Taxes in Montenegro, Taxation in Montenegro, Taxes system in Montenegro
Personal income tax rate in Montenegro is 9% (previously 12%).
New rates of tax and contributions from and on personal receivings are applicable of January 1st 2010, as following:
Tax and contributions from personal receivings
- personal income tax 9%
- contributions for pension and disability insurance 15%
- contributions for health insurance 8,5%
- contributions for unemployment insurance 0,5%
Contributions on personal receivings
- contributions for pension and disability insurance 5,5%
- contributions for health insurance 3,8%
- contributions for unemployment insurance 0,5%.
A new type of contributions, paid to the Labour Fund has been introduced, being paid by the employer at the rate 0,2%, while surtax is paid at same rates as previous years.
The personal income tax of 9% is levied on salaries and other types of personal income, including income from dividends. Certain income, however, such as income from services, is subject to tax at the rate of 15% on the tax base that is equivalent to 60% of income.
Basis – Resident individuals are taxed on worldwide income; nonresidents are taxed only on Montenegro-source income.
Residence – An individual is resident if he/she is in Montenegro for 183 days or more in a calendar year or if his/her centre of vital interests is in Montenegro.
Tax Filing status – Joint tax returns are not permitted.
Taxable income – Taxable income comprises income from employment, business and professional income, investment income (dividends, interest and royalties); and income from immovable property.
Capital gains – Capital gains are not taxable in Montenegro.
Tax Deductions and tax allowances – There are no deductions or allowances in Montenegro.
Other taxes on individuals:
Capital duty – No
Stamp duty – No
Capital acquisitions tax – No
Real property tax – Property tax is levied on the owner/user of property at rates ranging from 0.08% to 0.8%. Deductions are available.
Inheritance/estate tax – A 3% tax is levied on the inheritance of real estate. An exemption is available for the transfer of property as a gift or inheritance to children, parents or a spouse.
Net wealth/net worth tax – No
Social security – Social security contributions due by employee are levied at a rate of 24%. These include contributions for pension (15%), health (8.5%) and unemployment (0.5%).
Administration and compliance:
Montenegro Tax year – Montenegro tax year is the calendar year
Tax Filing and Tax payment – Employment income is taxed via withholding by the employer. An annual income tax return is due for other income by 30 April following the tax year end.
Individuals that receive only employment income do not file an annual return. Individuals that receive income from several sources file annual income tax, with tax paid during the year deducted from the final tax due.
Penalties – A penalty of 0.03% per day is imposed for late payment of tax.
Montenegro Corporate Tax
Montenegro corporate income tax is a flat 9%.
Residence – A company that is registered in Montenegro, or that has its management and control there, is deemed to be resident for tax purposes.
Basis – Resident companies are taxed on worldwide income; nonresidents are taxed only on Montenegro-source income.
Taxable income – Taxable income is based on accounting profit, further adjusted for tax purposes, by nondeductible expenses, nontaxable income, tax depreciation, etc.
Taxation of dividends – Dividends paid between residents are subject to withholding tax but are not included in taxable income. Dividends received from abroad are included in taxable income, but a resident taxpayer can claim a tax credit for foreign tax paid.
Capital gains – Capital gains are included as normal income and taxed at the standard rate of tax.
Losses – Tax losses may be carried forward for 5 years. The carryback of losses is not permitted.
Rate – The main rate of 9% applies to both domestic and foreign companies.
Surtax – No
Alternative minimum tax – No
Foreign tax credit – An ordinary tax credit is available for foreign income taxes paid. The credit is limited to the amount of Montenegro tax attributable to the foreign-source profits.
Participation exemption – See under "Taxation of dividends".
Holding company regime – No
Tax Incentives – A 3-year tax holiday is granted to companies registered in underdeveloped areas.
Dividends – A 9% withholding is levied on dividends paid to residents and nonresidents, unless the rate is reduced under a tax treaty.
Interest – A 9% withholding tax is levied on interest paid to nonresidents, unless the rate is reduced under a tax treaty.
Royalties – Royalties paid to nonresidents are subject to withholding tax of 9%, unless the rate is reduced under a tax treaty.
Services – Service fees paid to nonresidents for market research, advisory and audit services, as well as on income from the lease of movable and immovable property, are subject to withholding tax of 9%.
Branch remittance tax – No
Other taxes on corporations:
Capital duty – No
Payroll tax – The municipal authorities levy a surtax of up to 15% on an employee's salary.
Real property tax – Property tax is levied on the owner/user of property at rates ranging from 0.08% to 0.8%.
Social security – Social security contributions due by employer are levied at the rate of 9.8%. These include contributions for pension (5.5%), health (3.8%) and unemployment (0.5%).
Stamp duty – No
Transfer tax – A transfer tax of 3% is levied on the transfer of immovable property.
Transfer pricing – Transactions between related parties (as defined) must be at arm's length. The comparable uncontrolled price method may be used, but in the absence of any direct comparables, the taxpayer may use the cost-plus or the resale price method.
Thin capitalisation – There are no specific thin capitalisation rules, but interest paid to a nonresident (whether or not related) must be on arm's length terms.
Controlled foreign companies – No
Disclosure requirements – No
Administration and compliance:
Montenegro Tax year – Montenegro tax year is calendar year
Consolidated tax returns – Consolidated returns are not permitted; each company must file a separate tax return.
Tax Filing requirements – Monthly advance payments are due, based on the results of the previous year. Tax returns must be filed within 3 months after the year end.
Penalties – A penalty of 0.03% per day is imposed for late payment.
Montenegro vat (Value-Added Tax) Rates
There are two Value-Added Tax rates being implemented in Montenegro:
- standard tax rate of 17%, and
- reduced tax rate of 7%
Also, a zero VAT rate is applied on export transactions and on delivery of medicines and medical supplies which are funded by the Republic Health Insurance Fund. Exemptions exist for financial services, the sale of land, etc.
Taxable transactions – VAT is levied on the supply of goods and services and imports.
VAT Registration – Taxpayers with revenue in excess of EUR 18,000 must register.
Filing and VAT payment – VAT must be filed and paid monthly, by the 15th of the month for the previous month.