Montenegro Tax System: Expat Guide 2025
Montenegro remains one of the most attractive countries in Europe in terms of fiscal burden, despite the 2025 reforms. The system combines low base rates and a progressive scale. For an expat, it is critically important to understand tax residency status and the new rules harmonized with EU standards.Tax Residency: Status and Obligations
Your tax status determines which income you pay tax on: worldwide or only Montenegrin-source income. Tax resident: An individual who stays in the country for more than 183 days in a calendar year (including partial days) or has a center of vital interests here (family, housing, main business). Residents pay tax on global income. Non-resident: Pays tax only on income earned in Montenegro (salary from a local company, rental income). Lifehack: Montenegro has double taxation avoidance agreements with 45 countries (including Russia, Germany, the United Kingdom). This allows taxes paid abroad to be credited and avoids double taxation.
Attention: There are no such agreements with the USA and Canada. Citizens of these countries face double taxation and require individual consultation.
Personal Income Taxes (PIT)
Montenegro applies a progressive tax scale to salaries and personal income.Salary Tax Rates
Tax is levied on the “gross” salary according to the following scheme:- 0% — on the portion up to €700;
- 9% — on the portion from €701 to €1,000;
- 15% — on amounts above €1,000.
Social Contributions
In addition to PIT, pension contributions are withheld from salaries. Mandatory healthcare contributions were abolished earlier, reducing the overall labor burden.- Employee pays: ~15.5% (pension fund, unemployment insurance).
- Employer pays: ~6.5% on top of the gross salary.
Passive Income and Digital Services
A flat rate of 15% applies to the following types of income: * Dividends and interest. * Royalties. * Capital income (sale of assets). * New in 2025: Income from online services, video games, and gambling.Taxes for Businesses and Sole Proprietors
Entrepreneurs choose between registering as a sole proprietor (Preduzetnik) or a limited liability company (DOO).Sole Proprietors
Taxed according to the personal income tax scale.- 0% — on income up to €8,400 per year.
- 9% — from €8,401 to €12,000.
- 15% — above €12,000.
Companies (DOO)
Corporate profit tax is also progressive:- 9% — on profit up to €100,000.
- 12% — on the portion from €100,000 to €1.5 million.
- 15% — on the portion exceeding €1.5 million.
Recommendation: If you plan a manufacturing business, consider the northern regions. There is an 8-year corporate tax exemption (up to €200,000).
VAT (PDV)
Mandatory VAT registration is required when turnover exceeds €30,000 over the last 12 months.- 21% — Standard rate.
- 7% — Basic foodstuffs, medicines, water, public transport.
- 15% (From 2025) — Books, hotel accommodation services, restaurant food, solar panels, hairdressing services.
- 0% — Export of goods and services.
Property and Asset Taxes
Real Estate
* Annual tax: from 0.25% to 1% of the market value (depends on municipality and property quality). * Transfer tax: * 3% — for property value up to €150,000. * Fixed amount + 5% — on the portion exceeding €150,000. * *Note: When purchasing new property from a VAT-registered developer, the 3% transfer tax is not applied.*Transport
When registering a used car, boat, or aircraft, a tax of 5% of the value is charged.Inheritance and Gifts
The rate is 3%. Spouses, children, and parents of the donor/deceased are fully exempt.Deadlines and Penalties
Compliance with deadlines in Montenegro is strictly controlled by the tax authority (Poreska Uprava).- For companies: Corporate tax return — by March 31.
- For individuals: Income declaration (GPPFL) — by April 30.
- VAT: Monthly reporting by the 15th.
Important: Late filing results in fines, and company accounts may be blocked. Hiring a local accountant is recommended even for “zero” reports.