VAT treatment of promotional activities

Montenegro/October 2013

The open character of the Montenegrin market and the emphasis on development of the country as a tourism destination, coupled with the presence of numerous foreign companies, has made promotional activities particularly interesting for both resident and non-resident companies.

Promotional activities include a wide range of advertising services that companies are taking advantage of. All activities related to the presentation of information and feature of goods/services, are considered as promotion activities and are subject to taxation.

According to the Law on VAT, the place where such services are actually provided is considered as the place of taxation, regardless of the provider or recipient of such services is resident or non-residents in Montenegro.  Additionally, the main business activity of the recipient plays no importance when it comes to the tax treatment of such services.

In line with the above, the renting of billboards as well as other promotional tools located in Montenegro is subject to Montenegrin VAT even if rented by non-resident companies. It is also worth noting that, in case a non-resident company rents advertising space and proceeds with re-selling of said advertising placements, the VAT is still deemed to arise in Montenegro.

The current VAT rate in Montenegro is 19%.

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