Stricter conditions for foreigners from next year

The right to obtain a work and temporary residence permit is granted to a foreigner who owns at least half of the real estate (1/2 in the real estate list) that is worth more than 150.000 euros (the amount of the tax base) according to a decision of the municipal tax office, or who is the owner and co-owner of a share of more than 51 percent in a company that paid at least 5.000 euros in taxes and contributions in the previous year based on a certificate from the State Tax Administration, which means that this refers to duties paid to this state body.

This was stated to "Vijesti" by the Ministry of Internal Affairs in response to questions regarding the implementation of the new law on foreigners, which has been in effect since the beginning of this year.

Most of the stricter conditions for obtaining permits will begin to apply from next year, when the deadline for the Ministry of Interior to draft bylaws has been extended, i.e. from the 2026 tax return, while foreigners who received a residence permit based on real estate ownership under the old law will not have to prove the value of the property for its extension.

In recent days, several associations of foreigners and business associations have stated that certain provisions of the law are unclear and that they need to be specified in bylaws, which they also emphasized at a roundtable at the Chamber of Commerce regarding the implementation of the new provisions of the law. Some of these ambiguities related to how the value of real estate is assessed, whether the owner should be a natural person who requests a permit or can be a legal entity owned by him, which taxes the minimum amount of 5.000 euros applies to (state, local, ...), who collects them, or how to determine whether this amount has been met ... They also called for the adoption of bylaws as soon as possible.

The Ministry of Interior told "Vijesti" that the Law on Foreigners stipulates that by-laws for the implementation of this law will be adopted, or harmonized with this law, within 12 months from the date of entry into force of this law.

At a roundtable discussion at the Chamber of Commerce held two weeks ago, a representative of the Ministry of Interior Dragan Dasic He said that previously the established value of the property was not a condition, and that when exercising rights based on the company's operations, more than a thousand cases were discovered that these were inactive companies, that is, that they were used only for obtaining a residence permit and not for active business, which is why they decided to introduce the minimum paid amount.

When asked by "Vijesti" to explain how a temporary residence permit is obtained through ownership of real estate and what procedures the owner needs to complete and initiate, the Ministry of Interior stated that the owner of at least 1/2 of the real estate must be a natural person requesting a residence permit.

“A temporary residence permit for the purpose of using and disposing of the right to real estate owned by a foreigner in Montenegro may be issued to a foreigner who meets the requirements set out in Article 43 of this Law, and as proof of the justification of the request, a real estate certificate or other evidence in accordance with the law governing the real estate cadastre, confirming ownership of that real estate, as well as evidence of the value of the real estate issued by the local government authority competent for tax collection, in accordance with the law. This means that a temporary residence permit is issued to a natural person - a foreigner who owns real estate in Montenegro. The permit referred to in paragraph 1 of this Article may be issued to a foreigner who is a co-owner of at least 1/2 of the real estate. Real estate, within the meaning of paragraph 1 of this Article, is considered to be family houses, weekend houses, villas, apartments, catering facilities, residential and commercial buildings and business premises. Proof of the value of real estate is a decision on determining the tax on the sale of real estate issued by the local government authority competent for tax collection, the amount of the tax base of which is not less than 150.000 euros”, the Ministry of Interior stated.

They also pointed out that the submission of evidence of the value of real estate does not apply to citizens of European Union member states or their family members, regardless of whether those members are citizens of EU member states, as well as citizens of the Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Swiss Confederation.

Dašić said at the roundtable that foreigners who have already acquired the right to reside based on ownership of real estate under the old law continue to extend their permits under the previous rules, without additional proof of the value of that real estate.

When asked which taxes the condition for obtaining residence based on the company's business operations applies to, the Ministry of Interior said that the Tax Administration issues a certificate to that effect.

"Temporary residence and work permits for entrepreneurs and executive directors in companies in which they are the sole owners or owners of more than 51% of the capital may be extended as long as they meet the requirements of Article 43 of this Law and provide proof of fulfilled obligations based on taxes and contributions in the minimum amount of 5.000 euros annually. Proof of fulfilled obligations based on taxes and contributions shall be obtained by the foreigner from the Tax Administration," the Ministry of Internal Affairs stated.

Dašić said at the roundtable that abuses have been recognized in exercising rights on this basis, which is why they decided to introduce additional control mechanisms, including the obligation to prove settled tax obligations when extending the license, the full implementation of which will be implemented from next year.

There is no limit to how many family members can be brought into a property or business.

In July last year, when the amendment to the Law on Foreigners was being prepared, there were 95 foreigners living in Montenegro, which is about 15 percent of the total population. Of that number, 30 had permanent residence permits, mostly people from the former Yugoslavia, and 65 had temporary residence permits.

The Ministry of Interior stated at the time that around 16 had received temporary residence based on ownership of real estate or companies, and that they then brought several members of their family who had received residence based on family reunification.

When asked by "Vijesti" how many family members can now obtain residence based on one real estate, the Ministry of Internal Affairs said that the law does not prescribe the number of family members who can exercise the right to a temporary residence permit for the purpose of family reunification with a foreigner who has been issued a temporary residence permit for the purpose of using and disposing of the right to real estate.

"We note that a temporary residence permit for the purpose of family reunification is issued to a foreigner who is, among other things, a close family member of a foreigner who has been granted temporary residence in Montenegro or a partner in a civil partnership of the same sex of a foreigner who has been granted temporary residence in Montenegro. A close family member is considered to be: spouses; their minor children born in marriage or out of wedlock; children of one of the spouses and adopted children, up to the age of 18; parents or adoptive parents of minor children," the Ministry of Interior said.

Also, the law does not prescribe how many family members of a foreign owner or director of a company established in Montenegro can obtain the right to reside based on the activities of one company.

Number of residence permits down by 0,8 percent in two months

When asked by "Vijesti" whether the number of residence permits issued to foreigners has increased or decreased since the start of the new law, data from the Ministry of Interior indicates that the number of foreigners with residence permits based on ownership of real estate has increased slightly, from 5.432 on December 29 to 5.516 on February 23, when the Ministry of Interior continued its cross-section.

The total number of foreigners with temporary residence and work permits for entrepreneurs and executive directors in companies on December 29th was 12.211, while on February 23rd that number slightly decreased to 11.992.

In other words, in two months the total number of foreigners who received a permit on this basis has slightly decreased from 17.643 to 17.508 or by 0,8 percent.

Natalija Gerasimova, CEO of Navus, a company that also deals with the registration of foreign companies, repeatedly announced during January that the new law would significantly reduce the number of foreigners living in Montenegro, and that 70 percent of her clients intend to leave Montenegro due to the stricter conditions.