Tax rates in Montenegro

Tax Rates

Consumption Taxes

Nature of the Tax: PDV (VAT)
Tax Rate: The standard rate is 21%
Reduced Tax Rate: Reduced PDV is 7% for certain products, including bread, milk, books, medicines, computers, public transport, hotel and other tourist accommodation.
Zero-rate PDV applies to products for export and the supply of gasoline for vessels in international traffic.
Exempt items include: banking services and financial services; health care and health services; services regarding social security; educational services; religious services, goods provided by religious institutions or involved in religious ritual; radio broadcasting services; insurance services; entertainment games and chance games services.
Import of protective equipment and medical supplies donations is exempt from VAT (COVID-19 related measure).
Other Consumption Taxes: Excise duty are levied on alcohol and alcoholic beverages, tobacco products (including liquid for electronic cigarettes), mineral oils, coffee and coffee products, mineralised water with sugar or aroma.

Find out more about Taxes and Accounting in Montenegro on GlobalTrade.net, the Directory for International Trade Service Providers.

Corporate Taxes

Company Tax

Tax Rate For Foreign Companies

Resident entities are taxed on their worldwide income. Non-resident companies are taxed on their Montenegrin-sourced income or income attributed to their Montenegrin permanent establishment.
A company is considered tax resident if it is incorporated in Montenegro or if it has the place of effective management in the country.

Capital Gains Taxation

Capital gains are included in taxable income and taxed at the general rate of 9%. Gains may be offset against capital losses occurring in the same tax period.

Main Allowable Deductions and Tax Credits

Deductions include: depreciation (for tangible and intangible assets with a useful life of at least one year and an individual acquisition value of at least EUR 300), business-related interest expenses, bad debts, certain charitable contributions (up to a limit of 3.5% of total revenue), salary costs, severance payments related to the retirement of employees, entertainment expenses (up to 1% of total revenue), taxes, duly documented start-up expenses, membership fees paid to chambers of commerce and other associations, etc.
Losses can be carried forward for five years, while the carryback of losses is not permitted.

Other Corporate Taxes

Other taxes include:

real property tax (at rates ranging from 0.25% to 1%)
transfer tax (payable on the acquisition of ownership rights over an immovable property at a rate of 3%)
social security contributions (8.3% divided as follows: pension 5.5%, health 2.3%, unemployment 0.5% - the maximum base for contributions being EUR 53,858 in 2021)
payroll tax (up to 15% of the salary)
environmental charges (i.e. dangerous waste, harmful substances, etc.).

Other Domestic Resources

Department of Public Revenues

Consult Doing Business website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

	Montenegro	Eastern Europe & Central Asia	United States	Germany
Number of Payments of Taxes per Year	18.0	13.9	10.6	9.0
Time Taken For Administrative Formalities (Hours)	300.0	226.2	175.0	218.0
Total Share of Taxes (% of Profit)	22.2	36.5	36.6	48.8

Source: Doing Business, Latest available data.

Individual Taxes

Tax Rate

Individuals income tax	Flat rate of 9%
Surtax on income tax (paid to the municipality)	13% (15% in Podgorica and Cetinje)

Allowable Deductions and Tax Credits: No deductions are provided for individuals.
An individual who generates revenue from secondary self-employment activities can deduct 30% of the realised revenue from those other activities.
Special Expatriate Tax Regime: Residents are taxed on their worldwide income, regardless of the source. Non-residents are taxed only on Montenegro-source income.
An individual is considered resident for tax purposes if he/she: spends at least 183 days in a tax year in the country; has a domicile in Montenegro, or has the centre of personal and economic activities in Montenegro.
A 9% withholding tax is levied on dividends and royalties paid to non-resident individuals.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: See the list of double taxation prevention treaties signed by Montenegro.
Withholding Taxes: Dividends: 9%, Interest: 0 (residents)/9% (paid to non-resident entity)/5% (paid to non-resident individual), Royalties: 0 (residents)/9% (non-residents)