Tourism And Foreign Direct Investment In Montenegro

With a low corporate tax rate and a business-friendly economic system, Montenegro has great potential to become a magnet for investment, reports Thomas Hughes.
 

Based in Southeastern Europe on the Balkan Peninsula, Montenegro is bordered by Serbia to the northeast, Bosnia and Herzegovina to the northwest, Albania to the southeast and Croatia to the West. It is a small Adriatic nation with a big heart, occupied by friendly, hospitable people, picturesque beaches and breathtaking mountain ranges. As one of the world’s youngest sovereign states, the capital and largest city is Podgorica, and the economy is mostly service-based, with tourism accounting for about 25% of GDP.
 

Montenegro aspires to become an elite tourist destination and as the country prepares to join the European Union, large infrastructure projects financed by foreign investors are a fundamental step towards realising this objective. As one of the most tourism-dependent economies in the world, the country saw a surge in property purchases between 2006-2007, with wealthy British and Russian investors seduced by the charm, diversity and Mediterranean air on the Montenegrin coast. In recent times, local real estate professionals have enjoyed seeing Montenegro emerge as a major second home and property-investor market in the Mediterranean. Investors are able to benefit from capital appreciation with low real estate taxes in an emerging market with great potential.
 

Montenegro is an ideal holiday destination and offers everything from medieval walled villages, limestone peaks and rugged mountains, to glacial lakes, wide canyons and national parks. Some popular beaches include Jaz Beach, Mogren Beach, Bečići Beach, and Sveti Stefan Beach. Big money is flowing into luxury developments, and Porto Montenegro is known to have Gulf Royal families park their super yachts in the area. The country is also popular with libertarian-minded Westerners who want to live in a place that ‘just leaves them alone’, with many moving to Montenegro to avoid restrictions during the events of 2020.
 

The Central Bank of Montenegro was founded in 2001, with the euro being adopted the following year. The main industries attracting foreign direct investment include real estate, tourism, energy, telecommunications, banking and construction, with the main investing countries being Russia, Switzerland, Serbia, Austria, Italy, and the Netherlands. The economy is on a positive upward trend, and is based primarily on aluminium, construction and exports of hydroelectricity. Montenegro offers great monetary stability and economic freedom, with domestic and foreign companies enjoying equal treatment. Foreign companies may own 100% of a domestic company, while it is possible to repatriate profits and dividends without any restrictions or limitations. Montenegro introduced a set of tax reforms in 2022, but the country has low tax rates compared to other European countries- both individual and corporate income tax rates fluctuate from 9-15%.   EG