Incentive Measures for Innovative Activities in Montenegro: Rights, Obligations and Conditions

Innovation is the driving force of every modern economy, and Montenegro offers a range of incentive measures to encourage the development of new ideas, technologies, and business models.

If you are a natural or legal person with a vision and the desire to implement innovative projects, here are the key things you need to know.

WHO CAN BE AN INNOVATION ACTOR?

The right to incentive measures is granted to:

• Legal and natural persons – domestic and foreign,
• Innovation activity entities – organizations developing innovative products, services, and processes,
• Innovation infrastructure entities – incubators, accelerators, and other organizations supporting innovation,
• Investors – individuals and organizations investing in innovative projects,
• Other actors connected with innovation.

TYPES OF INNOVATION

Innovation can include different areas of business and society:

• Product and service innovations – new or improved market offerings,
• Business process innovations – more efficient ways of working and organizing,
• Technological and non-technological innovations – from new technologies to new methods and approaches,
• Innovations across sectors – private sector, public sector, and social innovations.

CONDITIONS FOR QUALIFYING FOR INCENTIVE MEASURES

For legal entities:

• Registration in the CRPS (Central Register of Business Entities),
• An innovative program or project worth at least 25,000€, with market novelty in Montenegro or abroad,
• Settled tax obligations,
• No bankruptcy or liquidation proceedings initiated,
• Cannot be founders/co-founders of scientific research institutions or entities that have already used these measures.

For natural persons:

• Registration in the CRPS,
• Settled tax obligations,
• Cannot be founders/co-founders of scientific research institutions or related entities that have already used incentives.

INCENTIVE MEASURES YOU CAN USE

Innovation entities that meet the requirements are entitled to:

• Tax incentives – reduction or exemption from personal income tax, corporate profit tax, and contributions,
• Fee reductions – more favorable terms for communal fees, property tax, and the use of state land,

The maximum amount of all reductions cannot exceed 300,000€ over a three-year period.

• Support for reinvestment of profits – exemption from corporate tax if profits are reinvested into innovative projects.

ACTIVITIES NOT COVERED BY INCENTIVES

Incentive measures are not granted for:

• Production and sale of weapons and military equipment,
• Activities that are illegal or harmful to health and the environment,
• Political parties,
• Production and trade of excise goods.

HOW TO BECOME A BENEFICIARY OF INCENTIVE MEASURES?

1. Prepare and submit an application to the Ministry with evidence of meeting the requirements.
2. The Ministry reviews the documentation.
3. A Commission makes a decision on granting beneficiary status.
4. Entities are entered into the Register of Innovation Activities.

The beneficiary status is granted for a period of up to 3 years.