Jan 17, 2020

Applying for Montenegro citizenship by investment program in 2020: pros and contras

Over a dozen countries allow foreign nationals to become their citizens and to obtain a second passport in exchange for investment. These include five Caribbean countries, Vanuatu in the southern part of the Pacific Ocean, Turkey, Jordan, Bulgaria, Austria, Moldova, Cyprus and Malta. Recently, Montenegro has also joined the group and started granting its citizenship to foreigners who bring capital to the country. What is attractive about acquiring a Montenegrin passport? And what possible pitfalls can there be? We discuss these questions below.  

Currently, the real estate market is truly prospering in the sunny Montenegro. Buyers from various parts of the world flow into the Balkan country in order to purchase houses and apartments on the beautiful Adriatic coast or in the mountain areas of Montenegro.

This is because the international reputation of this jurisdiction is rapidly improving as the passenger airline services are being extended and new luxury resorts constructed and put into operation.

The opportunities to invest in Montenegro look great and the country’s authorities are doing their best to attract more foreign capital. In particular, they have recently launched the ‘citizenship by investment’ program that allows becoming a Montenegrin citizen for an investment starting at 250,000 euros.

The capital has to be invested into the Government-approved real property that is still under construction in the northern part of Montenegro. Purchase of this property will make the foreigner and his or her family eligible for Montenegrin passports, which will allow legally residing in the country. In addition to the investment into real estate, you have to contribute 100,000 euros as a non-returnable donation to the state fund regardless of the residential accommodation complex that you choose to invest in.  

In addition to that, it is possible to buy residential premises at an amazingly luxurious resort called Dukley Gardens whose constriction has already been completed. We would like to put heavy emphasis on the fact that this resort is NOT on the list of Government-approved construction projects. However, the resort administration undertakes to buy out apartments at the approved construction sites on behalf of the foreign investors and donate the required some to the state fund. Thus, it is also possible to obtain Montenegrin citizenship via investing in this luxury place.   

Montenegro citizenship by investment program: the major pros

Experts note that the Montenegrin authorities are working diligently to improve the quality of life in the country as well as the business climate, stability, and security. Montenegro became a NATO member state in 2017 and currently it is on the way to the European Union. It is expected that the country will reach the destination by the middle 2020s.  

Many bureaucratic procedures connected with doing business in Montenegro have been recently simplified. In particular, now foreign businesspersons enjoy the same rights and privileges as their local counterparts do. The costs of implementing business projects are lower in Montenegro in comparison to those in other western block countries.

The taxes levied on both corporate and personal income are 9% each. The real property sale tax is 3%. The normal VAT rate is 21% but it is reduced to 7% for staple foods as well as a number of other items including five-star hotel operations.

Office space in Podgorica office buildings can be rented for 10 to 15 euros per square meter per month.

Residential accommodations are also more affordable in Montenegro than those in most other European countries. For instance, you can rent a very nice fully furnished one-bedroom apartment in Podgorica business district for 300 to 400 euros per month.

Apart from the favorable business environment found in the capital city of Podgorica, there are a number of other beautiful cities and towns in Montenegro. Many of them boast vast historical and cultural heritage. The country entices visitors by its magnificent nature, comfortable climate and the abundance of sunny days. (As a rule, it is sunshine in Montenegro for 280 days a year). These factors make Montenegro an increasingly popular tourist destination. 

Most ambitious investment projects are carried out in Montenegro at the moment. A large number of internationally renowned hotel chains have already established presence in the country. These include such companies as Hilton Hotels & Resorts, Sheraton Hotels & Resorts, Aman Resorts, Regent Falkensteiner Hotels & Residences, Chedi, Meliá Hotels International, and Iberostar Hotels & Resorts. Other hotel chains such as One & Only and Ritz Carlton, for example, are building their facilities in Montenegro at the present time.

Some giant transnational audit firms including such monsters as Deloitte Touche Tohmatsu, KPMG, and Ernst & Young are also working in Montenegro. Microsoft is also there as well as Coca-Cola. Besides, a number of well-known banks such as OTP Group, NLB, and Erste Bank, among others, have opened their branch offices in Montenegro. Generally speaking, the country is globalizing at a high speed.

