The Company Act in Montenegro regulates the forms of organizations pursuing economic activities and their registration procedure. Foreign investors and local businessmen alike can set up sole traders in Montenegro, following the provisions of this law.
Our experts in company registration in Montenegro can give you all the details regarding the process of setting up a sole trader.
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Sole trader incorporation process in Montenegro
If a sole trader is your choice of business, our company formation agents can provide you with a description of the main steps to take to open this type of company in Montenegro. These include the following:
- Certify the articles of association and other founding agreements of the company – you need copies of your identification documents, corporate documents, and a receipt of document certification. These have to be submitted to the municipality where you set up the sole trader in Montenegro;
- Register the sole trader – you submit all the necessary documents with the Central Registry to obtain the registration certificate, tax identification number, VAT number, and customs authorization;
- Obtain a company seal and open a bank account;
- Register with a tax authority – a single registration form has to be filed in with the Tax Administration. Registration is automatically done with the employment bureau and the pension and health fund.
Do not hesitate to get in touch with our representatives in company formation in Montenegro if you need professional assistance in setting up a sole trader. Besides this, if you are planning to buy a shelf company, you can get assistance from our agents. They can offer you appropriate shelf companies as per your plans.
Documents required to create a Montenegrin sole proprietorship
All business registration processes in Montenegro are handled by the Central Register of the Commercial Court (CRPS). The following list of documents is required for the registration of a sole proprietorship in Montenegro:
- a business name that differs from the sole proprietor’s legal name;
- personal identification papers;
- the completed registration form issued by the Register;
- the receipt proving the registration fee payment;
- proof of payment for the administrative cost to publish the company name in Montenegro’s official gazette;
- certificate of VAT registration, if necessary.
Our company registration advisors in Montenegro can assist with the incorporation of a sole trader with the Companies Registrar.
Who can act as a sole proprietor in Montenegro?
The single proprietorship is also known as a one-person company. This kind of business is managed and operated by a single person. The trader bears full responsibility for any business earnings and losses stemming from their operations. In Montenegro, a sole proprietorship is not a recognized legal organization.
The sole proprietorship can be established in Montenegro by anyone who is at least 18 years old. For foreigners, the age restriction is the same. Foreigners who wish to establish a sole proprietorship business in Montenegro have to create a bank account and obtain a residency permit.
It is necessary for foreigners to create a bank account prior to registering as a sole owner. Our company formation agents in Montenegro can offer support in the opening of the account.
Timeframe to open a sole trader
In Montenegro, there may be variations in the duration required to register a sole proprietorship. The average timeframe to obtain a registration certificate is 4 to 5 days. There is no minimum share capital needed, and the owner is free to invest as much or as little as he considers appropriate in the company. Filing the necessary paperwork to the Trade Register and registering for taxes in Montenegro are the prerequisites for anyone wishing to become a registered sole proprietor.
Feel free to address our specialists about any questions if you want to open a company in Montenegro.
Why register as a sole proprietor in Montenegro?
A sole owner must be an adult with the capacity to contract. A license from the relevant authorities may be required in specific circumstances for launching the business. For instance, the local government expects anyone wishing to open a pharmacy to obtain a license. You should register as a sole trader in Montenegro because you can get the following benefits by doing so:
- a sole proprietor interacts with clients directly. As a result, he/she is better able to comprehend and assist customers;
- the sole proprietor has total discretion over decisions and their implementation. He/she does not need to ask for or receive approval from others;
- the sole trader is exempt from publishing his/her accounts. He/she is more competitive when business affairs are conducted in total secrecy;
- the proprietors are the company’s owner, manager, and controller. They do not recruit experts for numerous roles. As a result, proprietorship management is low-cost;
- a sole proprietorship can be ended easily and conveniently. Dissolution is not subject to any particular legal requirements or formalities.
If you need to learn more about the benefits of setting up a sole trader in Montenegro, you can get help from our agents. Our company incorporation consultants can offer you comprehensive guidance. Furthermore, you can also get help from our agents if you want to open a branch office in this country.
Legal advantages of a sole proprietorship in Montenegro
A sole proprietorship has fewer risks than other business structures with numerous shareholders and stricter legal requirements because it is solely owned by one person.
