Reasons to invest in Montenegro
Montenegro has the potential to become a magnet for investment because of its business-focused economic system. It enjoys great economic freedom and monetary stability.
The Government's privatization policy has attracted many foreign investors.
Pursuant to the Foreign Investment Law, there is a real equal treatment between Montenegrin and foreign investors in the country.
The Government has established many customs and fiscal incentive measures.
Montenegro ranks 42nd out of 190 economies in terms of ease of doing business, according to the 2018 World Bank Doing Business Report.
The sectors attracting most of the FDI are tourism, real estate, energy, telecommunications, banking sector and construction. The main investing countries are EU members, Russian Federation, Egypt etc.
Country attracts a lot of foreign investors for the following reasons:
- foreign companies have the same rights as national companies;
- the tax system is one of the most competitive in Europe;
- the workforce is qualified and wages are relatively low;
- the Euro is the national currency;
- formalities for creating a company are simple and quick;
- it is a stable democratic NATO country;
- it is a step away from the EU membership.
Introduction to the System of Governmental Revenues
Purpose of this site is to provide the basic information with respect to tax system of Montenegro.
National tax system is compatible with tax systems of developed EU countries and directives, regarding types of taxes and regarding procedures of determining collection methods and audit procedure. Tax system is founded on direct and indirect taxes. System is modern, flexible and consistent. National tax rates are competitive and stable (i.e. they are not subjected to frequent changes).
Tax reforms in Montenegro started in 2001 through the amendments of tax legislation with the intention to adjust local fiscal system with European Union standards. Montenegrin tax system comprises the following tax forms:
- Value added tax
- Corporate profit tax
- Personal income tax
- Contributions for mandatory social insurance (pension-disability insurance, health insurance and insurance from unemployment)
- Tax on immovable property
- Tax on turnover of immovable property
- Tax on insurance premiums
- Tax on usage of passenger motor vehicles, vessels, aircrafts and flying objects
- Tax on turnover of used motor vehicles, vessels, aircrafts and flying objects
- State fees (administrative, court, registration)
- Charges for use of natural and other goods of general interest (for forests, waters, mineral resources, maritime resources)
- Municipal (local) taxes (surtaxes, charges and fees).
Local taxes have been introduced with the municipality regulations, in accordance with state level laws that define basic elements for their payment (taxpayer, tax base, range of rates and etc.); some tax forms are introduced by special laws.
Self-Assessment - A Basic Principle of the Taxation Procedure
Self-assessment taxation is the basic principle in the procedure of assessment and collection of taxes and other charges.
Assessment principle of determination of tax liability is established as authorization and obligation of tax authority in the situations when calculation of tax is not done or is incorrectly done according to self-assessment principle, as well as in some cases when it is stipulated by law (when assessing tax on immovable property, tax on turnover of immovable property).
The activities of assessment, collection and audit of taxes are performed by the Department of Public Revenues (i.e. Tax Administration of Montenegro, on the state level) and local tax administrations (on the municipality level), pursuant to the Law on Tax Administration.
International Taxation - Double Taxation Prevention Treaties
A double taxation prevention treaty enables offsetting tax paid in one of two countries against the tax payable in the other, and in this way prevents double taxation.
Montenegro has signed 42 double taxation prevention treaties, with various countries on subjects of income and property.
From that number, 36 treaties are effective; remaining 6 treating are still pending, i.e. they are in procedure of the ratification.