Montenegro VAT - 2024 Update

Updated on Friday 26th January 2024

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The VAT in Montenegro is a tax applied when goods or services are sold or imported. In some countries, the VAT can be applied to exports as well, but this is not the case with Montenegro. The tax amounts to a certain percentage of the value of the sold product.

For the companies which have revenues exceeding 18 000 euro per year, the standard VAT rate in this country is of 21%, with possible rate reductions at 7% or even complete tax relief.

A law firm in Montenegro can offer all needed assistance for the obtaining of VAT number, for VAT invoicing and any other VAT related issue. You can also rely on us for business registration solutions in Montenegro, including tax and VAT registration. You can also rely on us if you want to set up a business in Montenegro.

We can also offer details about immigration to Montenegro. You must go to the Montenegrin consulate or embassy in your native country to apply for a visa. Make an appointment to submit your visa application by getting in touch with the Montenegrin Embassy that is closest to your location. Be careful to arrive at your appointment promptly. Or you can also simply rely on our lawyers. They can guide and help you in immigration to Montenegro throughout the relocation procedure.

Quick Facts
VAT registration services available (YES/NO)	Yes
Standard rate	21%
Lower rates	7% on certain food products, medicines, computers; 0% available on exports, supply of gas for vessels on international transport
VAT registration requirements	18,000 EUR annual turnover
Registration time frame (approx.)	Approx. 2-4 weeks
VAT for real estate transactions	21% rate for transfer of ownership for bulidings
Exemptions available (YES/NO)	Yes, financial services, healthcare services, education, radio broadcasting, religious services
Filing period	Monthly filings
VAT returns support (YES/NO)	Yes
VAT refund availability (YES/NO)	Yes, for non-residents purchasing goods from Montenegro
Local tax agent required (YES/NO)	Not mandatory, however, a local agent for foreign companies is required

Montenegrin VAT registration for EU and non-EU nationals

All companies and persons undertaking an activity which implies manufacturing, trading and providing or supply of a service, respectively a product will be liable to the payment of the value added tax in Montenegro. In order to do that, the entity must first register with the local tax authorities and obtain a VAT number.

The VAT legislation also imposed certain specific activities which are liable for VAT payments in Montenegro. Among these, the use of a property, be it real estate (tangible) or intellectual property (intangible) which results in the generation of income will be subject to the VAT in Montenegro.

Also, any temporary activity which generates income will also be subject to the value added tax. Those who import goods into Montenegro will also be subject to VAT payments.

On June 4, 2021, Montenegro released revisions to the VAT Law, raising the threshold for VAT registration from EUR 18,000 every 12 months to EUR 30,000 any 12 months. In addition to raising the registration requirement, the revisions stipulate that egg supplies are subject to the 7% reduced VAT rate. The modifications take effect on June 4, 2021, the publishing date.

It is important to know that in order to pay the VAT any business person or company must register with the Montenegro tax authorities. However, VAT registration is not mandatory in Montenegro, it is voluntary. But once a company has been registered, it cannot apply for non-registration for at least next three years.

Also note that, VAT registration is compulsory for any entity with a turnover of more than EUR 30,000. The value-added tax is calculated every month and is paid together with the other customs duties in the case of imported goods. Our team of immigration lawyers in Montenegro can answer questions about taxes for expats. Furthermore, if you are interested to acquire a passport in this country, the services of our lawyers are at your disposal. International treaties may be used to confer citizenship in Montenegro. For instance, the former Yugoslavian people benefited from this. There are three legitimate methods to receive a Montenegrin passport from the state for people without a history or close family ties to Montenegro: move there permanently, get married to a citizen, or make an investment.

Legislation on the value added tax in Montenegro

Over time, the value added tax has suffered various modifications, which is why there are several laws which provide for the levy of this tax. The following laws need to be consulted when dealing with the Montenegro VAT:

the Law on Value Added Tax which was introduced in 2001 and which was last revised in 2017;
the Rules on the Application of the Value Added Tax which was last amended in 2017;
the Rules on the determination of goods and services which are applied the reduced VAT rates;
the Rules on the form and content of VAT returns which must be filed by Montenegro companies;
the rules which provide for various exemptions from the payment of the value added tax;
when transferring real estate ownership rights of the buildings built after April 1st, 2003 for the first time, 21% VAT is imposed.

