Montenegro:
Tax updates for May
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In May 2021, the Montenegrin authorities passed several changes to existing laws aimed at improving the current situation of the Montenegrin economy. Amendments to existing laws adopted include:
- Amendment of the existing sales tax law – increase of the sales tax registration limit from 18,000 to 30,000 euros
The changes to the existing VAT laws were published in the Official Gazette of the Republic of Montenegro No. 59 on June 4th, 2021 – the limit for a taxpayer up to which there is no VAT registration requirement will be raised from the current EUR 18,000 to EUR 30,000 annual turnover.
According to this, a taxpayer who has generated sales of goods or services with a value of at most and probably not more than EUR 30,000 in the last 12 months is not a taxpayer within the meaning of the law on value added tax. This law comes into force on the day of its publication in the Official Gazette of Montenegro.
- Amendment of the existing Income Tax and Social Insurance Act – income tax and social contribution reduction for new employees in 2021
In the same issue of the Official Gazette of Montenegro, No. 59, amendments to the Income Tax Law and the Law on Compulsory Social Insurance were published. These changes incorporate the exemption of part of income tax and compulsory social security contributions to be borne by the employee and by the employer.
Exemption from payment of part of income tax and compulsory social security contributions is made on the employee’s salary, which is not higher than the average monthly salary in Montenegro, according to the information provided by the administrative authority responsible for statistics, in the amount of:
1) 90% taxes and social security contributions in 2021.
2) 60% taxes and social security contributions in 2022.
3) 30% taxes and social security contributions in 2023.
The employer can exercise the right to time off provided that:
1) The employee was entered in the records of the Labor Office of Montenegro at least three months before the date of the conclusion of the employment contract.
2) the employer has concluded a permanent employment contract with the employee until December 31, 2021.
3) by establishing an employment relationship with the employee named in number 1 of this paragraph, the number of employees that the employer had as of December 31, 2020 has increased.
4) Before the conclusion of the contract, the employee was not employed by the person who is the founder or the person is related to the employer for whom he is employed, regardless of whether the employment relationship was terminated.
The content of this article is intended to provide general guidance on the subject. You should seek expert advice regarding your specific circumstances.
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