Montenegro Corporate Tax Guide 2026

Overview — Corporate Tax in Montenegro

Corporate tax in Montenegro is governed by the Law on Corporate Income Tax (Zakon o porezu na dobit pravnih lica) and administered by the Tax Administration (Poreska Uprava). A company is tax resident if it is incorporated under Montenegrin law or has its place of effective management in Montenegro. Resident companies are taxed on worldwide income; non-resident companies with a permanent establishment in Montenegro are taxed on Montenegro-source income only. The standard CIT rate of 15% is one of the most competitive in the Balkan region, making Montenegro attractive for foreign investment.

Standard CIT Rate — 15%

The standard CIT rate for resident companies in Montenegro is 15% of taxable profit. Taxable profit is computed as gross revenue less allowable deductions including operating expenses, depreciation, interest costs (subject to thin capitalisation rules), and losses carried forward. Losses may be carried forward for up to 5 years. Capital gains are included in ordinary business income and taxed at the standard 15% rate. There is no separate capital gains tax for companies. Companies must file annual CIT returns by 31 March of the following year. Advance CIT payments are made quarterly based on the previous year's tax liability.

Small Business Rate — 9%

Small businesses whose annual turnover does not exceed EUR 30,000 benefit from a reduced CIT rate of 9%. To qualify, the company must meet the following conditions:

• Annual turnover does not exceed EUR 30,000 in the previous tax year
• The company is not a related party to other companies whose combined turnover exceeds the threshold
• The company is not engaged in certain excluded activities (banking, insurance, gambling)

The 9% rate is applied to the entire taxable profit, not just the portion below the threshold. Companies that exceed the EUR 30,000 threshold in a given year must revert to the standard 15% rate from the following year. The small business regime simplifies compliance requirements including reduced bookkeeping obligations.

Free Zones & Development Incentives

Montenegro offers significant tax incentives for companies operating in free zones and under-developed municipalities:

• Free zones — companies in free zones (Port of Bar, Nisic Plateau) benefit from CIT exemption for the first 8 years and 50% reduction for the next 8 years, provided they invest at least EUR 5 million
• Under-developed municipalities — companies investing in municipalities with below-average development may qualify for CIT reductions of 50-100% for up to 10 years, depending on investment amount and job creation
• Employment incentives — tax credits for employing new workers in under-developed areas, persons with disabilities, or long-term unemployed
• R&D incentives — double deduction of research and development expenses for CIT purposes

These incentives require prior approval from the Ministry of Finance and compliance with specific conditions. The free zone regime is particularly attractive for logistics, warehousing, and light manufacturing operations.

Withholding Tax on Payments to Non-Residents

Payments made by Montenegrin companies to non-residents are subject to withholding tax at the following rates (treaty rates may apply):

• Dividends — 15% (reduced under DTTs)
• Interest — 9% (reduced under DTTs)
• Royalties — 15% (reduced under DTTs)
• Management, consulting, and technical fees — 9%
• Rental of movable property — 9%

Capital Allowances (Depreciation)

Montenegro uses a depreciation system for tax purposes. Standard annual rates include:

• Buildings — 5-10% straight-line
• Plant and machinery — 10-20% straight-line
• Computer equipment — 20-25% straight-line
• Motor vehicles — 15-20% straight-line
• Intangible assets (goodwill, patents) — 10-20% straight-line

FAQs

What is the penalty for late filing of CIT returns?

Late filing attracts interest at the statutory rate on unpaid tax plus penalties. Failure to file may result in the Tax Administration issuing an estimated assessment based on available information.

Can foreign companies claim treaty relief on withholding tax?

Yes, Montenegro has over 40 double tax treaties. Treaty relief may reduce withholding tax rates on dividends, interest, and royalties. The non-resident must provide a Certificate of Tax Residency from their home country.

Is there a minimum tax for loss-making companies?

Montenegro does not impose a minimum tax. Loss-making companies may carry forward losses for up to 5 years against future profits. However, the Tax Administration may audit companies with persistent losses.

Disclaimer

This guide provides general information about Montenegrin corporate tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Montenegrin tax advisor or the Tax Administration of Montenegro for advice specific to your situation. InvestmentKit does not provide tax advice.