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  Domicile - Residency Visa Requirements

Montenegro has been known for its enigmatic beauty since Roman times when many emperors built palaces on its lands. It has been known for some time as Europe's best-kept and ideal place to rest, whether you want breathtaking seashores or snowy mountains. Montenegro is one of the eco-friendliest countries of Europe. It's one of the best places where to establish your tax residency in 2024. The country has one of the best tax systems in Europe and is hungry for investment, meaning the country is wide open for foreigners.

To establish domicile and tax residency in Montenegro, there are several factors and requirements to consider:

Domicile
- Definition: Domicile refers to the country that a person treats as their permanent home and to which they have the closest legal attachment.
- Establishing Domicile: To establish domicile in Montenegro, one must generally have the intention to reside permanently in the country. This can include purchasing property, moving family to Montenegro, and obtaining a residency permit.

Tax Residency
- Criteria for Tax Residency: An individual is considered a tax resident of Montenegro if they spend more than 183 days in the country within a calendar year or if they have a center of vital interests in Montenegro.
- Tax Implications: Tax residents in Montenegro are taxed on their worldwide income, whereas non-residents are taxed only on income generated within Montenegro.

Steps to Establish Tax Residency
1. Apply for Residency Permit: Begin by applying for a temporary residency permit, which may require proof of employment, investment, or family reunification.
2. Spend Sufficient Time in Montenegro: Ensure you spend more than 183 days in the country during the tax year.
3. Demonstrate Ties to Montenegro: Show significant personal and economic ties to Montenegro, such as owning property, opening bank accounts, or having family living in the country.

Tax Benefits
- Montenegro offers a relatively low flat income tax rate, which can be attractive for individuals seeking tax efficiency.
- No inheritance tax or gift tax applies, which may benefit long-term residents.

Legal and Administrative Requirements
- Registration with Local Authorities: Upon arrival, register with local police and obtain a residence card.
- Tax Registration: Register with the Montenegrin tax authorities to obtain a tax identification number.
- Filing Obligations: Comply with annual tax filing requirements as mandated by Montenegrin law.

You will qualify as a tax resident in Montenegro if you spend 183 or more days in Montenegro. Nevertheless, even if you spend less days in the country, you can still become a tax resident of Montenegro. This will be the case if you have your domicile or your centre of personal or economical life in the country. In practice, the Montenegrin tax authorities will only consider you as a tax resident if you have a temporary residence permit and actually spend more than 183 days in the country. In order to become a tax resident in Montenegro you do need to spend the majority of the (first) year in Montenegro.

Montenegro offers a relatively simple tax system with flat rates that are competitive within Europe. Here are the current tax rates in Montenegro:

Personal Income Tax
- Flat Rate: 9%
- This rate applies to most types of personal income, including salaries, self-employment income, and other earnings.
- Surtax: Up to 15%
- Municipalities may impose a surtax on the income tax, which can vary depending on the location but is generally up to 15%.


Corporate Income Tax
- Flat Rate: 9%
- This flat rate applies to corporate profits, making Montenegro an attractive destination for businesses seeking lower tax burdens.

Value Added Tax (VAT)
- Standard Rate: 21%
- Applies to most goods and services.
- Reduced Rate: 7%
- Applies to certain goods and services, such as basic foodstuffs, medicines, books, and certain tourism services.

Social Security Contributions
- Employer Contributions: 10.7%
- This covers contributions to health insurance, pension, and unemployment funds.
- Employee Contributions: 24%
- Includes contributions to pension and disability insurance, health insurance, and unemployment insurance.

Other Taxes
- Capital Gains Tax: 9%
- Capital gains are taxed at the same rate as personal and corporate income tax.
- Real Estate Transfer Tax: 3%
- Applicable when transferring real estate properties.

These tax rates are designed to attract foreign investors and individuals seeking tax-efficient jurisdictions. However, it's always recommended to consult with a local tax advisor to ensure compliance with Montenegrin tax laws and to understand any recent changes or specific circumstances that might affect taxation.

Tax residency for digital nomads

The first €8.400 in professional income is tax exempt. Everything you make above €8.400 up to an amount of €12.000 is taxed at 9%. Income over that threshold is subject to a tax rate of 15%. The tax rate on investment income is 15%. In addition to this federal tax rates, also local surtaxes apply. The rate of the surtax depends on the municipality you are living in.

Citizenship by Investment

The Montenegro Citizenship by Investment Program was launched by the Government of Montenegro as part of its ongoing efforts to attract foreign direct investment and increase economic activity in the country.

The Montenegro Citizenship by Investment Program requires applicants to make a defined economic contribution to Montenegrin society through an investment in an approved development project, and a capital contribution to a fund designated by the government for the advancement of under-developed areas. In exchange, and subject to a stringent vetting and due diligence process, including thorough background checks, applicants and their families are granted citizenship.

Benefits of Citizenship by Investment Program

- Visa-free or visa-on-arrival access to over 120 destinations including Europe’s Schengen Area, Russia, and Türkiye
- Citizenship in a country that is an official EU candidate country
- Citizenship in a multinational and multilingual European community that enjoys a mild Mediterranean climate, beautiful scenery, and a low cost of living
- Citizenship in a member state of the European Monetary Union, the NATO Alliance, OSCE, and the WTO
- Full citizenship granted to the applicant and family members
- Investment in a development project operated by a renowned hotel brand

Requirements of Citizenship by Investment

To qualify for the Montenegro Citizenship by Investment Program, the main applicant must be over 18 years of age, meet the application requirements, and make the qualifying contributions to the Government of Montenegro. There are two routes to choose from to qualify for the program:

- An investment of EUR 450,000 to development projects in the capital of Podgorica or in the coastal regions
- An investment of EUR 250,000 to development projects in northern or central Montenegro, excluding Podgorica

In addition, there is a government fee of EUR 200,000 per application. This contribution will be directed to a special fund for the advancement of underdeveloped areas (EUR 100,000) and towards the Innovation Fund of Montenegro (EUR 100,000).
 
Due to the complicated nature of taxation, it is crucial that you understand the taxation criteria and how it will impact your plan as a whole. Working with our experts can help streamline this process, providing valuable insights and tailored strategies to ensure successful outcome. Don’t hesitate any longer. Apply to become a client today to work with our experts on legal strategies to overcome barriers.
 

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