A preduzetnik is Montenegro’s sole proprietor structure. It is commonly used by freelancers, consultants, and small service providers who want a fast and relatively simple way to operate a business.

For many foreigners, it’s an attractive starting point because:

• It’s quick to establish

• The structure is simple

• It works well for solo, low-risk activities

• It’s often suitable for testing the market before committing to a larger structure

However, the preduzetnik model is not designed for scale. Once the business grows beyond a certain point, the same simplicity that made it attractive can become a constraint.

There is no single income number that automatically forces a switch, but in practice, founders usually reach a tipping point when one or more of the following apply:

Common growth pressure points

• You want to add a business partner or investor

• You need clearer ownership and governance

• You plan to hire employees or expand operations

• Your contracts are increasing in size and complexity

• You want better credibility with banks, payment providers, or corporate clients

• You’re uncomfortable with unlimited personal liability

VAT is often the wake-up call

In Montenegro, VAT registration becomes mandatory once turnover exceeds EUR 30,000 within a 12-month period.
Once VAT enters the picture, reporting obligations increase, cash-flow management becomes more complex, and many founders find that a D.O.O. structure offers cleaner long-term compliance.

A D.O.O. (Društvo sa ograničenom odgovornošću) is Montenegro’s standard limited liability company. It is a separate legal entity, meaning the company—not you personally—is generally responsible for business obligations, provided it is managed correctly.

Key characteristics of a D.O.O.

• Limited liability protection

• Clear ownership through shares

• Suitable for partnerships and investment

• More scalable for hiring, contracts, and expansion

Share capital

Montenegro allows D.O.O. formation with minimal share capital (commonly EUR 1), making it accessible even for small but growing businesses.

1. Liability separation

With a preduzetnik, business risk is personal risk. A D.O.O. creates a legal buffer that is especially important once revenues, contracts, or operational exposure increase.

2. Partnership and investment readiness

If you plan to:

• Bring in a co-founder

• Add a silent partner

• Structure equity properly

A D.O.O. is almost always the correct framework.

3. Banking and operational credibility

Banks, payment processors, landlords, and larger clients often prefer—or outright require—a corporate structure. A D.O.O. signals long-term intent and operational seriousness.

Corporate income tax (D.O.O.)

Montenegro applies progressive corporate income tax rates, commonly structured as:

• 9% on profits up to EUR 100,000

• 12% on profits between EUR 100,000 and EUR 1,500,000

• 15% on profits above EUR 1,500,000

VAT considerations

• Mandatory VAT registration at EUR 30,000 turnover

• Voluntary registration is possible earlier

• Once registered, VAT deregistration is not immediate and usually requires a minimum commitment period

Bookkeeping requirements

Unlike many preduzetnik arrangements, a D.O.O. must maintain full bookkeeping and submit regular financial and tax filings. This is not optional and must be factored into your operating costs.

Many founders assume the process is simple:

1. Close preduzetnik

2. Open D.O.O.

3. Continue business as usual

In reality, businesses are ecosystems. A rushed switch can disrupt:

• Banking and payment processing

• Active contracts

• Invoicing and VAT compliance

• Leases and registered addresses

• Employee arrangements

• Immigration or work authorization timelines

This is where avoidable downtime and compliance risk appear.

In most real-world cases, the cleanest solution is to operate both structures in parallel for a short period, then transition deliberately.

Recommended transition flow

Step 1: Register the D.O.O.
Establish the company while keeping the preduzetnik active.

Step 2: Open corporate bank accounts and stabilize payments
Ensure incoming and outgoing payments align with the correct entity.

Step 3: Confirm address and lease compliance
Business registration must align with property use permissions.

Step 4: Migrate contracts and invoicing
New contracts are typically signed under the D.O.O., while existing ones are transitioned carefully where appropriate.

Step 5: Close or wind down the preduzetnik
Only once the D.O.O. is fully operational and compliant.

This approach minimizes risk, preserves cash flow, and keeps clients and authorities aligned.

If you plan to live and work in Montenegro through your business, company setup and immigration planning should happen together.

Foreign founders typically require:

• Temporary residence approval

• Work authorization linked to their role in the company

The correct pathway depends on nationality, role (director vs employee), and company structure. Poor sequencing is one of the most common causes of delays.

Preduzetnik works best when:

• You operate solo

• Risk exposure is low

• Growth is limited

• You want simplicity above all else

D.O.O. works best when:

• Revenue and contracts are growing

• You want partners or employees

• You need stronger legal and financial structure

• You are building a long-term business presence in Montenegro

Moving from a preduzetnik to a D.O.O. in Montenegro is more than a legal formality—it’s a structural upgrade.

Key takeaways:

• D.O.O.s are scalable and investor-ready

• VAT thresholds often trigger the transition

• Corporate tax is progressive and predictable

• A staged transition is usually safer than a hard switch

When done correctly, the move positions your business for long-term stability, credibility, and growth.

If you’re approaching the limits of your preduzetnik—or want to structure your move to a D.O.O. correctly from day one—proper planning saves time, money, and stress.

Relocation Montenegro provides end-to-end support for:

• D.O.O. formation

• VAT and bookkeeping readiness

• Address and compliance strategy

• Residency and work authorization planning

A well-planned transition isn’t just safer—it sets the foundation for sustainable growth in Montenegro.