Montenegro: May Tax Updates

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During May 2021, the Montenegrin authorities have adopted several amendments to existing laws aimed at improving the current situation in the Montenegrin economy. Adopted amendments to existing laws  include: 

1. Amendment to existing law on Value Added tax – Increasing the limit for mandatory VAT registration from 18,000 to 30,000 euros  

The amendments to existing laws on Value Added Tax were published in the Official gazette of the Republic of Montenegro no. 59 on 04. June 2021 – the limit for a taxpayer, up to which VAT registration is not obligatory, is increased from the current 18,000 euros to 30,000 euros of annual turnover.   

According to that, a taxpayer who in the last 12 months realizes the turnover of sales of products or services in the value that does not exceed and is not likely to exceed the amount of 30,000 euros is not a taxpayer in the sense of law on the value added tax. This Law shall enter into force from the day of its publication in the Official Gazette of Montenegro.  

1. Amendment to existing law on personal income tax and law on obligatory social security contributions – Personal income tax and social contribution reduction for new employees in 2021 

In the same number of the Official Gazette of Montenegro, no. 59, amendments to the law on personal income tax and law on obligatory social security were also published. These amendments adopt the exemption on part of the income tax and obligatory social insurance contributions at the expense of the employee and at the expense of the employer.

Exemption from the payment of part of the personal income tax and compulsory social security contributions is realized on the salary of the employee which is not higher than the average monthly salary in Montenegro, according to the data of the administrative body responsible for statistics, in the amount of:    

   1) 90% tax and compulsory social contributions in 2021. 

   2) 60% tax and compulsory social contributions in 2022. 

   3) 30% tax and compulsory social contributions in 2023. 

The right to exempt may be exercised by the employer provided that: 

   1) the employee was on the records of the Employment Service of Montenegro for at least three months before the day of concluding the employment contract. 

   2) the employer has concluded an employment contract for an indefinite period with the employee until 31 December 2021. 

   3) by establishing an employment relationship with the employee referred to in item 1 of this paragraph, there was an increase in the number of employees that the employer had as of December 31, 2020. 

   4) the employee before the conclusion of the contract was not employed by the person who is the founder or the person is related to the employer with whom he is employed, regardless of whether there was a termination of employment. 

For further information please contact Mr. Sutkovic Fahrudin, country manager for Montenegro at our Eurofast office in Montenegro at mail address podgorica@eurofast.eu

Eurofast is a regional business advisory organisation employing local advisors in over 23 cities in South East Europe & Middle East . The Organisation is uniquely positioned as one stop shop for investors and companies looking for professional services in South East Europe & Middle East.

8/6/21