The legislation on the VAT is quite extensive, however, if you need information about it, our Montenegro lawyers are at your disposal. You need a temporary residency permit if you want to remain for more than 90 days. They often last a year or as long as the underlying ailment is met (e.g., employment or studying.) They are renewable for additional one-year periods. Permits for permanent residency are valid for five years and are renewable. Except for voting and having a Montenegrin passport, this confers all the rights and advantages of Montenegrin citizenship. Our lawyers can help you get a temporary or permanent residence permit in Montenegro.

The new Law on Value Added Tax in Montenegro

The value added tax is based on the law bearing the same name which suffered various amendments in 2017. At the time, the government established a few changes among which:

the new standard rate was established at 21% from the previous 19% rate;
business-to-business services are now subject to new rules related to the determination of the place of their supply;
new regulations related to the place of supply are also available to business-to-consumers services;
the VAT exemption threshold for imported products was lowered to 75 euros.

It should be noted that even if Montenegro is not an EU member state, its VAT legislation is in line with the EU regulations on this tax in order to ease the access to EU-based companies to the local market and the other way around.

Our Montenegro lawyers can offer more information on the changes brought to the VAT legislation and its impact on your local company.

Our team of immigration lawyers in Montenegro can answer questions about taxes for expats.

We also invite you to read about VAT registration in Montenegro in the scheme below:

What are the objectives of VAT taxation in Montenegro?

According to the tax legislation on the value added tax, there are two important categories of goods which are subject to this tax in Montenegro. These are the supply of goods and services and the imported goods.

When it comes to the supply of goods, which refers to the sale of movable and immovable assets, it is important to know that there are several categories of products which are deemed as liable for taxation in Montenegro. The following supplies of goods are levied with the VAT in Montenegro:

the supply of goods as a decision imposed by the authorities, including by the government;
the supply of goods which are sold based on a contract which contains provisions on the payment of a commission;
the supply of newly built constructions, as well as the transfer of ownership over immovable assets;
the supply of natural resources to household and corporate consumers and which can include electricity, gas, air conditioning and energy for heating.

With respect to the supply of services, these can be considered liable for VAT if they are performed or contracted by another party. Among the services which are subject to the Montenegro VAT are the transfer of intellectual property rights, the supply of services based on a decision of the authorities and the supply of services by a taxpayer.

There are also several exemptions from the payment of the VAT in respect with the supply of goods and services. The sale of land, of used cars and vessels for which the taxpayer was not entitled to deduct the VAT is not considered as supply of goods.

With respect to the import of goods, all products entering the country through the Montenegro Customs Authority will be subject to VAT.

Our attorneys in Montenegro can offer more information on the supply of goods and services which are imposed with the Montenegro VAT in 2024.

Goods and services subject to VAT reduction in Montenegro in 2024

In Montenegro, some goods and services are subject to a partial VAT exemption form 19% to 7%. Such products are:

Consumption products, such as those from the food industry;
Products from the pharmaceutical and medical fields such as medication and medical tools;
Housing services such as those offered by hotels, camps and other tourist lodgings;
Transportation services which deal with the transportation of people and luggage;
Services which assure public hygiene;
Funeral services;
Planting and breeding materials used in agriculture.

If the domain of activity of your company is among the list above, it means you can initiate a VAT partial exemption registration. Our lawyers in Montenegro can help you with the application procedure, tax planning services and with all relevant information.

Goods and services subject to 0% VAT rate or VAT tax exemption in Montenegro

Due to the Montenegrin legislation, some products and services can benefit from a 0% VAT rate. Another class of products is accorded complete tax exemption. Although in both cases the amount of money to be paid is 0, there are still some important differences. For example, a 0% VAT payer can claim a credit for the VAT paid on inputs, while a tax exempt company does not have this option.

Some of the services which benefit from 0% VAT tax reduction are:

Services offered in the maritime and air international traffic;
Goods used for consular and diplomatic needs;
Services and goods used in petroleum extractions in the sea.

