What can you do to acquire Montenegrin citizenship in 2020? The fastest, the simplest, and the surest way to achieve this goal is by investing in real estate in the country. Soon this immigration route is going to become even more attractive for families with children. The Montenegrin authorities are eliminating the drawbacks in the immigration law that hinder the process of obtaining citizenship by the investors’ minor dependents. However, this is not the only reason to purchase property in Montenegro in 2020 and use it as a legal foundation for obtaining a Montenegrin passport. There are other good reasons to do that and we discuss them below.
Montenegro is a small extremely beautiful rocky Balkan country that can offer something of interest to everybody. The splendor of the mountains, the ancient city walls, the rocky areas away from the seacoast inhabited by wolves and bears attract tourists from all over the world to Montenegro. Some of them end up falling in love with the country and buying residence accommodations there. And the number of such people grows year by year.
Even though the real estate prices have risen considerably over the last few years, houses and apartments in Montenegro resorts are still notably less expensive than similar property in France, Spain, or even the nearby Croatia. What makes purchase of real property in Montenegro yet more attractive is the possibility to acquire legal residence and citizenship in the country in exchange.
Montenegrin citizenship by investment in 2020: the new rules
The ‘citizenship by investment’ Government program was launched in October last year. Since that time, more and more foreigners have sought to obtain a second passport and establish permanent residency in Montenegro.
However, when reading the Immigration Law, many potential investors who had families grew disappointed and turned away from Montenegro. The Law had a serious disadvantage: it did not allow people under 18 years of age to become citizens of Montenegro even if they were dependents of adult investors who had applied for citizenship. Article 12 of this Law went as follows:
“[…] a person over 18 years of age can acquire Montenegrin citizenship in exceptional cases if this is beneficial for the State for economic or cultural reasons, for sports development considerations, for the national interests or for any analogous reasons”.
The Law did not mention the applicant’s dependents. This means that the interests of the immigrant’s minor children were not covered by the ‘citizenship by investment’ regulations.
It was obvious that the Law required amending. Experts drew the Government’s attention to the fact that investors would normally have children who had to be granted Montenegrin citizenship as well when their parents acquire it. In a recent Decree, the Government admitted that Article 12 of the Law has to be amended:
“It is evident that a minor child cannot become a citizen of Montenegro under the regulations of Article 12 (unless it is amended). This may have negative impact on the decisions made by trustworthy and serious potential investors. This fact may ultimately slow down the inflow of foreign investments into Montenegrin economy and regional development especially with the view of the fact that all other countries offering citizenship in exchange for investment permit granting citizenship to minor dependents of main applicants. The proposed amendment will eliminate this drawback, increase the inflow of investment capital, and help keep families united”.
The Decree permits including the main investor’s minor dependents in the application for citizenship by investment opportunity. The Decree was signed on December 3, 2019 and it will go into force eight days after it is published in the official Montenegrin Government bulletin.
Another official document informs the public that licensed immigration agents filed five applications for citizenship by investment on behalf on their clients between October and end of December 2019.
It has been announced that the total of 2,000 non-EU main applicants will be able to use the economic citizenship program (plus their dependents). This program will be available for three years only.
The Government is also considering three more construction projects (none of them has been specified) to be approved for the ‘citizenship by investment’ program. Currently, four such development projects exist in Montenegro.
You can obtain full Montenegrin citizenship if you invest from 250,000 to 450,000 euros into real estate in the country. The minimum required investment amount depends on the region where you want to buy residential accommodations.
In addition to that, every main applicant shall donate 100,000 to the state fund. This money is non-refundable. Thus, every approved application for citizenship will bring between 350,000 and 550,000 to the Montenegrin national budget.
By attracting foreign investors and granting them citizenship of the country, the Government of Montenegro expects to raise between 0.7 to 1.1 billion euros while the ‘citizenship by investment’ program is in force.
The current property prices in Montenegro
We would like to stress once again that acquiring Montenegrin citizenship in exchange for investment is possible only if you purchase property that has been approved by the Government for the purposes of the immigration program. As we have said above, currently there are only four such development projects.