Montenegrin economy demonstrates one of the fastest growth rates in Europe. The country GDP grew by 4.7% and 4.9% in 2017 and 2018, correspondingly. Thanks to the openness of the economy and the favorable business environment, Montenegro has been attracting large amounts of foreign direct investments (FDI) for several years in a raw already.  

The total net FDI amounted to 227.3 million euros over the first nine months of 2019. This is 48% more than over the same period of the previous year. The interest of foreign investors to Montenegro is expected to grow with the recent official launch of the ‘citizenship by investment’ program. More capital coming from abroad will make a significant contribution to the overall growth of the Montenegrin economy.

A considerable portion of the investments will be made into modern resort complexes. The list of Government-approved development projects that qualify for the ‘citizenship by investment’ program includes resorts in the southern part of the country as well as those in its central and northern regions.

In addition to investment into resort facilities, foreigners can obtain Montenegrin citizenship by putting money into the agricultural or wood processing sectors of economy. Becoming a citizen of Montenegro, the foreign investor will be able to travel to 122 countries without a visa. These include Schengen zone states, Turkey, and the Russian Federation.

Montenegrins also have easy access to the US E-2 visa permitting prolonged stays in the USA. The agreement signed between Montenegro and the United states allows the citizens of the former country to reside in the USA permanently on the non-immigration E-2 visa. Unlike the holders of the American green card, the E-2 visa holders are not obliged to pay taxes to the US federal budget.

Montenegro citizenship by investment program: the major contras

Moving to Montenegro might sound like an attractive option indeed. It is true that there are many reasons to do that but there are several reasons not to do that too! Let us look at the main downsides of living in Montenegro.

The language in Montenegro

The Montenegrin language is rather difficult to master. Moreover, its status is not completely defined. One the one hand, it is the official language of Montenegro. On the other one, some linguists maintain that it is not a separate language but rather a Serbian dialect.

Even the Montenegrin alphabet is a discussable issue: some Montenegrins prefer using the Cyrillic alphabet while others opt for the Roman one.

The young generation in Montenegro generally speak English but not too well. Hotel, restaurant, and other tourist facility personnel will have sufficient English to understand foreign guests and talk to them. However, if you plan to live in Montenegro permanently, you will have to learn the local language. Without it, it will be close to impossible to communicate with local administrators and street vendors.

In addition to that, if you intend to obtain Montenegrin citizenship by investment or by some other means, you will have to pass the Montenegrin language test before you can have the passport.

The medicine in Montenegro

The Government of Montenegro does have a program for medical service improvement in the country. However, the small economy and the small number of taxpayers put Montenegro at a disadvantage here.

Some commentators express concern about the average number of medical doctors per capita. Expats who develop some serious conditions may have to go to Croatia or Serbia in order to obtain state-of-the-art medical treatment.  

Politico-geographical position of Montenegro

Montenegro is located between Russia and Serbia on one side and its EU and NATO allies on the other one. The fact that there is a low-intensity conflict between the Eastern block and the Western block cannot be denied. At the current moment, this is not causing any problems in Montenegro. However, in case the situation worsens and the political tension increases, the country can theoretically find itself between the devil and the deep blue sea. In other words, Montenegro is not in the full control of its own destiny as it depends on the geopolitical situations in the neighboring countries.  

The short history of Montenegro as an independent state

Montenegro peacefully separated from Serbia a bit more than ten years ago. Ten years prior to that, however, it was drawn into a war that had changed many a life when Yugoslavia disintegrated. The ethnic clashes that were acute some twenty years ago have not grown into acts of violence but they have hampered progress in some instances.  

The ‘citizenship by investment’ program will serve as a bright example of the case when the parliamentary fractions in Montenegro find it hard to come to an agreement. The draft law was proposed several year ago and it had to be discussed thoroughly and amended drastically before it was eventually passed.