Complete tax exemption is granted for revenues coming from services such as:

Banking services and financial services;
Health care and health services;
Services regarding social security;
Educational services;
Religious services, goods provided by religious institutions or involved in religious ritual;
Radio broadcasting services;
Insurance services;
Entertainment games and chance games services;

If you need more details about the Montenegro VAT, our lawyers are at your disposal. Besides, this, our lawyers can also offer you updated information on how to acquire citizenship in Montenegro. The political and economic stability of Montenegro attracts foreign investment to the country. Investors want to relocate to nations with robust political structures. So you can be confident that neither your business nor your status as an expat will be affected by an unstable economy, a dysfunctional political system, anarchy, or any other unanticipated situations. Benefits associated with citizenship in this country act as your future safety.

How is the VAT calculated in Montenegro in 2024?

In order to determine the amount to be paid as a value added tax, the taxpayer must file specific documents with the tax authorities. The tax base of the Montenegro VAT is made of:

the excise duty, the import duties, as well as other taxes and fees imposed upon the goods entering the country;
indirect costs which can be represented by packaging, transportation, insurance, and commissions.

The same tax base applies to goods imported by Montenegro companies or individuals.

It should be noted that special regulations apply to VAT payments related to works of art, travel agencies, small businesses, and agricultural activities in farms in Montenegro in 2024.

In order to pay the VAT, the taxpayer must have an invoice which will contain information about the products and their price. Both the seller and the buyer must have copies after the invoice. This document must contain specific information, among which the place and the date, as well as a reference number of the invoice, are mandatory.

The invoice must also provide information which helps with the identification of the seller and their Montenegro VAT number. Information about the buyer must also be found on the invoice. Other elements which must be contained by the invoice are the quantity and the name of the goods or services supplied, as well as the price which must be written with and without the VAT. The invoice must bear the signature and the stamp of the seller in order to be valid.

Filing VAT returns and VAT refunds

In order for the authorities to be able to collect the value added tax, the law imposes for all Montenegro companies and individuals paying the VAT to file returns. These documents must be filed on a monthly basis. These returns must be submitted by the 15^th of the month for the previous month for which the tax assessment was made. If the amount to be paid is lower than the amount which can be deducted, the difference will be refunded to the taxpayer in a maximum of 60 days.

All companies registered for VAT in Montenegro must know that they are required to store all invoices which prove the payment of such tax, including import documents.

If you are a foreign national in the country, our immigration lawyers in Montenegro can give you details about the applicable tax obligations.

Documents related to VAT payments in Montenegro

All taxpayers charging the VAT are required to submit various documents which prove the payment of this tax. Even if the VAT is charged to the final user of the product (the buyer), the taxpayer is required to file the following documents in order to prove the collection of the tax:

documents attesting the amount of money collected as VAT (the invoices);
the advance payments which have been made by the company;
the total value of the goods and services supplied;
the invoices issued by a Montenegro company abroad (if it has registered offices there).

It is important to know that for VAT purposes, the invoices issued by Montenegro companies must contain the entire price of a product, the price without the VAT and the value of the VAT to be paid.

Montenegrin VAT overview 2024

The Montenegrin VAT's guiding principles are consistent with those of the EU's Sixth Directive. The standard VAT rate for taxable supplies is 21%; however, some supplies are taxed at a reduced 7% rate (such as bread, milk, books, pharmaceuticals, and computers) and 0% rate (e.g. export of goods, supply of gasoline for vessels in international traffic).

The consideration (in cash, products, or services) received for supplies, including taxes other than VAT (such as customs and excise duty), and direct costs make up the VAT base in principle (e.g. commissions, cost of packing, transport).

The tax base will be the market value of the products or services obtained at the time of supply if the consideration is not given in cash. Additionally, the tax base represents the value of the received commodity or service in cases when goods are exchanged for services.

In Montenegro, registering for VAT may be compulsory or voluntary. For taxpayers whose turnover in the previous 12 months did not exceed 30,000 euros (EUR), voluntary VAT registration is an option.

A corporation cannot request deregistration for at least three years after it has been registered. Any firm that generates revenue that exceeds the EUR 30,000 level in any 12 months must register for VAT.

VAT is calculated and paid monthly using the calendar (i.e. a VAT return must be submitted and VAT liability must be cleared monthly). Customs duties and VAT calculated on imports are paid together.If you have any additional questions about VAT registration in Montenegro, consult our lawyers.