In any case, however, when assessing the possibility to invest money into one of these development projects, the investor has to know the average real estate prices in Montenegro. Below we provide the most up-to-date figures. The table also shows the price dynamics.
|Average prices in the regions² in euros, III quarter of 2019||Prices in the III quarter of 2018||Price change over the year, percent|
|Price per 1 square meter||Cost of construction site preparation||Cost of construction work||Other expenditures|
|Montenegro average||1 122||192||778||152||1 150||-2,43|
|Commercial buildings, average||1 226||236||804||186||1 158||5,87|
|State-supported construction of residential accommodations 1||663||0||663||0||793||-16,39|
|Podgorica (the capital), average||1 082||181||744||157||1 022||5,87|
|Commercial buildings, average||1 248||253||775||220||1 022||22,11|
|State-supported construction of residential accommodations||663||0||663||0||—||—|
|Coastal region, average||1 365||263||935||167||1 430||-4,55|
|Commercial buildings, average||1 365||263||935||167||1 459||-6,44|
|State-supported construction of residential accommodations||—||—||—||—||866||—|
|Central region, average||660||48||562||50||609||8,37|
|Commercial buildings, average||660||48||562||50||613||7,67|
|State-supported construction of residential accommodations||—||—||—||—||583||—|
|Northern region, average||676||83||510||83||774||-12,66|
|Commercial buildings, average||676||83||510||83||900||-24,89|
|State-supported construction of residential accommodations||—||—||—||—||600||—|
|1 State-supported construction of residential accommodations is performed with partial funding from the Montenegrin municipalities. This cooperative funding program is aimed in satisfying the needs of the employees of various state agencies, organizations, and institutions located everywhere in Montenegro.|
|2 Coastal region includes Bar, Budva, Herceg Novi, Kotor, Tivat, and Ulcinj.|
|Central region includes Cetinje, Danilovgrad, Niksic, and Tuzi.|
|Northern region includes Andrievich, Berane, Bielo-Pole, Gusinje, Kolasin, Mojkovac, Petnicha, Plav, Plevlya, Pluzhine, Rozhai, Shavnik and Zabljak.|
Source: Montenegrin Statistical Office MONSTAT
The table shows that the real estate prices remain affordable in Montenegro and rather stable over the last year.
The growth in the number of tourists as a guarantee of return on investments
A foreign investor in Montenegro will be pleased to know that tourism development in the country has been among Government priorities for several years now.
At the regular meeting with the businesspersons organized by the Montenegrin Chamber of Trade and Commerce, Prime Minister Duško Marković said that 2019 was the best year in the entire history of Montenegrin tourist industry. The country’s authorities expect that 2020 will become even more productive.
“In 2019, about 2.6 million tourists visited Montenegro. We reached 14.5 million tourist-days in total. These figures allow speaking of 2019 as the best year in the history of our tourist industry”, said the politician.
Prime Minister also informed the public that forty-nine new hotels were opened in Montenegro in 2019. This increased the number of available accommodations by over 3,700. Over the last three years, 103 new hotels were opened in Montenegro. Marković also noted that the country airports serviced 2.6 million passengers between January and December of 2019, which is 220,000 more than in the previous year.
“Not only the government, the resort, and hotel owners benefit from the increased number of tourists to Montenegro. Our economy in general benefits greatly”, Prime Minister Marković said.
Improvement of transport accessibility of Montenegro should also contribute to tourism proliferation in the country. In particular, the local Government plans to invest 155 million euros (171.7 million dollars) in Montenegro Airlines Company within the nearest six years. This investment will stimulate the company development.
Montenegro Airlines will use the money to cover its obligations and to purchase new airplanes that are worth 50 million euros in total. This announcement has been posted on the Montenegro Government website.
The country flagman air carrier serviced 660,000 passengers in 2019 thus breaking the previous year record of 645,000 passengers. A Montenegro Airlines representative has made this claim.
The improvements in the overall Montenegrin economy
The growth of the Montenegrin economy in general is also worth noting. According to MONSTAT statistical office, the country’s Gross Domestic Product (GDP) amounted to 1.63 billion euros in 2019. The office representative also said that real GDP growth in July-September was 4.7%.
The absolute value added increase was 100 million euros higher than that in the same period of the previous year. The positive changes in the GDP in the third quarter are attributed to the growth in almost all sectors of economy.
According to Government officials, the highest increase was registered in the construction industry. The construction work costs grew by 31.4% in comparison to the previous year. Another large contributor to the overall growth of the country’s GDP in 2019 was the tourism sector.
Additional reasons to invest in Montenegro in exchange for its citizenship
An open and dynamic economy, a favorable geographic location, a flexible tax system, security and political stability are the main factors that attract foreign investors to Montenegro. They purchase property in the country to obtain full Montenegrin citizenship and also make other investments to receive sizable profits from doing business there.
Montenegro is not only a secure and economically developed country but it also has positive perspectives for further growth and improvement. In addition to political stability, multiethnic accord is found in the country.
There are two international airports in Montenegro as well as one international and three local seaports. In addition to those, a highway is being constructed between Bar and Bolyare that will most likely be stretched further to Belgrade. The ease of access to the country and the transportation infrastructure within it serve as one more argument for investing in Montenegro.
