OnTheBall Travels (Montenegro)
It’s like a tall, absolutely gorgeous brunette with a history of bad relationships and no personality
Montenegro. A place that has gotten some warranted attention as of the last few years amongst nomadic expats. I’ve been keenly following investors, podcasters, travel bugs, expats, nomads and the-like who all seem to be commenting on Montenegro. Perhaps for most people, they are still unaware of its existence given its size and only becoming a country in 2006. Montenegro is known for it’s stunning beauty, relatively low taxes, and it’s traditional Balkan ways (unlike the progressive ways in Western Europe). So after lots of reading & listening, I went OnThe Ball-Kan
I’d like to give you my review about my stay in the country. Before you get a taste of the pros and cons be sure to check out my other articles
My intent was to stay for 6 months and acquire tax residency, however, I decided against it. Find out why…
Itinerary
As I said, Montenegro was our destination with the idea that we were to stay for the next number of months. The goal was to evaluate it for 3-4 weeks and see if we’d like to initiate residency.
We flew from Belgrade, Serbia to Tivat, Montenegro first class because this was the only option that allowed us to check this many bags–a fun little experience but right away off to a bad start. We felt like morons flying first class with the slippers, complimentary wine, food and desserts for a 27 minute flight. Air Serbia was great however, can recommend them. We exited the plane at this tiny airport to the outside and walked into the customs checkpoint which was half outside, half inside. Interestingly, a private jet landed and these folks were ushered on through customs ahead of us (FIND OUT why this is interesting!).
More on this story here:
Crime
In fact, I should mention that our drive to the airport in Belgrade asked how long we were to stay in Montenegro and we said weeks but maybe longer and he kind of chuckled like “you have no idea”. We both looked at him and he said, “you know the mafia is big there” We chuckled and said yeah we all know. He said no really, two families are in a little war right now and they are very big in all of Europe. So we had a feeling like “ah shit, why did we choose here?”–all was well with us but now we know why the ‘Dadyan’ family chose there.
Also, last year there was a woman robbed of millions of Euros at a bank and seemingly had just gotten away. The case was peculiar as to how the robber knew the victim had that sort of money, at that bank, at that time, hinting to a tip off from within the bank itself. Of course, the Balkans are not the pinnacle of stability & security.
Back to our arrival–We got through customs and once we received our checked luggage (again we were thinking about living there for months) we were stopped by a woman (we had 2 bags each) and my partner was asked “How much cash do you have on you?” (now its a running joke that she enjoys being cash free whereas I like having cash on me) so she replied, “none”. Which if you’re lying, is the exact answer you would give…
So like the movies, two other guards sensed blood in the water and slowly gathered around and then I am asked “Sir, Please tell us how much cash do you have?” after some fumbling between conversion rates they let us go on through but it looked like we had far more cash on us than we actually did.
We arranged our AirBNB to get a driver to pick us up at the airport who had the claim to fame with being born without a personality. After dropping us off short from our destination and yanking 4 pieces of luggage on cobblestone streets for a half km and carrying it up 5 levels… we arrived.
Transportation
This is a point that honestly became somewhat of a deal-breaker for my partner and I. Montenegro, being part of Serbia or Yugoslavia most of its recent history had never really developed the infrastructure for transport (in their defence, what the hell are they going to transport & to where?). The airport that we arrived to in Tivat was absolutely tiny. Chances are your junior high school was larger than this airport. Check the google reviews of it as well to get a better idea of kind of size and quality you’re dealing with here.
The only airports are Tivat or Podgorica and given what we saw (& read) about Tivat we didn’t want any complications flying out there. But it was picking poisons because we had a 50 minute drive on the windiest roads, in the mountains (pack your dramamine). The countryside and coastline was truly beautiful, although the businesses nearby are clearly rundown and poor.
