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Montenegro Double Taxation Avoidance Treaties and Agreements

Montenegro Double Taxation Avoidance Agreements

Updated on Friday 30th December 2016

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Montenegro has signed so far treaties double tax treaties with: Albania, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Finland, France, Germany, Hungary, Iran, Italy, Korea, Kuwait, Latonia, Macedonia, Malaysia, Moldavia, Holland, Norway, Poland, Romania, Russia, Slovakia, Slovenia, Sri Lanka, Sweden, Switzerland, Turkey, Ukraine and United Kingdom. Even though the number of treaties is not so big (mostly due to the fact that Montenegro has already a very advantageous system of taxes) the number of it is increased every year.

These treaties of double tax avoidance are very important instruments used for attracting foreign investments due to the fact that the legal entities are no longer endangered to pay taxes in both the country of origin and in the country of residence. Our lawyers in Montenegro can help you benefit from this type of agreement.


Provisions of the double tax treaties explained by our Montengro lawyers

Even though the corporate tax on profits is among the smallest from Europe (only 9%) it can still be exempt by the DDT provisions or paid and after that credit in the country of origin. The methods used are called through exemption or through credit and a team of attorneys in Montenegro can help you apply one of these methods.
 
Other provisions contained by the treaties of anti-avoidance are referring to the withholding taxes on dividends, interests and royalties. Normally the dividends, royalties, interests and technical service fees paid to nonresidents have a 9% withholding tax applicable. Due to the double tax treaties these taxes are minimized and in many cases even exempt.


How to benefit from the provisions of a DTA in Montenegro

In order to be applicable the treaties must be signed by the Montenegro Ministry of Finance’s representative. This may take several months, that’s the reason many treaties are still waiting to be put in practice.
 
When wanting to benefit from the above conditions, the applicant must deliver evidence on its residency in other state(the state which has signed the treaty with Montenegro) such as a certificate of residency and a proof from a competent foreign tax authority regarding the fact that the candidate is already a tax payer in that particular country. This is one of the measures taken in order to avoid the tax frauds. Other method to avoid the tax frauds is by exchanging information regarding the tax payers of the treaty countries. These exchanges are regulated by the provisions stipulated at the end of the treaties, mostly if these treaties are elaborated after the OECD model.
 
If the tax information exchange provision is not present, various protocols regarding this process can be signed

In case you want to verify if a certain double traxation agreement applies to your business or if you need more information on how to benefit from the stipulations of such a treaty, feel free to contact our law firm in Montenegro.

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