A taxpayer of the income tax shall be a resident or non-resident natural person who generates income from sources stipulated by the law.
A resident natural person shall be a natural person who:
- Has habitual residence or centre of business and vital interests in the territory of Montenegro;
- Resides in the territory of Montenegro for more than 183 days in the tax year.
The resident of Montenegro shall also be a natural person who was assigned outside of Montenegro to conduct business for a natural person or legal entity who is a resident of Montenegro, or for an international organization.
Object of taxation
Object of taxation of a resident shall be the income the resident generates in Montenegro and outside Montenegro.
Object of taxation of a non-resident natural person (hereinafter referred to as the non-resident) shall be the income that the non-resident generates in Montenegro.
Income shall not include revenues generated on the following basis:
- regulations on rights of disabled persons;
- child allowances and special assistance for supplies for newborn children;
- basic rights in the area of social protection;
- assistance in the event of destruction or damage of property as a result of natural disasters or other extraordinary events;
- compensations paid from health insurance, except for wage compensation;
- inheritances and gifts;
- organized social and humanitarian assistance;
- state awards established by law;
- pensions, except for pensions obtained in accordance with the law governing the wages of the state and public officials, and disability allowances;
- lotteries and games of chance;
- goods, life, and property insurance.
Persons exempt from taxation
The following persons shall not pay the income tax:
- members of foreign diplomatic missions in Montenegro, and members of their households, if they are not citizens of Montenegro;
- members of consular representative offices, as well as members of their households, if they are not citizens of Montenegro;
- officials and experts of technical assistance programs of the United Nations Organization and its specialized agencies;
- honorary consuls of foreign countries, but only for earnings received by a country, which has appointed them to render the honorary consul service;
- officials, experts, and administrative staff of international organizations if they are not citizens of Montenegro or do not have habitual residence if Montenegro.
Tax period for which the income tax shall be calculated shall be a calendar year, with the exemption of cases when a business activity terminates or commences during the year.
The income tax shall be calculated upon the expiry of the calendar year or other period for tax assessment according to the tax base realized during that period.
A tax base for the income tax of a resident shall represent the taxable income of the taxpayer generated during the tax period, reduced by the amount of loss carried forward.
A tax base for the income tax of a non-resident shall represent the taxable income of the taxpayer generated during the tax period.
Tax rate of the income tax shall be 9% of the tax base.
The income tax rate on personal earnings exceeding 720 euro a month in gross terms shall be 11% on the amount of earnings exceeding 720 euro.
Sources of income
The income tax shall be paid on revenues from all sources except those that are exempt under the law.
Sources of revenues referred to in paragraph 1 of this Article shall include revenues generated in respect of:
- personal earnings;
- self-employment activity;
- property and property-based rights;
- capital gains.
Income shall represent the sum of taxable revenues generated in the tax period.
Calculation and payment of the income tax in the tax return
The income tax shall be calculated annually.
The taxpayer himself shall calculate the income tax in the tax return.
Taxpayer of the income tax shall be obliged, upon the expiration of the tax period, to file a tax return to the competent tax authority.
The tax return shall be filed at the end of April of the current year for the previous year.
A resident who generates income from the following sources shall be obliged to file the tax return:
- self-employment activity chargeable to tax for actual revenue;
- property and property-based rights;
- capital gains;
- on the account of personal earnings generated with two or more employers or payers of earnings whereat total monthly gross amount exceeds 720 euro.
Double taxation avoidance
To a resident taxpayer, who generates income outside of Montenegro and pays an income tax in another country, the tax credit in the amount equal to the income tax paid in such country shall be approved.
Agreement on double taxation avoidance shall supersede the provisions of the national law.