Taxation of Sole Traders in Montenegro

Taxation of Sole Traders in Montenegro

Updated on Monday 27th February 2023

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taxation-of-sole-traders-in-montenegro.jpgSole traders in Montenegro represent private persons who activate on the local markets in order to gain profits. These legal entities in this country are governed by the Company Act in Montenegro. As follows, our lawyers in Montenegro explain a few details related to the taxation of sole traders in Montenegro.

The Law on Personal Income Tax in Montenegro

The Law on Personal Income Tax rules the taxation for sole traders in Montenegro.
According to this law, the rate of personal income tax is 9% of the tax base. This income tax is due by natural persons who gain revenues from, among others, self-employment.
The same law stipulates some of the following tax relieves for sole traders in Montenegro:
The calculated tax is reduced to 50% of the investments effectuated for the taxpayer who invested in fixed assets for his or her own business. Our attorneys in Montenegro can offer more details on this matter. Our law firm in Montenegro can also help entrepreneurs who are interested in setting up a sole trader in this country;
Certain fixed assets are not considered to be fixed ones, except for the ones classified in the first depreciation category and the passenger vehicles, with certain exceptions;
In case a taxpayer sells or divests the fixed assets mentioned above before the expiry of the three year period after the year in which the tax relief was utilized, he or she must rise the tax base for the value of used tax relief for the asset sale or divesture year.

Details on the personal income taxation in Montenegro

The personal income tax rate in Montenegro is a tax which is gathered from persons and is levied on various sources of income such as labor, pensions, dividends and interests.
The personal income tax of 9% is applied on salaries, income derived from real estate, as well as investment income.
The interest income gained by non-residents of Montenegro is levied with a personal income tax of 5%. Our Montenegro lawyers can provide more details on this tax.
In 2016, the local government rose the personal income tax rate from 9% to 11% on gross wages which are bigger than the average monthly wage.
Additionally, a local surtax is placed besides the personal income tax and is paid to the municipality in which the taxpayer lives.
A surtax of 13% is applied in all municipalities, except for Podgorica and Cetinje, where the surtax is of 15%.
The surtax base is the value of the personal income tax assessed.
For more information about the sole trader taxes in Montenegro, or for any legal advice, we kindly invite you to get in touch with our Montenegro law firm. Our lawyers can also give you details about all the taxes imposed in this country, including the Montenegro VAT. Our lawyers can provide you with more than just information about the taxation of sole proprietors in Montenegro. Furthermore, if you want to apply for citizenship in Montenegro, you can use the services of our immigration lawyers. They will not only provide you with step-by-step instructions but will also assist you practically throughout the entire application process.