What is a LLC – Limited liability company?

Establishing a Limited Liability Company (LLC) is one of the most common forms of organizing a company in Montenegro. This type of business offers many advantages, with the most important of which is limited liability of the owners, which means that the owners are responsible for the company's obligations only up to the amount of the inital capital.

In this blog, we will discuss the key aspects of establishing and operating a DOO to help you make informed decisions and gain a better understanding of this type of business.

NUMBER OF OWNERS AND INITIAL CAPITAL

• LLC can have 1 or more owners, with a maximum number of owners not exceeding 30.
• The initial capital can be a minimum of 1 euro, but owners have the option to enter a higher amount if they wish.
• The initial capital can be paid when the company is established or can be increased later during the company's operational period.
• It is important to note that the initial capital must be registered in the Central Register of Business Entities.

EXECUTIVE DIRECTOR

• LLC must have an Executive Director.
• One person must be declared the Executive Director, who is legally responsible for the company’s operations and authorized to represent the company within the powers defined in the company's documents.
• Contributions to the director's salary are calculated based on the agreed salary. The amount of contributions on the salary of the Executive Director depends on the salary stated in the Employment Contract. The contributions on the Executive Director's salary are calculated at the same rates as for any other employee.

LIMITED LIABILITY OF OWNERS

• One of the key advantages of LLC is the limited liability of the owners.
• The owners are responsible for the company's obligations up to the amount of their initial capital contribution.
• In case the company has debts, the entities which the company owes by the company can't collect from the founders' personal assets, only from the company's assets (if any).

ACTIVITIES OF LLC

• In addition to its main activity, a LLC can can also perform all secondary activities that are specified in the Company's Statute.
• The main activity and secondary activities are defined in the Statute.
• Only the main activity can be seen in the Company Establishment Decision, while secondary activities are exclusively listed in the Statute.

PROFIT AND CORPORATE TAX

• LLC generates profit and pays corporate tax.
• The corporate tax return must be submitted, and the tax obligation must be paid. The deadline for submitting the tax return for 2024 is March 31, 2025.

PAYMENT OF PROFITS TO THE OWNERS AND DIVIDEND TAX

• For the owner to transfer profit to their bank account, they must pay tax and surtax on the dividend.
• The owner cannot use the company’s profit for personal needs because it is the company’s profit, not their personal profit. To use the company's profit for personal purposes (to withdraw profit or transfer it to a personal account), they must first pay dividend tax, which amounts to 15% of the gross profit and surtax on dividend tax (on the tax base 10% - 15%, depending on the municipality).

The total tax + surtax on dividends amounts to 18%-20% of the net amount, depending on the municipality where the company is registered.

For example, to withdraw 1,000.00 euros from the company’s bank account as profit for the owner, you must pay between 180.00 and 200.00 euros.

Establishing LLC and managing business operations can be a complex process, but with professional assistance, it can be simpler.

Perfectum Agency can help you at every step—from preparing the documentation for company formation, registering in the Central Register of Business Entities, to advising on tax obligations and managing business records.

If you would like more information about our services, feel free to contact us. Our team will ensure that your business complies with legal regulations while maximizing efficiency.

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