Bill of the Law on Amendments to the Montenegrin VAT Law

Law on Amendments to the Montenegrin VAT Law

Bill of the Law on Amendments to the Montenegrin VAT Law has been adopted by the Montenegrin Government on the session held on 6 July 2017.

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Law Amendments

We would like to inform you that a bill of the Law on Amendments to the Montenegrin VAT Law (hereinafter: bill of the law) has been adopted by the Montenegrin Government on the session held on 6 July 2017. Bill of the law has not yet been adopted by the Parliament of Montenegro. In addition, a debate in the Montenegrin Parliament has not been scheduled so far.

The bill of the law specifies an increase in the general VAT rate in Montenegro from 19% to 21%. VAT will be calculated and payable at a general rate of 21% starting from 1 January 2018. Until 1 January 2018, the general rate of 19% will be applicable. The reduced VAT rate will remain unchanged.

The place of supply of services rules strive to harmonize with European Union rules. Namely, instead of the currently applicable general rule based on which services are taxable according to the place of a service provider, irrespective of whether the service recipient is a VAT payer or not, the bill of the law specify special rules for supplies to VAT payers (so-called B2B supplies) and to entities that are not VAT payers (so-called B2C supplies):

  1. If the supply of services is made to an entity that is a taxpayer (B2B), the place of supply of services is considered to be the place where the recipient of services has its headquarters/permanent establishment, or a place of permanent or temporary residence;
  2. If the supply of services is made to an entity that is not a taxpayer (B2C), the place of supply of services is considered to be the place where the provider of services has its headquarters/permanent establishment, or a place of permanent or temporary residence.

A series of exceptions to the above said general rule is specified.

The link to the Montenegrin Government website where the bill of the law is published is as follows: http://www.gov.me/biblioteka/predlozi-zakona.

Please feel free to contact us for any questions you might have.

Kind regards,

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