Key tax factors for efficient cross-border business and investment involving Montenegro.
No (EU candidate)
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Civil association, Limited partnership, Limited liability company, Joint-stock company.
EUR 1 for a Limited liability company, EUR 25,000 for a Joint-stock company.
A resident is a legal entity that is incorporated or has its place of effective management and control in Montenegro. Resident taxpayers are taxed on their worldwide income. Non-residents are taxed only on their Montenegrin source income.
The taxpayer is obliged to file a CIT return no later than 3 months after the end of the financial (calendar) year for which the tax is calculated (i.e. no later than the end of March for the previous year). Payment of CIT as per the tax return is also due by the same deadline. An income statement and balance sheet are submitted to the tax authorities along with CIT return.
The standard corporate income tax rate is 9 percent.
Yes, consulting, market research and audit services are subject to WHT.
Withholding tax of 9% is applied on the following payments to non-resident entities: lease fees for movable and immovable property, entertainment, musical, artistic and sports fees. In addition, 9% withholding tax applies on fees paid by Montenegrin resident companies to individuals for purchase of used products, semi-products and agricultural products.
Dividends received from Montenegrin tax residents (domestic dividends) are subject to a final WHT, but excluded from the tax base of the parent company.
Dividends received from non-Montenegrin companies (inbound dividends) are taxable; a credit for WHT paid abroad is available, subject to the parent company holding directly or indirectly 10 percent or more of the shares of the non-resident company for at least one year preceding the submission of the tax balance. Non-utilized tax credit can be carried forward for a maximum of five years.
Capital gains earned in Montenegro by non-resident companies are subject to 9 percent WHT.
Capital gains earned by a resident company (arising from disposal of a resident/non-resident subsidiary) is subject to 9 percent corporate income taxCapital gains earned in Montenegro by non-resident companies. Capital gains earned by a resident company (arising from disposal of a resident/non-resident subsidiary) is subject to 9% corporate income tax.
Losses (excluding capital losses) generated from business, financial, and non-business transactions may be carried forward over the five subsequent tax periods and offset against future taxable income. Losses that were carried forward are not forfeited due to mergers, acquisitions, spin-offs, and other reorganization changes.
Capital losses may be carried forward for five years and utilized only against capital gains.
Carry-backs are not allowed.
Yes, Montenegrin resident companies may opt for group consolidation. The parent company and its affiliates can constitute a group of associated companies, if at least 75 percent of the shares/interests of the affiliates are held, either directly or indirectly, by the parent company. Once approved, tax consolidation must be applied for at least five years.
Real estate transfer tax at the rate of 3 percent is due on transfer of land, as well as on the second and subsequent transfer of new buildings. First transfer of new buildings is subject to VAT at the rate of 19 percent.
In general, the tax rate ranges from 0.25 percent to 1 percent applied to the market value of real-estate. The general rate is subject to change, depending on the specific type of real estate and its intended use.
Taxpayers are required to separately disclose transactions between related parties in their tax balances and the value of such transactions at arm's length prices. The difference between the arm's length price and the transfer price used by the taxpayers is included in the tax base. Only three methods for determining the arm's length price are authorized by the Montenegrin legislator: comparable uncontrolled price method, cost plus method and resale price method.
Guidelines regarding the determination of the transfer price and documentation required in the case of a transfer pricing audit by tax authorities, currently do not exist in Montenegro.
Apart from transfer pricing rules, there are no other specific anti-avoidance rules applicable in a cross-border context.
The standard rate is 19 percent, and the reduced rates are 7 and 0 percent.
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