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Tax System

Tax System

Evropa Sad (Europe Now) is a new reformational program in Montenegro, started as of January 1st, 2022.

The government of Montenegro announced the program and sets the strategic goal of Montenegro’s economic policy as achieving smart, sustainable, and inclusive economic growth that will contribute to improving the quality of life of all its citizens. 

This very ambitious program has three main goals:

→ Increase the living standards of all citizens

→ Improve the business and investment environment and 

→ Reduce the grey economy in the labor 

For the implementation, on December 29th, 2021, Montenegrin Assembly passed a series of laws that are part of the Europe Now initiative: The changes were passed in Labor Law, Law on Personal Income Tax, Law on Corporate Income Tax, Law on Value Added Tax, Law on Tax Administration, Law on Mandatory Social Security Contributions. Also, new laws were passed as Law on Compulsory Health Insurance, Accounting Law.


Corporate Income Tax:

With Europe Now, progressive rates on profit of legal entities amount to 9%, 12% and 15%, depending on the amount of taxable profit instead of the proportional corporate income tax rates of 9% that applied so far.   

Tax rates on the amount of taxable profit are: 

→ up to EUR 100,000.00€ – 9%; 

→ from 100,000.01€ to 1,500,000.00€: 9,000.00€ + 12% on the amount over 100,000.01€; 

→ over 1,500,000.01€: 177,000.00€ + 15% on the amount over 1,500,000.01 euros. 


Withholding Tax:

With Europe Now, the withholding tax rate has increased from 9% to 15%.


Employment Taxes and Conditions:

Program Europe Now provides for the following main changes:

→ Increase of the minimum wage from EUR 250.00 to EUR 450.00 in net amount;

→ Reduction of costs for employers through lower tax burden on labor;

→ Introduction of progressive taxation as a more efficient model of taxation;

→ Introduction of the non-taxable part of the salary of EUR 700.00 on the gross basis (rate   income tax of 0% on a gross basis of up to EUR 700.00);

→ Introduction of an increased income tax rate of 15% on the gross base above EUR 1,000.00;

→ Abolition of the obligation to pay contributions for compulsory health insurance.

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