Montenegro VAT Guide 2026

Overview — VAT in Montenegro

VAT in Montenegro is governed by the Law on Value Added Tax (Zakon o porezu na dodatu vrijednost) and administered by the Tax Administration (Poreska Uprava). Montenegro's VAT system is harmonised with EU VAT directives as part of its EU accession process. The tax applies to the supply of goods and services by registered persons in the course of business, and to imports. Businesses with annual turnover exceeding EUR 30,000 must register for VAT. Voluntary registration is permitted for businesses below the threshold. The tax year follows the calendar year.

VAT Rate Structure — 21%, 7%, 0%

Montenegro has a three-rate VAT structure:

• Standard rate 21% — applies to most goods and services including electronics, clothing, vehicles, professional services, and alcohol
• Reduced rate 7% — applies to accommodation in hotels and tourist facilities, basic foodstuffs (bread, milk, meat, vegetables), water supply, medicines and medical devices, agricultural inputs (fertilisers, seeds), newspapers and books, utilities (electricity, heating), and children's car seats
• Zero rate 0% — applies to exports of goods, international transport, supplies to diplomatic missions and international organisations, and supplies related to international trade

Certain goods and services are exempt from VAT without credit (exempt without deduction), including financial services (insurance, credit), healthcare services, educational services, postal services, and residential property rent.

Registration Threshold — EUR 30,000

Businesses with annual taxable turnover exceeding EUR 30,000 must register for VAT with the Tax Administration. The threshold applies to the preceding 12-month period. Once registered, the business must charge VAT on all taxable supplies and issue VAT invoices showing the VAT amount separately. Businesses may voluntarily register for VAT below the threshold, which may be beneficial to reclaim input VAT on business purchases. Non-resident businesses making taxable supplies in Montenegro must register for VAT regardless of turnover.

VAT Filing & Payment

VAT-registered businesses must file returns either monthly (by the 15th of the following month) or quarterly (by the 15th of the month following the quarter), depending on turnover volume. The VAT return includes output VAT (21% or 7% on sales) and input VAT (VAT paid on purchases), with the net amount payable to (or refundable from) the Tax Administration. VAT returns are filed electronically through the ePorezi portal. Late filing attracts penalties and interest at the statutory rate. The Tax Administration conducts periodic VAT audits to ensure compliance.

Special Schemes & EU Harmonisation

As a candidate country for EU accession, Montenegro is progressively aligning its VAT legislation with the EU VAT Directive. Key harmonisation areas include the VAT refund system for foreign businesses, electronic invoicing standards, and anti-fraud measures. Montenegro has adopted the place of supply rules similar to the EU, meaning services to EU businesses are generally taxed where the customer is established. The 7% reduced rate on accommodation is particularly important for Montenegro's tourism-driven economy, which accounts for over 25% of GDP.

FAQs

Do I need to charge VAT if my turnover is below EUR 30,000?

No, registration is only compulsory if annual turnover exceeds EUR 30,000. Below this threshold, you are a small taxpayer and should not charge VAT on invoices. However, you also cannot reclaim input VAT. You may voluntarily register if beneficial.

Can I reclaim VAT on business purchases?

Yes, VAT-registered businesses can deduct input VAT on purchases used for making taxable supplies. Input VAT is netted against output VAT in the periodic return. Excess input VAT may be carried forward or refunded.

What is the VAT treatment for tourism and hospitality?

Accommodation in hotels, motels, guesthouses, and similar establishments benefits from the 7% reduced rate. Restaurant services (food and beverages) are generally taxed at 21% standard rate. Tour operator services follow special margin scheme rules.

Disclaimer

This guide provides general information about Montenegrin VAT 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.