Flying out of the capital of Podgorica (which lead nothing to the imagination either) was its own experience. We only drove through but if I can speak on behalf of a friend, I know someone who totally scrapped their travel plans to leave the capital early, thats how much they disliked it. Anyway, flying out of here was miserable & disorganized. It was hour before ‘take off’ that we were able to check our bags and get our boarding passes. After this line up, we were lined up again to wait to go through security (I have absolutely no idea why as staff were walking around joking & playing). It was about 25 mins until scheduled take off. I had some metal coins with me and when we were going through the Xray machine they stopped to see what it was that had been showing on their screen. They knew next to no English (despite virtually everybody previously selling coffee in the country being well-versed in English). They stopped me to try to ask questions. They didn’t understand my answers that they were silver coins so they began to talk amongst themselves in Montenegrin while I waited. Just judging by their attitude, the woman wanted me to go but her superior wanted me to stay behind and another woman wanted me to keep moving down the line (since everybody was stressed about missing their flight). But the woman still had my coins in her hand, which were almost the cost of the flight itself so I didn’t want to move. Finally, she got upset with her superior, placed the coins back in my tray so she could get her arms involved with arguing to him–and just like the movies–when they were distracted over me, I grabbed my things and left security to blend in with the rest of the airport!
But the whole aspect was slow, uncoordinated, inefficient and as someone coming with an entrepreneurial mindset it was abundantly obvious that the country was not and did not want to be a place of success.
Situation
Montenegro has elected to use the Euro as their currency despite having no formal monetary agreement with the EU, nor being a member of the Eurozone or EU. Therefore, it has unilaterally adopted the currency, disallowing it from issuing new Euros or coinage. It is not legal tender there although it remains recognized as their currency since 2002. The reason seems to be less-so about it’s chances about EU membership and more so about seeking stability.
Economically, Montenegro has lots of debt with China, an uncomfortable amount in fact. China had promised to complete a large bridge for a whopping billion dollars. but the project was not fully completed and the debt payment remains as per agreement.
It’s interesting that many Russians live in Montenegro and it’s always been a hot spot for Russian oligarchs. Having said that, they are now a NATO member with EU accession on the books. Serbia is also their largest import partner, a country that doesn’t align with the Eurocrats. Montenegro found its way becoming somewhat of a neutral place but I’m not convinced that this will remain. Even though, Russian can be heard in every other building you enter. It’s Russia-aligned on the ground but politically it’s Western-aligned.
On the drive to the airport, we passed through Budva where there was some construction taking place. I asked the driver, “is this construction new?” He said, “Yes, many people are coming”. I inquired from where and he replied “Almost everybody is coming from one of three countries. Turkey. Ukraine. or Russia. Turkey because of inflation, Ukraine because of the war and Russia, well same reason”. Montenegro really became a great escape hatch for those who may have had a business or a holiday property there already. Perhaps it was a simply lifestyle place rather than an investment but Montenegrin immigration law has two available routes to obtain a residency permit. One can either 1) buy company formation or 2) property ownership. In this sense, having one of these served as an immigration call option for these three countries. It wasn’t uncommon to see tall blonde women speaking Russian or shorter darker complexion women wearing a niqāb (from Turkey). All this forced immigration can be witnessed and if you check real estate prices since I’ve been, the prices have increased 40% since 2019. It remains to be seen if things will slow.
Montenegro made the recent decision to go ahead with their own Central Bank Digital Currency development–something that stands out relative to other Balkan countries. I’m not confident in them having have the resources to implement it successfully, but at least policy wise, they’re heading in the wrong direction.
Life is slow in Montenegro. Sort of feels abandoned at times. There’s not much of an effort to do anything in some areas. This resonated with it’s struggling economy. Anecdotally, many items (outside of wine, sausages, preserved meat) on the shelves seemed to come from Serbia–which is the producer of the two.
Of course, they are also new country with a troubled past of war after war–the likelihood that this is behind them remains to be seen, but I doubt it. I remember asking my driver in Serbia, Is Serbia the best country in the Balkans!? He replied, “No. [expecting a different country] There is no best in the Balkans. At any moment, a conflict can erupt, at any time”. Talk about being bleak.
One aspect of Montenegro that we found noteworthy was the number of Turks in every city. Turkey’s population is 135X larger than Montenegro, it wouldn’t take much to move on in, especially with Albania, basically a country made up of remnants of the Ottoman Empire is just South of them. Just a thought.
Services & People
The general feeling was that they knew we were not from there and they were absolutely sick and tired of us before we sat down (as tourists). One lady in a highly regarded restaurants yelled at us which was the first time anyone in the services sector had ever done that to me. I thought the “balls on this lady to treat us like that…” again, sick and tired of tourists.