The tax lawyers at our law firm in Montenegro can guide you in detail about VAT regulations currently applicable in this country. Furthermore, our company incorporation lawyers can also help you if you are planning to open a company in Montenegro. They will not only help you in opening a company but also assist you in VAT registration for your company if it is required.

Voluntary and compulsory VAT registration in Montenegro

The relevant countries always oblige businesses with specific turnovers to register for VAT compulsorily.

If you have a company in Montenegro, but you are unable to understand the requirements, our lawyers can assist you. You are welcome to get in touch with our lawyers and consult your company’s annual turnover and check whether you are required to register for VAT.

Such tax compliance can keep you and your business away from troubles in a foreign state. Any business below the VAT threshold has the option of voluntary registration. Businesses have the option to charge VAT even when their sales are below the required amount.

They may do this for a variety of reasons. However, given that optional VAT registration entails additional fees, these should be balanced against the drawbacks. Choosing to voluntarily register for VAT might be challenging. With some additional duties and some drawbacks, there are a lot of potential advantages.

It stands to reason in some circumstances, such as when you need to add credibility or backdate a significant sum of VAT. In other cases, it might only result in more effort or expenses. Each business is different, so if you have any concerns about your company’s need for VAT registration, you can get in touch with our lawyers.

EORI numbers in Montenegro

Montenegro companies with trading activities in EU countries are allowed to apply for EORI numbers when first supplying goods and services in an EU member state. The EORI number will be issued by the Customs in the EU state and the company will be allowed to use it throughout the entire territory of the EU.

EORI numbers are issued based on the VAT number of the Montenegro company, so if you are interested in easier customs procedures, do not hesitate to ask our lawyers about obtaining such a number in 2024.

You can also watch our video below:

Other aspects related to the Montenegro VAT

Montenegro companies should keep in mind that:

a company is required to register for VAT if its annual turnover has exceeded 18,000 euros;
small taxpayers are not required to register for VAT if their income during an entire calendar year has not exceeded 18,000 euros;
once registered, a company is not allowed to de-register from VAT for a period of 3 years;
all documents related to VAT payments must be kept by taxpayers at least 5 years.

Local and foreign investors who want to open companies in Montenegro and want to register them for VAT in 2024 do not need to complete any special procedure. They can choose to register voluntarily or when reaching the required threshold.

At the level of 2024, it is worth considering VAT registration at the time the business is incorporated with the Montenegro Trade Register in order to avoid future complications.

In order to determine whether you are obliged to VAT registration and which class of VAT you should register for you might need the support of our Montenegro law firm.

Montenegro VAT format

In Montenegro, there are two different kinds of distinctive identifiers:

the registration number;
a VAT ID.

For instance:

Type 1: PIG-format number (12345678);
Type 2: REG- format number (1-23456789/012).

Our Montenegrin lawyers can help you if you have questions related to the format of a VAT number. In Montenegro, Value Added Tax (VAT) non-compliance can result in penalties and other sanctions. The VAT system in Montenegro is regulated by the Law on Value Added Tax, which sets out the rules and procedures for the payment, collection, and reporting of VAT. So, if you are interested in understanding VAT regulations in 2024, you can rely on our Montenegrin lawyers.

Besides this, if you are seeking expert help for purchasing a property in Montenegro, our lawyers can also help you in this regard.

Invocing requirements in Montenegro

The Law of Accounting and Audit governs mandatory invoicing laws in Montenegro. According to this law, all companies have to maintain documentation of their financial dealings and make sure that their invoices have all the information that is required, such as:

the invoice number;
the date of issuance; the supplier and customer's identities
a description of the goods or services;
the VAT;
the total amount owed.

While e-invoicing is not required in Montenegro, more and more companies are using it. E-invoicing facilitates digital transition, minimizes paper usage, and streamlines operations. The Law of Electronic Document, Electronic Identification, and Trusted Services in Electronic Business, however, requires enterprises to abide by certain standards.

Please contact our local lawyers which will help you conform to the VAT rules of this country and will help you invest in Montenegro.

We can also answer questions about immigration to Montenegro.