Montenegro has set a new fiscal course! In October 2024, the Montenegrin parliament adopted a forward-thinking fiscal strategy aimed at driving economic growth and improving the quality of life for its citizens. This comprehensive reform goes beyond policy adjustments, seeking to ease burdens on both employees and employers, while fostering a more equitable economic environment.
Key Changes in the Fiscal Strategy
Payroll Enhancements: Increased Net Income for Workers and Businesses
One of the strategy’s highlights is a reduction in social security contributions. Employee contributions for pension and disability insurance are set to decrease from 15% to 10%, while employer contributions will be entirely eliminated, dropping from 5.5% to 0%. This change directly increases employees’ net income, giving them more disposable income and improving living standards. For businesses, reduced operational costs create room for reinvestment in workforce and growth plans. These combined benefits are expected to stimulate job creation and economic growth.
Minimum Wage Boost to Support Low-Income Earners
The government is also implementing a significant minimum wage increase. A tiered system will be introduced, with an average wage set at €700, and higher wages for those with advanced qualifications, reaching up to €800 for university graduates. This measure aims to uplift low-income workers, reduce income inequality, and ensure that the benefits of economic growth are more widely shared, contributing to a more inclusive economy.
Tax Reforms for a Fairer System
The fiscal strategy introduces several tax reforms:
- Excise Duty Simplification: Excise duties on “still wines” will now align with those on carbonated and non-carbonated sugary beverages, promoting fairness across similar products.
- Expanded Tax Base: The VAT rate will increase from 7% to 15% for certain goods and services, such as books, accommodation, catering services (excluding specific beverages), and certain cultural and sports activities. Although this may result in a slight rise in consumer prices, the broadened tax base will help sustain public services and infrastructure over the long term.
Eurofast’s Perspective – How We Can Help
Eurofast is here to guide you through Montenegro’s evolving fiscal landscape. With our deep expertise in payroll and tax services, we can help businesses navigate these changes, ensuring compliance while maximizing growth opportunities.
For tailored assistance, please reach out to us at podgorica@eurofast.eu.