In 1999, the Law on Non-governmental Organizations introduced the concept of CSOs, which includes two organizational forms: associations and foundations. In spring 2006, there were 3,454 NGOs registered in Montenegro, out of which there were 3,344 associations and 110 foundations. The Law regulates the procedure of founding, registration, and all aspect of the operation of organizations. CSOs may pursue an undetermined set of private or public interests, but the registration, establishment and functioning of the following forms of non‐governmental, not‐for‐profit organizations are not covered by the law and are provided for by separate regulations: political organizations, religious communities, trades unions, sports organizations, business associations, and any organization and foundation whose founder is the State. Association can be registered by a minimum of five individuals. A foundation is defined as a not‐for‐profit organization without members, established by domestic or foreign persons, and formed to manage certain property for the accomplishment of public benefit goals. A foundation may be founded by at least one person. The registration procedure is simple, taking no more than 10 days from submission of the articles of foundation or association, bylaws and accompanying application form. Under a separate law CSOs are forbidden to finance financial political parties, but a point of uncertainty exists in the Law in that it does not address the extent to which CSOs may otherwise engage in political activities. In practice, very few CSOs have to date engaged directly in lobbying campaigns for election candidates or political parties.
The Law has been amended in November 2007 to allow CSOs to be exempt from paying business tax on the first 4,000 EUR of earned income (not profit).
In March 2010, a working group for preparing analysis on laws related to work of CSOs was established. This group is tasked to prepare detailed analysis on legislation in force pertaining NGO activities. After that, working group will provide concrete suggestions for changes and supplements of these laws such as: Law on NGOs, Income tax laws, Law on lottery games. These proposals should and will go along with relevant international legislation, already prepared by international expert. The working group is consisted of representatives of Ministry of finance, Ministry of economy, Ministry of interior affaires and public administration, Head of Government Office for cooperation with CSOs, and representative of Coalition of NGOs By cooperation towards the goal.