VAT rules in Montenegro

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Montenegro is quite famous for its beautiful nature, five-star hotels, as well as its investment opportunities of course. As someone who is considering to set up a business in this beautiful country, you are probably wondering about the VAT policies there. Now, nobody likes taxes, but learning about them is quintessential for anyone investing in a foreign country.
So, in this article, we are going to tackle everything you need to know about Montenegro’s VAT rules.

VAT rates in Montenegro

Montenegro has three types of VAT rates:

  • The standard VAT rate of 21%
  • The reduced VAT rate of 7%
  • The VAT exemption or 0% VAT rate

In order to be able to pay the value-added tax, you need to be registered with Montenegrin tax authorities. Only companies that have a yearly revenue below 18,000 EUR aren’t obligated to register for VAT payments.
Overall, the Montenegrin VAT legislation is completely in line with EU regulations, which makes things easier for the EU companies who want to expand their businesses on the Montenegrin market place and vice versa.

Who needs to pay the VAT in Montenegro?

The VAT taxpayer in Montenegro is any legal entity participating in any economic activity with the purpose of generating profit. As we already mentioned before, the standard VAT rate in Montenegro is 21%, which is in accordance with the EU’s Sixth VAT Directive.
The supply of goods or services and imported goods are the main objects of VAT taxation in Montenegro.

VAT reduction

The Montenegrin government offers tax reductions for specific types of goods and services. This is called a partial VAT exemption at rates between 19% – 7%, which is considerably low, in comparison to other European countries.
The goods and services subjected to this type of tax reduction can be found under the following categories:

    • Essential products for human consumption such as milk, bread, and sugar
    • Medical equipment (including dentistry) and medication
    • Educational tools
    • Accommodation services including hotels, motels, camps, villas, and others
    • Drinking water, not including bottled water
    • Transportation services (transport of people and luggage)
    • Funeral services
    • Non-profit sporting events
    • Agricultural goods such as fertilizers
    • Copyright services
    • Tickets for cinema, theater, art exhibitions, and other cultural and sporting events

VAT exemption

The goods and services subject to the 0% VAT rate can be found in the following categories:
1. Public services such as:

    • Postal services
    • Medical services
    • Social security services
    • Educational services
    • Services of cultural importance
    • Sport services
    • Religious services
    • Non-profit business services

2. Specific imported goods
Imported goods can be exempt from VAT payment in Montenegro in some specific cases. As these cases can be quite complex, we advise you to contact a legal professional for a more detailed explanation.

3. Other VAT exemptions:

      • Insurance services
      • Financial services
      • Gold imported by the Montenegrin Central Bank
      • Chance games services

The bottom line

The value-added tax is the focal point of the Montenegrin tax system. Some companies can benefit from a complete tax exemption depending on their services.
In this article, we provided you with a short overview of the Montenegrin VAT legislation. Hopefully, it was informative and interesting enough to make you want to learn more about the amazing investment opportunities this small country has to offer.

Stevan. M

Stevan. M

Stevan is a Montenegro based writer and consultant

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