I can also say that we weren’t the only people we’ve spoken to who also had their own trip to Montenegro felt the people were smug and unfriendly. To be politically incorrect, it was like the quote above–you cannot deny that the place is gorgeous, but it doesn’t give that warm, welcoming feeling–instead it was bored of us.
The restaurants were generally uninteresting. The selection was not ample my any means and the food was nothing to scoff at really, especially for the cost. This was in contrast to Croatia and Serbia who visibly spent more attention on their food scene.
It was not uncommon for us to end up with food that we didn’t order. Ten euro water drinks or 15 euro lattes were a common complaint by us. It ultimately felt that what you could get at a fast food joint or sort of kebab store for 7 euros was 25 euros in restaurants. My partner and I are a big fan of lemonade–when we ordered this but they’ll only give you 200ml for 3 euros.
From an investment perspective,
It feels like there’s more downside than upside (so far I’ve been correct since initially writing). They simply don’t have the foundation that could launch it to become the next vacation destination & coupled with lots of debt, insistence to join the doomed Union, slow work ethic (witnessed), overpriced touristic prices, tight travel mobility and idiotic measures like raising taxations, I’d say that Montenegro is best suited for a very long term back-up play or a lifestyle decision. Europe overall, is in trouble with their insist to put the state & politics over free markets and individuals and there’s no reason to think that problems with their neighbours won’t impact them, too.
Nobody likes tax but I take a particularly strong attitude against taxation (just look how government spends & wastes). I was really bothered by the ‘Tourist tax’ in Montenegro. Based on my hurried reading, there is a tourist tax based on which city you are staying if you are a foreigner. Few are exempt and essentially, it’s 1 euro per day, per adult. I’d like to preface this with other than google searches and articles like this, there was no warning of this tax. Failing to pay within 48 hours lead to a 60-euro violation fee and not paying at all (I’m told) is a 200-euro fee once you’re trying to leave Montenegro. Outside of having a generous hosts or hotels, most of this is done by yourself, you know, during your vacation time. Hell of way to encourage tourism.
Tensions
It depends how far you go back because it was a lot of things given all the wars throughout the last 200 years. Although yes, in recent history as Yugoslavia collapsed the remaining bit was now Serbia and Montenegro as one nation. In 2006, Montenegro broke off.
This is relevant because as far as I can tell in polls and based on who I spoke to, this decision still does not unanimously resonate. Till today you’ll see protests where they fly the Serbian flag, and you’ll see others only using the Montenegrin flag who are stark in favour of independence–but the country is divided on this basic idea. Recently, you’ve also seen outrage in the form of violent riots as Montenegro decided to inaugurate a new Bishop (Serbian Orthodox Christianity). Apparently they were upset by both the fact that the ceremony was taking place in a place where Montenegro struggled for independence from Serbia (viewing it as a mockery of their sovereignty) and the bishop himself has questioned whether that Montenegro has a right to exist in the first place.
Nina Marković at the Macquarie University in Sydney writes: “Just like a quarrel between siblings over material legacy left behind by the last deceased parent, political leaders of Serbia and Montenegro do not see eye-to-eye on many regional issues, international alliances as well as fundamental issues of national identity and political orientation — pro-Western or pro-Russian — including religion”
Advantages you should still know
Infrastructure, orderliness, tax trends, CBDCs, transport and poor service–but not all is bad. Even though they raised tax recently by adopting a 3-bracket progressive framework (with some additional ones, too), Taxes aren’t too bad.
Corporate Taxes:
- On the profit up to 100,000 euros (EUR), the tax rate shall be 9%.
- On the profit above EUR 100,000 to EUR 1,500,000, the tax shall be paid in the amount of EUR 9,000 plus 12% on the profit above EUR 100,000.
- On the profit above EUR 1,500,000, the tax shall be paid in the amount of EUR 177,000 plus 15% on the profit above EUR 1,500,000.
Resident taxpayers are taxed on their worldwide profit. Non-resident taxpayers are taxed on their Montenegrin-sourced income or income attributed to their Montenegrin permanent establishment (PE).
Other forms of passive income are generally treated as normal CIT. It’s good that the tax is paid on profit however, so you can pay yourself a salary to avoid one bracket or the other.
Withholding taxes generally are 15% but there is some specificity depending on your case.
