Investors and ordinary people often choose other countries as a place of permanent residence. Montenegrin has the status of a stable state with many advantages. For example, the prospect of joining the EU in the coming years. However, before starting to apply for Montenegrin citizenship, it is worth getting as much information as possible about the situation inside the country. Privileges, areas for development, quality of education – this is what raises the most interest. According to an expert on the investment program of Malta Victoria Atanasova (company Immigrant Invest), it is worth getting acquainted in detail with the system of income tax in Montenegro.
Taxes on income for legal and private entities
The work is accompanied by the payment of fees. However, the conditions for international entrepreneurs and ordinary citizens are different. Foreigners who are preparing to move here should take this into account.
All types of income of citizens are subject to taxes. You need to be prepared that any profits made must be legal. There are several ways to pay your Montenegro tax residency, and the rate depends on a number of factors :
- Individual profit. The fixed rate is 9%. Sometimes the Montenegro corporate tax rate can increase by another 2%, but it is charged only on those incomes, which are higher than the established average level. The average income of residents in 2020 was 765 euros. If an individual receives income below this amount, the rate remains 9%, and above – 11%.
- Residence. You pay Montenegro taxes only if you are a permanent resident. This means that the period of stay in Montenegro must be at least 183 days during the year. If this period is less, the income tax will not be charged.
- Payment of fees. Tax residents who passed the registration in the relevant organizations, pay Montenegro property tax every year. Remember about the local income tax (13%), which in rare cases increases to 15% (Podgorica, Cetinje).
Taxation is the main requirement for a resident. The payment is made to the municipality where the registration procedure was carried out.
Taxes for corporate entities
Payment for corporate organizations is made by a modified scheme, nevertheless, it is still a Montenegro tax haven. In order to avoid financial difficulties, a representative office passes registration in Montenegrin and is considered to be a permanent place of activity.
The fixed Montenegro tax rate is the same 9%. However, there are some exceptions. If services are provided by a company outside the country, it is necessary to obtain an agreement. If there is an agreement, entrepreneurs can avoid paying double taxation in different countries (the place of registration of the owner and the place where services are provided).
In order to pay tax, it is necessary first of all to pass registration in the new country (Montenegrin). Tax authorities do not provide consultation and guide, so it is worth finding a specialist and asking questions. Entrepreneurship must ensure legal tax compliance of gains, regardless of the sale of goods or provision of certain services.
Companies try to base their activities (headquarters) in the country where the Montenegro tax haven will be held. It is advantageous for corporations to do this in Montenegrin territory for many reasons, including
- low Montenegro capital gains tax that promotes “survival.”
- outstanding entrepreneurship environment for start-ups;
- easy operations.
In 2025 Montenegro will become a full member of the European Union. As a result, low Montenegro taxes will be an advantage for entrepreneurs. At the same time, the number of new companies will increase. Advantages of taxation for entrepreneurs will open new opportunities for entrepreneurship and its development.