The Government of Montenegro has proposed amendments to the Law on Foreigners that introduce significantly stricter requirements for foreign entrepreneurs and executives. The draft, adopted on July 24, 2025 and currently in parliamentary procedure, stipulates that foreign company founders or managing directors must employ at least three full-time workers — one of whom must be a Montenegrin citizen — in order to qualify for an extension of temporary residence.
This proposal comes in addition to the existing rule under which temporary residence holders lose their permit if they spend more than 30 days outside Montenegro within a single year, unless they pre-notify the police of “justified reasons,” which may allow an absence of up to 90 days.
According to the Government, the goal is to prevent the establishment of “paper companies” created solely for the purpose of obtaining residence permits. However, the German-Montenegrin Business Club warns that the chosen approach is not proportionate and diverges significantly from European standards.
The Club states that no EU member state requires a mandatory number of employees as a precondition for granting or extending residence to foreign company founders. Germany, for example, bases its permits for self-employment on economic interest, local benefit, and secured financing — without mandating a minimum number of employees. Austria follows a similar model through its Red-White-Red Card system, which evaluates investment levels, project sustainability, and macroeconomic impact.
While such systems filter out non-viable projects, they still allow valuable and sustainable businesses to operate with only one or two employees. In contrast, the Montenegrin model is described as rigid and disconnected from the realities of modern business.
The Club also highlights that the 30-day annual absence limit is an “extreme exception in Europe,” noting that Germany only revokes residence after six months spent outside the country, while Schengen rules allow up to 90 days of travel within any 180-day period for business purposes. They further warn that the current exception allowing up to 90 days of absence lacks clear criteria, as the law does not define what qualifies as a “justified reason,” nor does it obligate the police to process requests within a predictable timeframe. This, they argue, creates legal uncertainty for internationally active companies whose executives frequently travel for meetings, negotiations, and project management.
The German-Montenegrin Business Club believes that combining the three-employee requirement with the strict absence limitation sends the wrong signal to foreign investors — especially at a moment when Montenegro emphasizes its European trajectory and the importance of attracting new capital. With foreign direct investment accounting for roughly 8% of the country’s GDP, the Club warns that rigid measures could damage the investment climate and discourage entrepreneurs and professionals who bring capital, expertise, and international networks.
As an alternative, the Club proposes replacing the fixed employment quota with objective indicators of actual economic activity, such as capital investment, revenue, or documented business performance. They also recommend modernizing absence rules in line with European practice — allowing at least 90 days without prior notification and up to six months through a simple, transparent procedure.
The Club concludes by emphasizing that it fully supports strengthening the integrity of the residence system, but insists that solutions must be European, proportionate, and focused on preventing abuse rather than deterring investment. Montenegro, they stress, should remain open to entrepreneurs and professionals who are essential to its development.
