Business Environment

flag Montenegro Montenegro: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The tax year corresponds to the calendar year.
Accounting Standards
Montenegrin accounting is based on the International Financial Reporting Standards (IFRS).
Accounting Regulation Bodies
Council for Accounting and Auditing
Accounting Reports
Accounting structures must present balance sheets and profit and loss accounts.
Publication Requirements
According to the Law on accounting and audit, all legal entities must submit their financial statements annually. According to the Law on business organizations, joint stock companies must submit their financial report with the audit report. Only foreign companies do not have to submit a financial report.
Professional Accountancy Bodies
Association of Montenegrin accountants and auditors
Certification and Auditing
An audit may be performed by a person who is a certified accountant. You can contact the Association of Montenegrin accountants and auditors or an external auditor: Deloitte, KPMG, PricewaterhouseCoopers.
Accounting News

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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. 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.
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.

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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.

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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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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: 15%, Interest: 15%, Royalties: 15%

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Intellectual Property

National Organisations
You can contact the Intellectual Property Office of Montenegro by Email.
Regional Organisations
GRAOVAC
International Membership
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patent Cooperation Treaty
20 years
Trademark
 
Trademark Law Treaty
10 years, unlimited renewal Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Industrial Designs
15 years  
Copyright
 
Berne Convention
WIPO Copyright Treaty
Industrial Models
 
Industrial Designs
15 years  

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Legal Framework

Independence of Justice
The legal system is independent but there are still serious problems of corruption.
Equal Treatment of Nationals and Foreigners
In Law, the whole population is judged in an egalitarian way, but in reality there can be differences in treatment, especially for ethnic minorities.
The Language of Justice
The language used is Montenegrin.
Recourse to an Interpreter
You can easily have recourse to an interpreter in Montenegro for legal affairs.
Sources of the Law and Legal Similarities
Laws stem from the Constitution of Montenegro.
Checking National Laws Online
Laws of Montenegro

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Standards

National Standards Organisations
ISME
Integration in the International Standards Network
The Institute for Standardization of Montenegro is Correspondent member of International Organization for Standardization (ISO), Affiliate member of European Committee for Standardization (CEN), Associate member of International Electrotechnical Commission (IEC) and Affiliate member of European Committee for Electrotechnical Standardization (CENELEC).
Classification of Standards
The Montenegrin standards are the MEST. For more information consult the ISME website.
Online Consultation of Standards
Montenegrin standards can be found on the catalogue of the ISME website.
Certification Organisations
Institute for Standardization of Montenegro

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Business Practices

General Information
Worldwide tax
Opening Hours and Days
Shops are open from 7 am to 12 noon and from 4 pm to 8 pm Monday to Saturday.

Banks are open from 8 am to 8 pm Monday to Friday and from 8 am to 3 pm on Saturday.

Opening hours vary for companies, but most companies are open from 8 am to 4 pm.

 

Public Holidays

New Year 1 and 2 January
Orthodox Christmas 7 and 8 January
Orthodox Easter End of April - beginning of May
Labor Day 1 and 2 May
Montenegro Independence Day 21 May
National Day 13 July
 
 

Periods When Companies Usually Close

Christmas holidays The first ten days of January
Easter Two days
 

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Latest Update: July 2022