# Montenegro personal income tax, tax year 2026 This skill computes Montenegro personal income tax for an individual or a sole proprietor (preduzetnik) for 2026. The law is the Personal Income Tax Law (Zakon o porezu na dohodak fizičkih lica, "PIT Law"), consolidated through amendment 160/25, which applies from 1 January 2026 (160/25 art. 21), read with amendment 70/26, which changes the gambling rate from 21 May 2026 (70/26 arts. 1 and 3). The tax is run by the Tax Administration (Poreska uprava). The currency is the euro. ## Who this applies to - **Taxpayers.** Every resident or nonresident individual who earns income from a source named in the law. Where two or more people earn income jointly, each is taxed on his or her share (PIT Law art. 2). - **Residents.** An individual is resident if he or she has a domicile or centre of business and vital interests in Montenegro, or stays in Montenegro for more than 183 days in the tax year. An individual sent abroad to work for a Montenegrin resident person or for an international organisation is also resident (art. 3). Citizenship, a bank account or one immigration document does not decide residence. - **Scope.** Residents are taxed on income earned in and outside Montenegro; nonresidents only on income earned in Montenegro (art. 4). - **Tax period.** The calendar year, except where an activity starts or stops during the year (art. 7). On cessation of an independent activity, tax is computed for the part of the year in which it was carried on (art. 42(1a)). - **Income classes.** Personal earnings (salary); independent activity, split into a principal independent activity, supplementary entrepreneurship and occasional independent work; property (rent); capital; capital gains; sport; copyright, related rights, patents, trademarks and independent cultural professionals; other receipts; internet and video games (gaming); and games of chance (art. 12(2)). Total income is the sum of these for the period (art. 12(3)). - **Out of the tax.** Members of foreign diplomatic and consular missions and their households who are not Montenegrin citizens, UN technical-assistance officials, honorary consuls on pay from the appointing state, and officials, experts and administrative staff of international organisations who are not Montenegrin citizens or have no domicile in Montenegro (art. 6). - **Other skills.** Monthly salary withholding and the IOPPD report are in the [payroll skill](montenegro-payroll.md); insurance status, contribution bases and the annual pension refund in the [social contributions skill](montenegro-social-contributions.md); VAT in the [VAT skill](montenegro-vat.md); companies (d.o.o., a.d.) in the [corporate income tax skill](me-corporate-income-tax.md). ## Rates, bands and thresholds | Item | Amount | Tax year | Source | |---|---|---|---| | Personal earnings (salary), monthly | 0% up to EUR 700.00; 9% from EUR 700.01 to 1,000.00; 15% above EUR 1,000.00 | 2026 | [PIT Law art. 10(1)(1)][law], as restated by [160/25 art. 3][amend] | | Principal independent activity, annual | 0% up to EUR 8,400.00; 9% from EUR 8,400.01 to 12,000.00; 15% above EUR 12,000.00 | 2026 | [PIT Law art. 10(1)(2)][law] | | Supplementary entrepreneurship, occasional work, property, capital, capital gains, sport, royalties, other receipts, internet and gaming | 15% of the tax base | 2026 | [PIT Law art. 10(1)(3)][law] | | Gambling winnings paid 1 January to 20 May 2026 | 0% up to EUR 50.00; 10% from EUR 50.01 to 1,500.00; 15% above EUR 1,500.00, per winning | 1 Jan to 20 May 2026 | [PIT Law art. 10(1)(4)][law], [160/25 art. 3][amend] | | Gambling winnings paid from 21 May 2026 | 12% of each winning | from 21 May 2026 | [70/26 arts. 1 and 3][may]; [Gazette record][mayrecord] | | Undeclared income found from the rise in net assets | 80% of the base | 2026 | [PIT Law art. 10a][law] | | Occasional independent work, undocumented costs | standard expenses 30% of receipts | 2026 | [PIT Law art. 20(2)][law] | | Rent, undocumented costs | standard expenses 30% | 2026 | [PIT Law art. 35(2)][law] | | Holiday letting to tourists | standard expenses 50% if tourist tax is paid; 70% under a lease with a travel agency or local tourist organisation with average occupancy of at least 60 days a year | 2026 | [PIT Law art. 35(3)][law] | | Depreciable fixed assets | value over EUR 200 and useful life over one year | 2026 | [PIT