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, public transport, hotel and other tourist accommodation. From 2022, the 7% reduced rate also applies to the supply of services related to the preparation and serving of food and beverages (except alcoholic beverages, carbonated beverages with added sugar and coffee) in facilities for the provision of catering and accommodation services.
Certain product supplies are taxed at a 0% rate (e.g. export of goods, 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.
Corporate Taxes
- Company Tax
-
Progressive rates (9% to 15%)
- 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.
A withholding tax applies to payments towards non-residents for dividends and profit distribution, capital gains, interest, royalties, intellectual property rights fees, rental income, fees for consulting, market research, and audit services, as well as to income earned on the basis of performing entertainment, artistic, sport, or similar programmes in Montenegro. The general rate is set at 15%.
- Capital Gains Taxation
-
Capital gains are included in taxable income and taxed at the general rate of 15%. Gains may be offset against capital losses occurring in the same tax period. Capital losses may be carried forward for five years.
- 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 (up to 0.1% of gross revenue unless the amount of the fees has been determined by law), 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 54,533 in 2022)
- payroll tax (The municipal authorities impose a surtax of up to 15% on an employee’s salary. In addition, labor fund contributions are imposed on the gross salary at a rate of 0.2%)
- 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 |
Progressive rates |
| Salaries |
- up to EUR 700 (gross): exempt;
- from EUR 701 up to EUR 1,000 (gross): 9%;
- from EUR 1,001 (gross): 15%
|
| Income earned by entrepreneurs |
- from EUR 8,400.01 to EUR 12,000: 9%;
- from EUR 12,000.01: 15%
|
| 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 (5% for interests).
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Latest Update: April 2024
Montenegro: Business Environment
