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 15% and 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 (new): 15% — introduced in January 2025; applies to items such as accommodation services, books and publications, and tickets for cultural and sporting events
- Reduced rate: 7% — basic goods and services such as staple foods (bread, milk, etc.), medicines, schoolbooks and public transport
- 0%: exports and certain international transport transactions
- 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.
Recent note (April 2026): Following amendments to the VAT Law, the sale of construction land with a building permit falls within the scope of VAT as of 1 April 2026. Factor this new rule in if you are planning a land or development transaction.
4. Withholding
The general withholding rate on payments such as dividends, interest and royalties is 15%. For payments to jurisdictions deemed tax havens, the rate rises to 30%. Under the treaty with Türkiye, rates may be reduced: 5%/15% on dividends, 10% on interest, 10% on royalties.
5. Social security contributions
Two waves of reform markedly reduced the contribution burden on wages: health contributions were abolished entirely in January 2022 (Europe Now), and in October 2024 (Europe Now 2) the employee pension contribution was cut from 15% to 10% while the employer’s pension share was abolished. Today the contributions on wages are: employee 10% pension + 0.5% unemployment; employer only 0.5% unemployment. In addition, a municipal surtax applies on the income tax due: 13% in most municipalities, 15% 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.)