|
Last updated, February 2006
Montenegro Tax section was written by Branka Buric
Income Tax
- The individual income tax rates in Montenegro are progressive.
- Exemptions are granted to taxpayers with specific types of income.
INDIVIDUAL INCOME TAX
- Income tax in Montenegro is accounted for, depending on the amount of taxable income, by applying the following scale:
| Taxable income (monthly) |
Tax payable |
| up to 65 Euro |
0% |
| from 65 to 218 Euro |
0 Euro + 16% on income exceeding 65 Euro |
| from 218 to 381 Euro |
24.40 Euro + 20% on income exceeding 218 Euro |
| over 381 Euro |
57 Euro + 24% on income exceeding 381 Euro |
- Income from employment is withheld and paid by the employer, by application of the above scale, monthly, reduced by any personal deductions.
- Individual, who is a "permanent resident" of Montenegro, pays tax on his income earned in Montenegro and overseas.
- A foreign resident pays tax only on his income earned in Montenegro.
- A resident has right to personal deductions for each dependent family member in the amount of 120 Euro a year (10 Euro per month).
- A resident is any individual who resides on the territory of Montenegro for at least 183 consecutive days in a tax year, or a person who has a center of his/her business activities or life interests.
- Montenegrin resident's income from yield on investments (capital) is withheld, and taxed at the rate of 15%. Non-resident pays tax on yield on investments (capital) at the rate of 5%.
- A self-employed person can request lump sum taxation if their turnover in the year preceding the one for which tax is determined or whose planned turnover at the beginning of business is not higher than 18,000 Euro.
- Income from lease of real estate in Montenegro is taxed by application of the above scale. The taxable income is reduced by standard expenditures of 50%.
Corporate Tax in Montenegro
Corporate tax rates in Montenegro are progressive:
| For profit up to 100,000 Euro |
The tax is 15% |
| For profit above 100,000 Euro |
The tax is 15,000 Euro, plus 20% on the gain exceeding 100,000 Euro |
CAPITAL GAINS
- Capital gains in Montenegro are added to the regular income (in the amount of 50%).
- Capital gain from sale of securities which is reinvested within 12 months from their sale, into purchase of new securities, is not included in the taxable base in Montenegro.
- An individual who sells real property is exempt from tax on the condition that he/she has used that property for personal housing purposes for at least 3 years prior to its sale.
- A resident pays tax on capital gains annually, when filing the tax declaration. Resident's income from gains is added to the other income and taxed by application of the above tax scale.
- Non resident pays tax on capital gain at the rate of 15%, through withholding.
REPORTING DATES AND PAYMENT
- Income tax in Montenegro on revenues from employment is withheld at its source by employers. The tax is calculated based on the above scale, reduced by personal deductions, if any. Data on personal earnings and taxes paid of each employee have to be presented by January 31 for the previous year, by employer.
- Income tax on revenues from sources other than employment is paid by taxpayer, who is obliged to file a tax declaration annually.
- Tax declaration has to be filed no later than end of April, for the previous year.
DEDUCTION OF TAX AT SOURCE
Withholding taxes (paid at its source) are charged and paid on the following revenues:
- Wages/salaries (application of scale)
- Revenues from copyrights and industrial property rights - 20%
- Yield on capital - 15%
- Revenues from real estate - 20%
Comments:
Deduction at source for payments to foreign residents is subject to the Double Taxation Prevention Treaty
|
