Personal income tax in Montenegro
Corporate Income Tax Rate – low CIT - bigger benefit of establishing a company to traditional job businesses pay exactly the same rate 9%
Levz tax - This Relates to capital interest and gains income and also standard income. A year ago, the average Montenegrin company turned over 22.2% of profit to the government taxes. Municipal governments have the capacity to levy a payroll tax of up to 15 percent on worker wages. A labor fund is backboned by fees of 0.2% that are applied on gross incomes.
Capital Gains Taxes
Both business es and individuals pay 9% of capital gains.
If a non-resident sells a real estate to a resident, they pay a 9% withholding tax on the capital gains.
Montenegro Tax Incentives for Businesses
A newly established business is exempt from CIT should, if they are only operating in the northern undeveloped locations of Montenegro. This tax break lasts for the very first eight years of business launch and only covers the initial $200,000 in income taxes. (This is only in certain scenarios)
Montenegro’s Double Taxation benefits
Montenegro has double tax treaties with most major EU governments including France, Germany, Italy,
Ireland and the Czech Republic, UK, China, Russia and Switzerland.
In case your home country have an agreement with Montenegro you will pay a different withholding
tax(WHT) on some specific types of income.
Real Estate Taxes in Montenegro
It is typically expected to pay:
- A transfer tax on purchased plot
- A VAT on new buildings or a transfer tax on previously transferred objects
- Capital gains tax on actual real estate you sell
- Taxes on income from renting
Annual Property Tax
They range between 0.25% and 1% whereas the property tax calculation is based on the real estate’s market value.
Transfer Tax on Plot of land and Buildings
A buyer of real estate property in Montenegro is charged a flat 3% as a transfer tax. If a building has not been sold before then a 21% VAT will be applied onto the sale price. This lowers the cost of selling real estate in Montenegro and helps add liquidity to the market.
Taxes on Rental Income
It is charged a flat 9% tax rate on rental gains. Before calculating the tax you may either deduct your actual expenses related to renting property or a flat 40% of gross rental income.
Montenegro’s Tax System in Summary
To summerize all this: The Montenegrin government grasped the opportunity to
attract foreigners and investments with a low tax environment, by reflecting it through low, competitive, and fair tax rates.
Things for the summary which every person needs to know:
1. A payment of 9% in personal income tax needs to be paid. This goes up to 11% for the part of your
income which goes above the standard Montenegrin income.
2. New services and goods, also including new homes have a 21% VAT applied on them
3. Land transfer, interest and capital gains taxes are significantly lower than the average.