The advantages of registering as a self-employed person in Montenegro are as follows:
- secrecy: since the owner is the only one with authority, private information is protected. In Montenegro, the sole proprietor makes all of the business’s decisions, which promotes secrecy;
- the sole proprietor is not required under Montenegro law to make the business accounts public.
- a sole trader is the exclusive proprietor of the company and, as such, the only recipient of earnings. There is no requirement to distribute the company’s profits to anybody;
- simpler tax requirements: establishing a sole proprietorship carries less complicated tax obligations. An employment identification number is not required. Also, taxes on sole proprietorships are based on the revenue of the company;
- less paperwork: when a business is operated as a sole proprietor, the owner is relieved of much of the day-to-day paperwork. Since the owner is the sole one managing the company, less documentation is needed.
Sole trader share-capital requirements in Montenegro
In Montenegro, there is no share capital needed to open a sole trader. Depending on the type of business activity you plan to conduct after establishing a sole trader you must apply for a business license. The simplest business structure under which one can run a firm is the sole trader. It merely designates a person who is the company’s owner and liable for all of its debts. Particularly small-scale dealers, craftsmen, cab drivers, etc. adopt this manner of conducting business because of the initially cheaper expenses and administrative needs.
Although it is the simplest business form to incorporate, still it is important to get help from specialists. Especially when you are a foreigner and do not know the regulations of the country, you can get in touch with our agents. They can help you apply for the relevant work permit. Because if you regulate any activity without a permit from the relevant authorities, you may face legal complications. So, you are advised to get help from company formation specialists. Furthermore, if you are seeking incorporation assistance to open a D.O.O. in Montenegro, the services of our agents are at your disposal.
Features of sole traders in Montenegro
The commercial legislation specifies six types of companies that an entrepreneur can open in Montenegro. The sole trader is the smallest and simplest form a business can take in Montenegro. It does not require a minimum capital to be set up and the trader is liable for all debts incurred to the full extent of his/her assets. If a sole trader in Montenegro does business in the name of another person, then his/her name must be registered following the provisions of the specific rules and regulations. A sole trader in Montenegro can change the name of the business but is obliged to inform the Central Registry about the change within 30 days from the moment when the change occurred.
Any individual interested in activating as a sole trader in this country must follow the standard company registration procedure in Montenegro, by submitting a registration statement according to the provisions of the commercial laws of the country. A registration certificate is provided to the sole trader upon registration. Please note that this registration certificate does not represent a business permit or a license for conducting commercial activity. Our Montenegro company formation agents can tell you more about the legal aspects of establishing a sole trader.
Taxation on sole traders in Montenegro
In Montenegro, sole traders are private individuals who engage in market activity to make a profit. The Company Act in Montenegro governs these legal entities in this country. The following data regarding the taxation of sole proprietors in Montenegro are provided by our agents. You can also ask any further questions from our agents regarding sole trader’s taxation.
The taxation of sole proprietors in Montenegro is governed by the personal income tax law. This law sets the personal income tax rate at 9% of the tax base. All natural individuals who get income from various sources, including self-employment, are subject to this income tax. The same statute mandates some of the following tax breaks for Montenegrin sole proprietors. For the taxpayer who invested in fixed assets for his or her firm, the computed tax is reduced to 50% of the investments that were made. More information on this subject is available from our Montenegrin company formation specialists. Some fixed assets are not regarded as fixed, except for those listed in the first depreciation category and passenger vehicles, with some exceptions; Our company incorporation office in Montenegro may assist business owners who want to establish a sole proprietorship in this state; A taxpayer must increase the tax base for the value of the used tax relief for the asset sale or divestiture year. This is possible if they sell or divest the aforementioned fixed assets before the three-year window following the year in which the tax relief was used expires.
Economy of Montenegro
According to the European Commission, Montenegro’s economy:
- registered an accelerated growth in 2023, with a 6% increase on a yearly basis in the first half of the year;
- however, between 2024 and 2025, a mild decrease is projected;
- for 2024, it is expected to grow by 2.7%, while in 2025 by 2.3%.
If you need more information in this regard, you can contact our agents. Besides information, they can also practically assist you in company incorporation. Furthermore, if you need expert help with online incorporation, you can consult our specialists.