Law art. 23(2)][law] | | Depreciation rates | group I 2.5% (straight line, asset by asset); II 10%; III 15%; IV 20%; V 30% (declining balance on the group) | 2026 | [PIT Law art. 23(3) to (5)][law]; [160/25 art. 7][amend] | | Health, humanitarian, social, educational, scientific, religious, cultural, sports and environmental spending | deductible up to 3% of total income | 2026 | [PIT Law art. 24][law] | | Representation (entertainment) | deductible up to 1% of total income | 2026 | [PIT Law art. 25][law] | | Chamber and association memberships | deductible up to 0.1% of total income, or the amount fixed by law | 2026 | [PIT Law art. 26][law] | | Business losses | carried forward, no longer than 5 years | 2026 | [PIT Law art. 33][law] | | New business in an underdeveloped municipality | tax cut by 100% for the first 8 years, total relief no more than EUR 200,000; apply within 30 days of registration | 2026 | [PIT Law arts. 32 and 32a][law] | | New hire in an underdeveloped municipality | salary tax relief for 4 years from hiring | 2026 | [PIT Law art. 32b][law] | | Property acquisition cost that cannot be established | 80% of the sale price | 2026 | [PIT Law art. 37d(5)][law] | | Sport income, undocumented costs | standard expenses 30%; amateur athletes 90% | 2026 | [PIT Law art. 37j][law] | | Copyright and related income, undocumented costs | 60% fine art; 50% architecture, urban and landscape planning; 30% performers; 30% all other copyright, related rights, patents, trademarks and cultural professionals | 2026 | [PIT Law art. 37lj][law] | | Internet income | expenses 15% of receipts | 2026 | [PIT Law art. 37p(1)][law] | | Video-game (gaming) income, undocumented costs | standard expenses 20% | 2026 | [PIT Law art. 37p(3)][law] | | Lump-sum tax eligibility | prior-year (or planned) turnover below EUR 30,000.01 | 2026 | [PIT Law art. 49(1)][law]; [160/25 art. 14][amend] | | Salary from two or more payers, return required | total monthly gross above EUR 700 | 2026 | [PIT Law art. 43(4)(5)][law] | | Municipal surtax (prirez) | up to 13% of the tax; up to 15% in the Capital City (Podgorica) and the Old Royal Capital (Cetinje); rate set by each municipality's decision | 2026 | [Local Self-Government Financing Law arts. 8 and 9][local] | | Pension and disability contribution (PIO), employees | 10% employee, 0% employer | 2026 | [Contributions Law art. 15][contrib] | | Unemployment contribution, employees | 0.5% employee, 0.5% employer | 2026 | [Contributions Law art. 18][contrib] | | VAT, standard rate and registration | 21%; registration once turnover in the last 12 months, or a shorter period, exceeds EUR 30,000 | 2026 | [VAT Law arts. 24, 42 and 55][vat] | | Fine, individual (return, payment, foreign salary, rent withholding) | EUR 500 to 2,000 | 2026 | [PIT Law art. 53v][law] | | Fine, entrepreneur (return, advances, information return, lump sum, books) | EUR 1,000 to 6,000, plus a possible ban on the activity of 1 to 3 months | 2026 | [PIT Law art. 53a(3) and (4)][law]; [160/25 art. 18][amend] | | Fine, legal-person payer | EUR 2,000 to 20,000; responsible person EUR 500 to 1,000 | 2026 | [PIT Law art. 53a(1) and (2)][law] | Checks: a monthly salary of EUR 1,200 bears PIT of 300 × 9% + 200 × 15% = EUR 57.00. Annual principal-business profit of EUR 8,400 bears no tax; EUR 12,000 bears EUR 324.00. The salary bands are monthly; the business bands are annual. Never apply one to the other. ## The taxable base ### How the base is built Taxable income is total income less recognised expenses, which must be documented unless the law says otherwise (art. 13). A resident's base is the taxable income of the period less a carried-forward loss; a nonresident's base has no loss deduction (art. 8). Each income class has its own base, rate and payment route, so keep a separate schedule per class. ### Exclusions and exempt amounts - **Not income** (art. 5): disability rights payments, child allowance, basic social-protection rights, aid for natural disasters, health-insurance benefits other than salary compensation, inheritances and gifts, organised humanitarian aid, state awards, pensions (except pensions of state and public officials), prize games, insurance of property and life, and receipts of religious officials (point 12, added by [160/25 art. 1][amend]). - **Exempt up to set amounts** (art. 5a): for example, death solidarity aid up to EUR 