How to Register a Sole Proprietorship (Preduzetnik) in Montenegro

Becoming a sole proprietor (locally called preduzetnik) in Montenegro is a popular path for freelancers, small service providers, and independent contractors who want full control over their work. It allows flexibility, lower startup costs, and simpler administration than forming a company, but you are personally responsible for the business’s liabilities.

In Montenegro, the process is fairly straightforward, though there are legal and bureaucratic steps—and obligations like paying the right taxes and social contributions. Challenges include understanding which forms to use, registering correctly with multiple authorities, and ensuring you comply with tax thresholds and contribution obligations.

The main benefits are independence, simpler bookkeeping, and relatively low administrative and financial barriers.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Montenegro?

In Montenegro, a sole proprietorship is officially called “preduzetnik”. It may also be referred to as a sole trader, self-employed worker, or independent contractor. All these refer to a business model where one person operates a business without forming a separate legal entity.

How does a sole proprietorship (preduzetnik) work in Montenegro?

Preduzetnik vs. other business structures in Montenegro

While many freelancers and entrepreneurs choose to operate as preduzetnik, there is also the option of forming a limited liability company (Društvo sa ograničenom odgovornošću, or DOO). Here is how a sole proprietorship compares to this alternative business structure.

Step-by-step guide: How to register a sole proprietorship in Montenegro

Step 1: Check your eligibility

To register as a preduzetnik in Montenegro, you must be at least 18 years old and legally capable of entering into business agreements. Both Montenegrin citizens and foreign nationals are eligible, but non-citizens usually need to hold a valid residence permit and provide a registered business address in Montenegro.

Step 2: Choose your business name

You can operate under your own name or register a trade name. If it differs from your personal name, you must register the trade name with CRPS. Use the official CRPS portal to check name availability and complete registration.

Step 3: Gather required documents

To register as a preduzetnik in Montenegro, you will need:

• Valid personal identification (ID card or passport)
• Residence permit if you are a foreign national
• Completed registration form from the CRPS
• Proof of payment for the registration and publishing fees
• Proof of a business address in Montenegro

Step 4: Register with CRPS

File your registration with the CRPS. Submit your application and all required documents. The process can often be done electronically via the CRPS portal.

Step 5: Pay registration fees and contributions

To complete the registration, you must pay the required fees. The registration fee is approximately €10, with an additional fee of around €12 for publishing the business name in the Official Gazette. Once your business is active, you will also need to make ongoing social security and tax contributions, which depend on your income level and location.

Step 6: Complete post-registration obligations

After registration, you will receive a certificate from CRPS. You may also need to obtain a business stamp and must open a bank account in Montenegro for your transactions. It is also mandatory to register with the tax authority to obtain a Tax Identification Number (TIN). If your turnover exceeds the threshold, you must register for VAT. Finally, you are required to file annual tax returns and keep proper accounting records, including invoices and receipts.

Financial and tax obligations for sole proprietors in Montenegro

You are responsible for:

• Income tax: Sole proprietors (preduzetnik) in Montenegro pay personal income tax on net business income. Depending on your earnings, tax is charged progressively from 0% up to 15%. You must submit an annual personal income tax return to the Tax Administration of Montenegro, declaring your total income and expenses. The return is usually filed by the end of April for the previous tax year, and tax is settled based on the filed return.
• VAT (PDV): The standard VAT rate is 21%, with reduced rates of 7% and 0% for specific goods and services. VAT registration is mandatory if your annual turnover exceeds the state threshold. VAT returns are typically filed quarterly with the Tax and Customs Administration.
• Social security contributions: Sole proprietors must register with the social insurance system and contribute towards pension, disability, health, and unemployment funds. Contributions are calculated as a percentage of declared income, and both minimum and maximum contribution bases apply. Payments are made monthly to the Tax and Customs Administration.
• Record-keeping: You are required to maintain proper accounting records, including all invoices, receipts, and expense documentation. Records must be stored for at least five years and must be available for inspection by the tax authorities.
• Invoicing: Invoices must include your business details, tax identification number (PIB), client information, invoice number, date, description of goods or services, and any applicable VAT. All invoices should be sequentially numbered and archived in line with Montenegrin accounting rules.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start a preduzetnik in Montenegro?
There is no minimum capital requirement. You can begin operations without needing to deposit any startup funds.

Do preduzetniks need to register for VAT?
VAT registration becomes mandatory if your business turnover exceeds the state threshold within a 12-month period. If you earn less than that, registration is optional, but some businesses choose to register voluntarily for credibility and tax reasons.

How much are the standard monthly or annual contributions?
Social security contributions in Montenegro depend on your declared income and the municipality where you are registered. As a preduzetnik, you must pay into pension and disability insurance, health insurance, and unemployment insurance through the Tax and Customs Administration. These contributions are calculated as a percentage of income, with minimum and maximum bases set by law, and are generally paid on a monthly basis.

Can a preduzetnik hire employees?
es. As a sole proprietor, you can hire employees, but you must register them with the tax authority, withhold income tax on their wages, and pay the appropriate social contributions on their behalf.

How long does it take to register as a preduzetnik in Montenegro?
If all documents are correct, registration usually takes about 4–5 working days.

Can foreign nationals register as preduzetnik in Montenegro?
Yes. Foreign nationals can register as sole proprietors, but they generally need to hold a valid residence permit and provide proof of a business address in Montenegro.

Do preduzetniks need a separate business bank account?
Although not always legally mandatory, opening a dedicated business bank account is strongly recommended. It simplifies accounting, is often required by authorities, and makes compliance with tax obligations more straightforward.

What happens if I stop working as a preduzetnik?
You must officially deregister your business with the CRPS, cancel your tax and VAT registration if applicable, and file final income tax and social contribution reports. This ensures you are no longer liable for ongoing obligations.

Are there any government incentives or reduced rates for new preduzetnik?
Montenegro offers tax incentives in certain underdeveloped municipalities, and small incomes under the annual exemption threshold are not taxed. This makes it easier for new entrepreneurs to get started.

Can I use Deel as a preduzetnik to get paid by international clients?
Yes. Deel enables preduzetniks and freelancers in Montenegro to receive international payments quickly, in multiple currencies, with transparent exchange rates.

Does Deel generate compliant invoices for preduzetniks?
Absolutely. Deel automatically generates invoices that comply with Montenegrin law, including VAT details where required, so you stay compliant without extra effort.

Can Deel help me with taxes as a sole proprietor in Montenegro?
Yes. Deel provides clear records of your earnings and downloadable tax reports, which can be shared with your accountant or submitted when filing tax returns.

Does Deel offer contracts for freelancers and preduzetniks?
Yes. Deel offers contract templates that are compliant with Montenegrin law, helping you work with clients professionally and securely.

Can I access benefits through Deel as a preduzetnik?
Yes. Deel gives independent contractors the option to access perks such as health insurance and retirement savings, benefits that are usually available only to traditional employees.