1. Corporate Income Tax (CIT) 2020
- Profit-making companies and branches are obliged to pay CIT in Montenegro. CIT rate is set at 9% flat rate;
- The submission of the transfer pricing documentation is not mandatory in Montenegro, but taxpayers are obliged to test transfer prices and make adjustment of the CIT base if necessary.
- Tax losses may be carried forward for limited period of 5 years.
- Statutory withholding tax rate is 9 %. Subject to WHT are dividends, interests, royalties, rental income, capital gain, consulting services, market research services and audit services.
2. Personal Income Tax (PIT) and Social Security Contributions (SSC)
- Montenegrin residents are due to pay tax on worldwide income, while non-residents are due to pay tax only on Montenegrin sourced income.
- Progressive income tax rates of 9% and 11% are prescribed.
- Additional income (other than employment income) should be reported in the annual tax return and is subject to 9 % tax rate.
- The employment income is subject to super tax whereas tax base is tax calculated on employment income, while tax rate is determined by the local self-government.
- Statutory withholding tax rate is 9%.
- Mandatory SSC are: pension and disability insurance (20.5%), health insurance (10.8%) and unemployment insurance (1%).
3. The Property Tax and Transfer Tax
- Subject to property tax are ownership right over immovable property (buildings and land) of companies and individuals and right of use of immovable property owned by the State. The tax rate ranges from 0,25% to 1%.
- Subject to 3% of property transfer tax is acquisition of property rights on immovable property in Montenegro which includes purchase, exchange, inheritance, gift, entry and withdrawal of real estate from a commercial company etc.
4. Value Added Tax (VAT) in Montenegro
- Standard VAT rate is set at 21%, while reduced rate is set at 7%.
- Place of supply of goods is principally the place where the item is located at the time disposal is transferred.
- Place of supply of services is the place where the recipient has its head office or a permanent establishment, if the service recipient is registered for VAT (B2B rule). If, however, service is provided to non-VAT payer, the place of supply of such services is the place where the service provider belongs. There are special rules for place of supply for certain services such as: services related to real estate, transport services, telecommunication services, etc.
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