Individual Taxes: Again residents (tax) are taxed on their worldwide income whereas non-residents are only taxed on their Montenegrin-source income
Monthly salary is taxed in the following manner:
- Salaries up to 700 euros (EUR) (gross) are exempt from tax.
- Salaries ranging from EUR 701 up to EUR 1,000 (gross) are subject to 9% tax.
- Salaries from EUR 1,001 (gross) are subject to 15% tax.
Monthly income earned by entrepreneurs (Sole proprietorship) is taxed in the following manner:
- From EUR 8,400.01 to EUR 12,000 is subject to 9% tax.
- From EUR 12,000.01 is subject to 15% tax.
Residency
Another benefit is the relatively simple way to achieve residency. There are two main ways that one can obtain temporary residency. The service is a hit or miss in my experience and it’s better to visit in person to get things done.
1) Buy residential real estate (not land). There is no minimum price that you need to pay but you will be expected to reside at this location year round (at least 11 of 12 months). If you don’t live there year round (or almost) you won’t be able to renew your previous residency.
2) Create a company. There are six types of companies. Entrepreneur (sole proprietorship), Joint stock company (a.d.) Limited Liability Company (d.o.o.), General partnership (o.d.), Limited partnership (k.d), and Part of a foreign company.
A “Doo” or LLC should suffice. The company can be in any sector. You are also expected to reside in Montenegro to operate your business but given that you’re a business person the state grants you more flexibility for travel.
I believe that the business option is far superior in my opinion as it provides more flexibility (+ the business itself could be used to purchase the real estate & pay a salary less than 700 euros a month).
[Update!! Residency by company formation in Montenegro new rules–>You must now pay yourself a full salary rather than a quarter salary. This now forces you to pay minimum of €117 in taxes per month to be paid on the salary (over 1400 euros yearly). This is in addition to company renewal fees, registered agent, company taxes (if any) and other annual fees. Taxes and more taxes. I guess the political gangsters liked watching In Living Colour, too]. This effectively only makes it a Plan B if you can withstand around 3000 euros a year to keep this option open.
Maybe the now +2000 euros/yr or so is fine for you to spend (if you’re not going to actually live there and/or operate your business actively), but perhaps it’s hard to justify that it couldn’t be spent on better things. 2000-3000 euros is a lot of Silver…
The last benefit:
It’s gorgeous…
Carrying Precious Metals around the world? Find out my experience here!
Closing
Montenegro has been the only country where my partner had a growing urge to return the longer we were away from it however. The other European countries were fun to recall, but we found ourselves missing the beauty of the mountains and blue water. The country is not in a hurry to improve, but this makes it a quiet, pleasant place to unwind.
Overall however, there was a culmination of things we witnessed that made us leave well before the 6 months. This was the only country where people were visibly lazy or inactive. Emails would go unanswered for weeks, shops would close early and many working age men were seated around smoking and drinking lattes midday. A quick study of their economic shows that it’s heavily reliant on imports as they hardly produce any of their own food or energy. This is compounded by the fact that they have uni-laterally decided to adopt the Euro as their currency (which appears to be too strong for their domestic economy).
The connect-ability of the country is very poor as is the infrastructure supporting it. Once you leave the tourist hotspots and the jaw-dropping natural landscapes you realize that for almost 20 years, hardly anything was done.
Additionally, whether it’s just good ol’ Balkan corruption or trying to appease the fools in Brussels, they have taken considerable action to raise taxes, create more regulations and restrictions. The research and development of their own Central Bank Digital Currency is evidence of this.
Perhaps the largest disappointment was the tourist tax and the service we experienced. Despite tourism being a large money maker, there was a vibe of being sick and tired of having tourists around.
Montenegro may still be great for some looking for a mellow slow pace life for retirement, a European wishing to reduce their taxes or someone who wants a Plan B from out of war conflicts. It’s definitely a great place to view on a travel trip–hands down. Although, if you read beyond what the travel blogs say–it’s still a volatile place on many fronts, its partly run by the mafia, costs & taxes are going up, it’s in a precarious position geographically and there is little reason to believe they’ll be any turn around, stimulation or economic boom here.
I’m back in the Western hemisphere now and I’m sure I will return. However, I no longer believe the company formation route is worth it. It will be interesting to see which path this country will take, but functionally it won’t be an independent path.
Thank you for reading I hope you enjoyed it! Now:
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