Why Foreign Business Owners Are Leaving Montenegro for Serbia

In recent months, Relocation Serbia has observed a clear and growing trend: foreign nationals who initially obtained residency in Montenegro through business formation are increasingly choosing to close those businesses and relocate their operations to Serbia.

This shift is not accidental. It is largely driven by new administrative rules introduced by Montenegrin authorities in late 2025, which significantly increase operational and employment obligations exclusively for foreign-owned businesses. While these measures are not formally enacted as law, they are already being enforced in practice—creating real consequences for startups, entrepreneurs, and small business owners.

This article explains what changed in Montenegro, why these changes matter, and why Serbia is increasingly viewed as the more flexible, startup-friendly alternative for foreign investors and entrepreneurs.

New Employment Requirements for Majority Foreign Owners

Under the newly enforced administrative guidelines, foreign nationals who own more than 51% of a Montenegrin company must now meet stricter operational thresholds in order to maintain residency through business ownership.

The most impactful requirement is the following:

• A company with a foreign majority owner must employ at least three full-time employees

• At least one employee must be a Montenegrin citizen

• The business must demonstrate active commercial operations, not merely exist on paper

For early-stage startups, solopreneurs, and location-independent businesses, this requirement is often financially unrealistic.

Forced Hiring Before Business Viability

Startups typically follow a predictable path:

1. Validate the business idea

2. Generate initial revenue

3. Stabilize cash flow

4. Hire employees

Montenegro’s new approach reverses this logic by forcing founders to hire multiple employees before the business is financially stable. This includes:

• Salaries

• Social security contributions

• Payroll taxes

• Ongoing compliance costs

For many startups, this is not sustainable.

Several clients have described the rules as business-hostile, particularly when applied exclusively to foreign founders.

While Montenegrin authorities have not explicitly linked these changes to EU accession, the alignment is difficult to ignore.

Montenegro has been actively working to:

• Harmonize labor and immigration standards with EU norms

• Tighten controls on “residency-only” companies

• Demonstrate labor market protection

These objectives are consistent with broader EU policy trends, where foreign-owned businesses are often subject to heavier regulatory scrutiny.

No Mandatory Hiring for Startup Residency

In contrast, Serbia does not require foreign founders to hire employees in order to obtain or renew residency through business ownership.

This makes Serbia particularly attractive for:

• Startups

• Consultants

• Digital businesses

• International service providers

• Holding companies

• Foreign companies opening Serbian branches

A founder may legally:

• Open a business

• Operate alone

• Pay taxes and contributions

• Maintain residency without artificial employment requirements

Entrepreneur (Preduzetnik)

• Flat-rate taxation available

• Lower administrative burden

• Increasing scrutiny for work-permit renewals

• Requires proof of professional qualifications

LLC (DOO)

• No requirement to prove professional qualifications

• Clear separation between owner and company

• Standard bookkeeping required

• Increasingly preferred for residency stability

Due to tightening enforcement around entrepreneur work permits, Relocation Serbia is now transitioning more clients directly into LLC (DOO) structures, as they offer greater long-term predictability.

Serbia Residency Trends

• Business-based residency: typically 1 year

• Property-based residency: often 3 years

Clients who purchase real estate in Serbia consistently receive longer initial residency approvals, while business-based residency remains renewable annually.

Montenegro’s stated objectives appear to be:

• Preventing fictitious companies

• Ensuring real economic activity

• Protecting the domestic labor market

• Aligning with EU regulatory expectations

While these goals are understandable, the execution disproportionately affects startups, rather than large foreign investors.

Serbia offers:

• Greater regulatory flexibility

• Fewer artificial barriers to entry

• Startup-friendly tax structures

• Non-EU autonomy

• SEPA participation for easier international payments

Importantly, Serbia remains outside the European Union, which allows it to maintain independent economic and immigration policies without full alignment to EU bureaucratic frameworks.

Serbia’s inclusion in SEPA (Single Euro Payments Area) significantly improves:

• International transfers

• Banking efficiency

• Cross-border business operations

This benefits globally operating businesses without requiring EU membership.

Montenegro remains an attractive lifestyle destination, particularly for coastal living. However, for founders and entrepreneurs seeking:

• Operational flexibility

• Lower startup pressure

• Predictable residency pathways

• Reduced regulatory risk

Serbia increasingly emerges as the superior option.

For foreign entrepreneurs deciding between Montenegro and Serbia, the regulatory landscape has shifted decisively.

Montenegro’s new enforcement approach introduces significant risk for startups, while Serbia continues to offer a pragmatic, flexible, and business-friendly environment for foreign founders.

If you are considering relocating, restructuring, or setting up a business in the Balkans, Serbia deserves serious consideration.

If you would like professional guidance on Serbian residency, business setup, or restructuring from Montenegro to Serbia, we invite you to book a paid consultation with Relocation Serbia.

Our team specializes in streamlined, compliant, and strategic solutions tailored to foreign entrepreneurs.

Your Move. Our Mission.