Smoking in Montenegro

People smoke everywhere in Montenegro. The smoke fills cafes and restaurants; you can feel its smell on the beaches, in cars, trains, and homes. Several years ago, the Government prohibited smoking in public places, in particular, in cafes and restaurants. But this prohibition turned the local people away from these places and they stopped gathering in the cafes every evening like they used to do before. This made the restaurant and café owners complain about loss of income.

Thus, after a short while, things returned to their former state. Legally, smoking in public places is still prohibited and theoretically, you could be fined for that. But unfortunately, this law, like many other laws in Montenegro, are there just ‘for show’. People still smoke everywhere.

Homeless animals in the streets of Montenegro

Many countries have the problem of stray cats and dogs wandering in the park alleys, and Montenegro is not an exception. There are countless cats and dogs in Montenegrin cities, which troubles both locals and tourists.

The problem is that stray animals are not sterilized and thus they multiply quickly. Sadly, sterilization is considered a ‘sin’ in Montenegro while leaving a two-week old kitten near the garbage bins is apparently not a sin.

The garbage in Montenegro

People in Montenegro are not very much knowledgeable about the ecological issues. You can see the results of the lack of educational activities in this area in the form of garbage scattered all over the place. Plastic bottles lying on the grass, plastic bags dangling from the trees, litter on the roadsides, and so on. There are not enough garbage bins in the tourist areas and you will often see a lot of rubbish by the side of the existing small bins.  

Montenegrins giving up their citizenship

It is also worth noting that a considerable number of Montenegrins renounce their citizenship to become citizens of other countries. They are not repelled even by the cost of Montenegrin citizenship renunciation of 300 euros. The price is even higher if the renegade uses a Montenegrin foreign embassy or consulate to give up citizenship of the country but some people use this possibility anyway.

Those giving up Montenegrin citizenship usually become citizens of such countries as Germany, Norway, the Netherlands, Slovenia, and Bosnia and Herzegovina, according to the Montenegrin Ministry of the Interior. Here is some statistics:

Year Number of people who renounced citizenship of Montenegro
2006 183 people
2007 250 people
2008   214 people
2009   162 people
2010   122 people
2011   147 people
2012   158 people
2013   141 people
2014   144 people
2015   204 people
2016   180 people
2017   287 people
2018   354 people
2019  (from January 1 to October 1) 238 people

Source: Montenegrin Ministry of the Interior

As you can see from the table above, 238 people gave up Montenegrin citizenship before 2019 was even close to the end. This is quite a large figure for a country whose population is only 622,000 people.

The total number of Montenegrins renouncing their citizenship since the country became an independent state in 2006 was 2,784 people. The largest number of them ran away in 2018 (354 people).

It will also be interesting to note that the total number of passports that have been issued within the eleven-year period of independence is 643,479. It is about 20,000 more than the total number of Montenegro residents (622,000).  

The Ministry of the Interior attributes this discrepancy to the fact that many Montenegrin citizens permanently reside abroad.

Citizenship by investment in Montenegro: the alternatives and expert assistance

The required investment amount that will make you eligible for a Montenegrin passport is between 350,000 euros and 550,000 euros. These sums do not include the state duties nor the cost of the immigration agent services.

On the one hand, the price of obtaining Montenegrin citizenship is smaller than that in other European states such as Malta and Cyprus, for example (about 1 and 2 million euros, correspondingly). On the other hand, purchasing the passport of one of the Caribbean states will cost you from 100,000 dollars. (Please follow this link to learn more about this opportunity.)

Whether you choose Montenegro as the country of your second citizenship or any other jurisdiction, you certainly need some professional advice. Every application for citizenship procedure will have its own little nuances and purchase of real property in a foreign country should also be handled with great care without any doubt.

We have been in this business for many years now and we know all the small details pertaining to acquiring a second passport, be it of Montenegro or some other country. We will gladly assist you in finding the most suitable destination depending on your preferences and financial resources.

We probably have the largest database of the countries that allow foreign nationals to become their citizens in exchange for investment and we can help you make the best choice. Please write to us to [email protected] if you would like to ask questions, request additional information, or place a service request. We will be prompt in answering.