Complete Guide to Income Taxes in Montenegro [2023]

• Personal income tax rates in Montenegro range from 9% to 15%
• Corporate income tax rates in Montenegro are 9% on profits up to 100,000 Euros, 15% on profits between 100,000.01 to 1,500,000 Euros, then 15% on the profit above EUR 1,500,000.01.

• A resident legal entity's taxation subject is the profit that a person/company makes inside and outside the Republic of Montenegro;
• The issue of taxation of a non-resident legal entity is the profit that that person/company makes in the Republic of Montenegro;
• A non-resident legal entity's permanent establishment, which makes a profit on the activities it performs in Montenegro, is obliged to pay tax on that profit. A permanent establishment is a permanent place of business through which a legal entity conducts its business in whole or in part. It exists in one of the following forms: a place of administration, branch, office, factory, workshop, mine, oil or gas field, quarry, or any other site where the exploitation of natural resources takes place. A construction site or prefabricated building is considered a permanent establishment only if it lasts longer than six months. 

• real estate and movable property located in Montenegro;
• sale of the real estate and movable property if its seller is located in the Republic of Montenegro;
• sales of goods produced in the Republic of Montenegro;
• provision of services in the Republic of Montenegro;
• interest earned by a resident taxpayer and a permanent establishment of a non-resident legal entity;
• dividends paid by a resident legal entity;
• use of property rights in the Republic of Montenegro;
• the exploitation of Montenegrin natural resources;
• insurance and reinsurance 

Personal Income Taxes in Montenegro

Income taxes in Montenegro are significantly lower than many other countries, with the base income tax rate being 9% for both corporate and personal income tax and 15% for higher rates of domestic and worldwide income.

According to PWC - Worldwide Tax Summaries, personal income for foreigners is taxed in the following manner:

“From January 1st 2022, Montenegro introduced a progressive taxation of salary:

Salaries up to EUR 700 (gross) are exempt from tax;

Salaries ranging from EUR 701 up to EUR 1,000 (gross) are subject to 9% tax;

Salaries from EUR 1001 (gross) are subject to 15% tax.”

"One of the biggest changes in 2022 is the introduction of a new rate of income tax for entrepreneurs:

From EUR 8,400.01 to EUR 12,000 is subject to 9% tax;

From EUR 12,000.01 is subject to 15% tax.”

Corporate Income Taxes in Montenegro

“Entities operating in Montenegro are subject to progressive corporate profit tax (CPT). Applicable tax rate depends on the realized profit of taxpayers and tax rate varies from 9% -15%. Progressive tax rate are as follows:

On the profit up to EUR 100,000, the tax rate shall be 9% fixed;

On the profit from EUR 100,000.01 to EUR 1,500,000, the tax shall be paid in the amount of EUR 9,000 fixed + 12% on the profit above EUR 100,000.01;

On the profit above EUR 1,500,000, the tax shall be paid in the amount of EUR 177,000 fixed + 15% on the profit above EUR 1,500,000.01.

Resident taxpayers are taxed on their worldwide profit. Non-resident taxpayers are taxed on their Montenegrin-sourced income or income attributed to their Montenegrin permanent establishment (PE). Non-residents are also subject to withholding tax (WHT) on income sourced in Montenegro."

It is also important to note that as soon as you have spent 183 days or more in Montenegro you automatically become liable for personal income tax.

This is an important consideration as if your country does not have a Double Taxation Avoidance Agreement with Montenegro, then you could become liable for income in both countries.

The following list of countries have double taxation treaties with Montenegro at the time of writing this article:

Albania, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, Italy, Ireland, India, Korea, Kuwait, Latvia, Macedonia, Malaysia, Moldova, Malta, Holland, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Sri Lanka, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, and the United Arab Emirates. Income tax treaties with Spain and Qatar are pending.