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Tax Reform in Montenegro

Tax Reform in Montenegro

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In “Official Gazette of Montenegro” no. 145/21 and no. 146/21 on 31, December 2021, amendments of the series of laws were published, including Law on Tax Administration, Law on Personal Income Tax, Law on Corporate Income Tax, Law on Contributions for Compulsory Social Insurance, Law on Compulsory Health Insurance, Labor Law, Law on Companies.

The aim of these laws amendment is implementation of the Montenegrin Government Economic Plan “Europe Now”.

Significant improvement of the business environment has been made through abolition of the obligation to pay contributions for compulsory health insurance and introduction of non-taxable part of the salary.

Non-taxable part of salary (up to EUR 700) has been introduced by the amendment of Law on Personal Income Tax in order to reduce the tax burden while also implementing the dual taxation system depending on the source of income.

With these changes, Montenegro becomes the state with the highest level of non-taxable part of the salary in the region, while retaining a  low rate of income tax on the amount of earnings exceeding the amount of 700.00€.

Also, in order to stimulate development of innovation, non-resident persons who perform activities electronically with an employer who doesn’t perform activities in Montenegro are exempt from income tax.

With amendments on the Law on Corporate Income Tax, Montenegrin legislation was harmonised with EU directives. A progressive corporate tax rate has been introduced while Montenegro kept its competitive position.

Amendments on the Law on Companies will prevent of launching of court liquidation on official duty for those business entities who have failed to harmonise the organization with the Law and to register changes before deadline defined by the Law.

There are expectations that these regulation changes will support the increase the living standards of all citizens, improve the business and investment environment and reduce the grey economy in the labour market.

By Daniel Vujacic, Associate, Vujacic

Law office Vujacic at a Glance

Law office Vujacic was founded in 1971, and in that time it was one of the first law firms in Montenegro. Today it is a modern business law firm with a long and proud tradition of supporting clients by high quality legal services in all areas of corporative, civil and commercial law. 

Our team of lawyers has shown a great success in areas such as: Mergers & Acquisitions, Telecommunications/Media, Intellectual Property, Administrative Law, Corporate Law, Finance Law, Competition Law, Real Estate, Dispute Resolution, Employment, Tax issues etc. 

As local counsel we have wide experience in all aspects of private and public corporate acquisitions and privatization. Our activities range from conducting due diligence reports, negotiations, preparing security documents and legal opinions.

The guiding principles of our Office are quality, confidentiality, efficient, timely, and cost effective services. We provide efficient legal representation to our clients both on regional and international levels.

Our work is based on commitment for providing comprehensive, effective legal advice to domestic and international clients operating in Montenegro. Also we try to find innovative solutions covering a variety of law and business experience. 

Firm's website: http://www.lawoffice-vujacic.com/