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A Montenegro Limited Liability Company (LLC) offers foreigners completely tax free income from all sources outside of the country along with limited liability close proximity to EU nations and its currency being the Euro. In addition, a single member LLC qualifies.
The Limited Liability Company is called a “Drutvo s ogranienom odgovornou” (DOO). LLC’s can purchase real estate in Montenegro and own shares in local companies.
Montenegro is a sovereign state located in South Eastern Europe. The Adriatic Sea’s coastline borders its southwest while Bosnia and Herzegovina borders its northwest, Croatia borders its west, Kosovo on its east, Serbia on its northeast, and Albania on its southeast.
Montenegro was part of the Yugoslavia nation until it gained its independence in 2006. While tourism is its main economic sector, attracting investors to establish new companies in Europe is a fast growing sector. In 2011, the country introduced a faster efficient one stop company registration system which foreigners like. While not being a member of the European Union (EU) the Euro is its official currency.
Its political system is described as a parliamentary republic with an elected one house legislature, a president, and a prime minister.
A Montenegro Limited Liability Company (LLC) profits from the following benefits:
• Complete Foreign Ownership: Foreigners can own all of the LLC’s shares.
• Tax Free: Non-resident owned LLC’s pay no taxes of any kind on income earned outside of Montenegro. However, U.S. taxpayers must reveal all income to their tax agency like everyone residing in countries taxing worldwide income.
• Limited Liability: A shareholder’s liability is limited to his or her share capital contribution.
• No Minimum Capital: There is no requirement for a minimum authorized share capital.
• One Shareholder/Director: Only one shareholder who can be the sole director is required to form the LLC.
• Europe: Central European location with the Euro as its official currency.
Montenegro Limited Liability Company (LLC) Name
No LLC company name can be too similar to an existing legal entity’s name in Montenegro.
The LLC’s name must end with the word “Limited” or use either abbreviation of “Ltd.” or “LLC”.
The Articles of Incorporation for a single member (or a multiple founders) LLC must be filed with the Central Registry of Business Entities. In addition, single member LLC’s must file a notarized “Decision on the Establishment of the Company” form. More than one member (founder) must file a notarized “Incorporation Agreement”. An application form must also be filed.
A Certificate of Registration with a registration number will be issued by the Registry within one week from the filing of the application and required documents mentioned above. An official notice of the new company will be published in the Official Gazette. While it may take from 10 to 15 days before the notice’s publication, the LLC can legally conduct business after receiving the Certificate of Registration.
The Incorporation Agreement is a contract made between the two or more founders (initial members) describing the LCC’s assets (cash, properties, goods, and rights). The percentage of ownership of the founders along with management structure and distribution of the profits will be agreed upon. The initial capital must be at least 1 Euro.
LLC members’ liabilities are limited by their contribution to the capital.
Only one shareholder (member) is required to form the LLC. The maximum number of shareholders is 30.
Shareholders can reside anywhere and be citizens of any country. They can be natural persons or legal entities registered in any country.
The LLC’s capital is divided into non-transferable shares.
New shareholders (members) purchase their shares by making a deposit into the LLC’s bank account. The size of the deposit determines the amount of shares. Shares reflect the percentage in the capital and ownership. One share could entitle a member to have more than one vote depending on the conditions set forth in the Articles of Incorporation and the Incorporation Agreement.
Only one director is required to manage the LLC. Directors can be shareholders in the LLC. A one shareholder LLC can appoint the sole shareholder as the only director.
Directors can be natural persons from any country and not residing in Montenegro.
Every LLC must have a local registered office address.
A local company secretary must be appointed who acts as the registered agent whose office may be used by the LLC as its registered office.
Minimum Share Capital
There is no requirement for an authorized minimum share capital other than at least 1 Euro must be its initial capital when registering with the government.
The corporate tax rate on profits is 9%. This tax only applies to residents. Non-residents are only taxed on their Montenegro sourced income. Therefore, all income derived outside of the country are completely tax exempt.
Note: U.S. citizens and all others subject to worldwide income taxation must declare all income to their government tax authorities.
Their capital gains tax is also 9%, but it does not apply to the sale of company shares involving non-residents.
While a non-resident owned LLC may never pay taxes, it must register with the tax authority and obtain a tax identification number.
Annual financial statements are not required. Annual audits are required but not filed with the government. Standard internationally accepted accounting practices and record keeping are acceptable.
Annual General Meeting
An annual general meeting of the shareholders is mandatory. All of the necessary decisions must be made during the meeting for the continued business operations.
While the founding members (shareholders) names are included in the registration documents which are public records, subsequent shareholders (members) names are not filed with the government.
Time for Formation
It is estimated that registration and approval can take up to one week.
Shelf companies are not available to purchase in Montenegro.
A Montenegro Limited Liability Company (LLC) gains from the following benefits: 100% foreign ownership, no taxes, limited liability, no minimum share capital, central European location with the Euro as its official currency.