Montenegro Tax System
Summary: Montenegro is one of Europe’s competitive countries, with progressive but low rates. Corporate tax is 9-12-15% by profit; salary income tax 0-9-15%; VAT 21% (reduced 7%). There is a double-taxation treaty with Türkiye. This guide summarizes the main lines plainly.
Contents
- Corporate tax (progressive)
- Income tax (salary)
- VAT
- Withholding
- Social security contributions
- Double taxation
- FAQ
1. Corporate tax (progressive)
Company profit is taxed at increasing rates by bracket:
| Profit bracket | Rate |
|---|---|
| Up to €100,000 | 9% |
| €100,000 – €1,500,000 | €9,000 + 12% on the part above €100,000 |
| Above €1,500,000 | €177,000 + 15% on the part above €1,500,000 |
Most SME-scale companies effectively stay in the 9% band; this is one of Europe’s lowest rates.
2. Income tax (salary)
| Monthly gross salary | Rate |
|---|---|
| Up to €700 | 0% |
| €700 – €1,000 | 9% |
| Above €1,000 | 15% |
The €700 tax-free band eases the burden on wages.
3. VAT
- Standard rate: 21%
- Reduced rate: 7% (on certain basic goods and services)
- Registration threshold: VAT registration becomes mandatory once 12-month turnover exceeds €30,000 (voluntary registration possible below).
- Returns and payments are made electronically, in monthly periods.
4. Withholding
The general withholding rate on payments such as dividends, interest and royalties is 15%. A higher rate may apply on payments to jurisdictions deemed tax havens (without information exchange). The treaty with Türkiye may affect how these rates are applied.
5. Social security contributions
With the October 2024 reform (Europe Now 2), the contribution burden on wages was noticeably reduced: the pension contribution rate was lowered and the health contribution abolished. A local surtax tied to the municipality also applies (higher in Podgorica and Cetinje).
6. Double taxation
There is a double-taxation treaty between Türkiye and Montenegro. It is applied to prevent the same income being taxed in both countries. Which income is taxed where depends on your tax residency and the source of income.
(Data sources: PwC Tax Summaries and 2026 legislation; rates may change, so verify the current position before any transaction.)