Montenegro relationships and trade with the European Union
- Montenegro signed the Central European Free Trade Agreement or CEFTA as long ago as July 26, 2007. The agreement with the European Free Trade Association or EFTA was signed in November 2011.
- At the Brussels summit of June 29, 2012, the heads of the European states and governments confirmed the initiation of Montenegro EU membership negotiations. As the country is an EU candidate state, it gives the foreign investors a possibility to become EU citizens in the future via acquiring citizenship of Montenegro.
- Montenegro officially became a NATO member state in June 2017.
- Residents of a large number of countries do not have to obtain visas in order to enter Montenegro. Montenegrin residents, in their turn, can visit EU/ Schengen countries without a visa. All in all, Montenegrins can visit 125 world countries without a visa or obtaining one on arrival.
Company registration in Montenegro
One more good reason to invest in Montenegro is the possibility to establish a business company in the country. Physical and legal entities coming to the country from abroad usually register the following two types of companies:
- Limited Liability Company (LLC);
- Public Limited Company (PLC).
Montenegro Government values foreign investors
Foreign investors are welcome to put money into any sphere of economy in Montenegro. They are also free to move their assets and capital including interests and dividends from abroad to Montenegro and back. Foreign business people enjoy the same rights in Montenegro as local ones.
The following entities qualify as foreign investors: foreign physical and legal entities whose head offices are located abroad; Montenegrin-based companies with foreign capital shares above 25%; Montenegrin citizens residing abroad for over twelve months; companies in Montenegro established by foreign citizens.
Investments can be made in Montenegro via the following routes:
- Establishing a new business company in Montenegro (independently or together with other investors);
- Investing into existing Montenegrin companies;
- Establishing a Montenegrin branch of a foreign company;
- Purchasing an existing Montenegrin company.
Taxes in Montenegro
The tax obligations that foreign nationals have in Montenegro are identical to the tax obligations of local business people. The corporate income tax rate is 9%. The personal income tax rate is 9% or 11% when the monthly income exceeds 720 euros. After paying the corporate income tax at the end of the year, foreign companies working in Montenegro can transfer the money earnt to their bank accounts abroad.
As far as the VAT is concerned, two VAT rates are applied in the country: the standard rate of 21% and the reduced rate of 7%. The reduced VAT rate is applicable to staple foods such as bread, milk, vegetable oil, and sugar; to medications and some medical devices; to books, textbooks, and educational items; to drinking water, forage, fertilizers, breeding livestock, plant protection and cultivation substances, and so on. Zero VAT rate is applied to export operations as well as medical items delivery that is financed by the National Medical Insurance Foundation.
The tax on the transfer of property rights is proportional to the amount of the purchase deal and constitutes 3% of the sum.
VAT return in Montenegro
If the output VAT over the taxable period is lower than the input VAT to be levied in this period, the difference can become a tax credit for the coming tax period. Otherwise, it can be returned to the taxpayer on his or her request within sixty days since the tax declaration has been filed.
The taxpayers engaged in export operation who have reported excess VAT in their declarations for three consecutive tax periods can obtain the VAT return within thirty days.
Foreign investment stimulation in Montenegro
In order to improve the business climate and to increase the competitiveness of the economy the Montenegrin Government issued a Decree on “Stimulating the increase in the amount of direct investments” in January 2015. This Decree specifies the financial stimuli aimed at attracting new investments.
Competitive investment projects are made public. The potential investor is required to allocate at least 500,000 euros to the project and create minimum twenty jobs.
There are other government-supported investment opportunities as well. 250,000 euros can be allocated to an investment project if in is carried out in the Central or the Northern regions (excluding Podgorica) and if it will create at least ten new jobs.
Other stimulation measures for investors include corporate tax exemption, personal income tax reduction, and tax breaks for the employers who hire certain categories of people.
Provision of incentives for entrepreneurship development in Montenegro
The Government of Montenegro has put a “Program of incentivizing business development” into place. The Program is aimed at supporting micro and small businesses located in certain regions of the country. The Program is part of the effort to enhance employment opportunities in the less developed municipalities via attracting capital from local and foreign investors there.
In addition to tax incentives and administrative support, the Program participants who work in the special business zone obtain the opportunity to use the state facilities and resources.
In particular, the Program allows using the buildings that belong to the local administrations as well as the utility infrastructure. These and other available resources shall be in coordinated use by several business companies. This opportunity allows for cutting the costs of production or service provision.
Generally speaking, the opportunity to invest into Montenegro and acquire the country citizenship deserves your attention for several objective reasons. If you have any questions about the technical aspects of bringing capital to Montenegro, please write to email@example.com and use our consultants’ advice. With our assistance, investing In Montenegro is going to be safe and efficient.