Montenegrin businesses and investors have access to 61 incentive measures for investments this year, including 32 non-financial supports and 29 financial aids.
The government has consolidated these measures into the 2024 Incentives Register, which provides a comprehensive overview of grants, subsidies, tax exemptions, customs and excise reliefs, free trade agreements and more, across various sectors such as manufacturing, services, agribusiness, agriculture and fisheries, energy, tourism, information technology, science and hybrid technologies.
This information is detailed in the Register, recently published by the Ministry of Economic Development. The Register serves as a centralized database compiling all monetary and non-monetary supports offered by state institutions to both domestic and foreign investors.
Key benefits of the Register include reduced time and costs for researching, identifying, and applying for incentives, increased awareness of available offers, attraction of investors, enhanced transparency, and better access for entrepreneurs, artisans, and micro, small and medium-sized enterprises (MSMEs).
It is noted that the Register does not include local-level incentives, as these are determined and implemented by municipalities. It also excludes incentives offered by non-governmental institutions and donors, as well as lists of favorable loans and grants from the European Union, the European Investment Bank, the Development Bank, and the United Nations Development Program.
€8.8 million for energy efficiency
The government will, through this database, more easily identify tax incentives for private investments and assess the profitability and benefits of these measures through cost-benefit analyses. The Register will also assist in comparing various incentives and their impacts on social policies and enhance coordination among those who create economic policies.
- Newly established companies that actively operate in economically underdeveloped municipalities are entitled to an eight-year exemption from profit tax; the VAT Law provides an exemption from VAT for the supply of goods and services for the construction and equipment of hospitality facilities rated five stars and above; taxpayers are allowed to reschedule tax liabilities; services of preschool education, training, and education for children, youth, and adults are exempt from VAT – these are some of the incentives offered by the Ministry of Finance.
The Register includes the Craft Promotion and Development Program implemented by the Ministry of Economic Development, which reimburses artisans for part of the costs of purchasing equipment and tools. This department also offers incentives for small investments, including grants for purchasing production equipment, new parts, and specialized tools.
Among the incentives provided by the Ministry of Energy, headed by Saša Mujović, is the Household Energy Efficiency Incentive Program, which offers subsidies to support households in upgrading facades, heating systems and windows. The government has allocated €8.8 million for this measure, with special attention to the northern region due to pollution and underdevelopment, particularly the Municipality of Pljevlja.
The Ministry of Agriculture offers subsidies for the development of agriculture and rural areas, providing Montenegrin farmers with direct payments or investment support from the agrobudget, covering both plant and livestock production.
Startups exempt from employer contributions
- Startups and spin-offs are exempt from paying employer contributions for their employees, including those employed in research institutions, those engaged in innovation activities, and individuals performing innovative activities for foreign entities (freelancers); companies registered in the Innovation Activities Register, companies that invest in other innovation activities, and enterprises that provide innovation infrastructure are eligible for profit tax exemptions; VAT is charged and paid at a reduced rate of 7% on the turnover of products, services, and the import of products for textbooks and teaching materials – according to the measures offered by the Ministry of Education.
On the other hand, the state Eco-Fund offers subsidies to businesses and the public sector for the purchase of charging stations for electric and hybrid vehicles, as well as for the purchase of new “M1” category cars that use exclusively electric or hybrid drives. Additionally, they provide incentives for those replacing electric appliances in households and companies with more energy-efficient ones.
Among the offerings of the Innovation Fund, there is a grant program for MSMEs working on projects aimed at developing new products, services, and technologies, as well as incentives for those who have patented their inventions domestically or internationally this year. The Fund also offers public calls for support for intensive training, courses, and advancement programs for students, young researchers, and professionals in areas of smart specialization.
The Ministry of Economy, in collaboration with other ministries, institutions, funds, and the World Bank Group, will annually update the Register to further stimulate investments in Montenegro.
Attracting investors together
The creation of the Register is recognized through the regional investment reform agenda, which is implemented within the framework of the multi-year action plan for the regional economic area in the Western Balkans.
- The goal of the regional reform agenda is to enhance the attractiveness of the Western Balkans region for both foreign and regional investors, thereby enabling greater investment inflows and achieving a higher degree of entrepreneurial activity, trade, and job creation. Since 2021, this activity has been incorporated as part of the common regional market framework (CRM 2021-2024) – the document states.
