Will Montenegro’s Citizenship Programme Draw More Demand if EU Membership talks progress?

Is EU Accession actually on the cards for Montenegro? That is what would make the difference in terms of the demand it draws from foreign investors. We explore where EU Membership talks are and what it would mean for Montenegro Citizenship by Investment investors in the long run.

Firstly, what is the Montenegrin Citizenship programme?

It offers investors keen to obtain a second citizenship through two options:

  • A Government Approved Property Investment option in more rural locations valued at EUR 250,000 (excluding VAT)
  • A Government Approved Property Investment in more affluent regions in the coastal south or Podgorica valued at EUR 450,000 (excluding VAT)

Both investor routes also require a government donation of EUR 100,000. With a fast processing time of 3+ months, it is one of the fastest routes to a second citizenship but has drawn limited interest so far. Whilst Montenegro offers a wealth of lifestyle, tax and global mobility benefits to investors who wish to obtain economic citizenship it lacks one vital factor — EU Membership. Added to that it doesn’t have the highest ranking Passport on Global Indices such as the Henley Partner one who ranks the Montenegro Passport 45th.

Some key benefits nonetheless include the fact it has access visa-free (post-pandemic limitations on travel) to the Schengen Zone as well as other key locations such as Russia, the UAE, Turkey and Hong Kong — up to a total of 124 countries. Importantly it also offers low tax rates for individuals who wish to relocate to Montenegro starting from 9%.

Yet regardless of the various benefits — to date Residency by Investment / Golden Visa programmes with a similar price tag but which don’t result in an imminent passport — are still outperforming Montenegro? Will accession to the EU boost demand for the Montenegrin CBI?

How do you obtain Montenegrin Citizenship?

Once you invest in their government development fund aimed to channel FDI to underdeveloped regions of Montenegro you can invest in one of the government approved projects. The government has purposefully limited the properties / projects available to economic citizenship investors — perhaps to avoid undue inflation in property prices as has been seen in other Golden Visa jurisdictions — but it does limit options (and impact the programme’s attractiveness) for investors.

On the condition that you are not an EU Citizen, you have a clean criminal record, no sanctions and a clear source of funds for your investment you would be eligible to apply with your dependents. Dependents include children up to the age of 26 and parents over 65. It is important to note that there are only 3 registered intermediary agents approved by the Montenegrin government for this CBI programme which is due to end by 31 December 2021.

Once you have selected your investment property from the approved list, you must ensure that you hold your investment for at least 5 years (hopefully making gains on sale) to qualify for the Montenegro Passport. Whilst Covid19 has put a damper on international travel and tourism, the south — at a higher price tag — has been luring affluent business and leisure travelers and investors in recent years and is expected to continue to appreciate in real estate value over the coming years.

Is EU Accession actually on the cards for Montenegro?

The government in Montenegro recently changed — December 2020 — after the defeat of the DPS — Democratic Party of Socialists — placing Zdravko Krivokapic as the new Prime Minister. The DPS has held power for almost 30 years therefore Krivokapic brings winds of change with him — change, even positive change can though cause uncertainty.

Criticism around the new Prime Minister involved claims that he is pro China and Pro Russia hence would pull away from the West. Yet, Krivokapic has reiterated his commitment to Europe;

“This information that we are pro-Serbian or pro-Russian or that we will stop negotiations. That we are anti-NATO. It is not true, and we will prove that very soon. We are committed to all our obligations and everything that we have signed in the agreement with NATO…..”

“…The pro-West, pro-EU orientation of the new government will be very clearly defined. There will be no doubt about it. Our pro-Western orientation is unquestionable.”

Djordje Radulovic the new Foreign Minister’s first trip abroad was to Berlin, reaffirming Montenegro’s commitment to the EU. It is hoped that Germany will bolster support for the integration of Montenegro into the European Union’s fold. France on the other hand is a less likely cheerleader for the Balkan state, in fact a recent study stated almost 2/3 of French citizens were not supportive of the Balkan countries accession (including Montenegro) to the EU.

The people of Montenegro too have demonstrated their strong willingness (77.6%) to become part of the EU as highlighted by a recent poll by DeFacto Agency on behalf of the Delegation of the EU to Montenegro. by the DeFacto Agency on behalf of the Delegation of the European Union to Montenegro. It is hoped that in the next 4 years Montenegro will obtain EU Membership. See below a snapshot of their route to EU Membership so far.

What will that mean for Economic Citizenship investors

Whilst the Citizenship by Investment Programme in Montenegro is not one of the most popular due to internal inefficiencies and the competition that other arguable more favourable jurisdictions offer — it could be worth its weight in gold if it does achieve its EU aspirations.

Having one of the faster (3–6 month) investment migration processing timeframes and resulting in EU citizenship (albeit in 4 years post EU Membership) — it could well be a cost-effective solution for an investor with a long-term view and an appetitive for some level of risk-taking. Compared to other competitors such as Greece or Spain or Portugal — who all provide residency (not citizenship) solutions and their respective routes to citizenship, Montenegro could deliver some unique advantages.

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