2,000 (raised from 1,500 by [160/25 art. 2][amend]), illness aid up to EUR 1,000, retirement severance up to EUR 1,500, field allowance and separated-living allowance up to EUR 100 a month, student grants up to EUR 300 a month, newborn payment to an employee up to EUR 1,000, amateur athletes' food allowance up to EUR 600 a month, and jubilee awards of EUR 150 to 450. - An inherited or gifted property's exclusion at receipt does not make its later sale tax free: the acquisition cost is then the donor's or deceased's cost (art. 37d(3)). - An unidentified bank credit is neither an exempt gift nor automatically business revenue. If the tax authority finds undeclared income from the rise in net assets, art. 10a taxes it at 80%. ### Principal independent activity and supplementary entrepreneurship - **Who.** A principal independent activity is a registered business, a liberal profession (health workers, vets, farmers, lawyers, notaries, auditors, engineers, architects, advisers, consultants, translators, journalists and similar) or professional and intellectual services that are the taxpayer's main activity (art. 16(2) and (3)). Supplementary entrepreneurship is business carried on by an entrepreneur as a supplementary activity under the company law (art. 16(4), added by [160/25 art. 5][amend]). Supplementary entrepreneurship is taxed at a flat 15%: it does not get the 0% and 9% bands. - **Base.** Taxable profit is the income-statement profit adjusted under the PIT Law (art. 17). Income and expenses follow the income statement under the accounting law unless the PIT Law says otherwise (arts. 18 and 20(1)). Dividends and profit shares from other legal persons are left out of the business base (art. 19); this does not exempt an individual's private dividends, which are capital income under art. 37. - **Not deductible** (art. 21): costs not incurred for the business, costs that cannot be documented, interest for late payment of tax and contributions, interest paid to nonresidents above the usual commercial rate, payments to a nonresident head office, profit distributions to employees or others, fines and penalties, and contributions to political organisations. Income tax and owner drawings are not expenses either. - **Inventory.** Materials and goods sold use weighted average cost or FIFO (art. 22). - **Depreciation.** Tax depreciation replaces book depreciation on fixed assets over EUR 200 with a life over one year, at the group rates in the table (art. 23). Right-of-use assets under operating leases and intangible assets are depreciated as booked under the accounting rules (art. 23(6) and (7)). Do not use the corporate-tax EUR 300 threshold. - **Capped expenses.** Qualifying-purpose spending up to 3% of total income, and only if paid to bodies carrying on those activities and used only for those purposes (art. 24). Representation up to 1%, if business-related, documented and not paid to a related person (art. 25). Memberships up to 0.1%, except a membership fixed by law (art. 26). Do not use the corporate 3.5% cap. - **Bad debts.** Deductible only if the debt was earlier included in income, is written off in the books and failed collection is proved; a later recovery goes back into income (art. 27). Reserve funds are not deductible (art. 28). - **Related-party interest.** Deductible up to the open-market interest cost and no more than actually paid (art. 30). The difference between arm's length interest and interest actually received is added to the lender's base (art. 31). - **Losses.** Business losses carry forward for no more than five years (art. 33). Keep a register by year of origin and use. A business loss is not set against rent, capital income or capital gains, and a capital loss is not carried forward under art. 33. - **Mixed-use costs.** Home office, car, phone and internet costs are deductible only for the business part, since private costs are excluded (art. 21(1)) and costs must be documented (arts. 13(2) and 21(2)). The law sets no fixed home-office or car percentage: ask for floor-area or mileage evidence and deduct nothing until it is produced. - **VAT-registered taxpayers.** Output VAT is not income and recoverable input VAT is not an expense, because the base follows the income statement (arts. 18 and 20). Principal annual business PIT on taxable base B: `0.09 × max(min(B, 12000) − 8400, 0) + 0.15 × max(B − 12000, 0)`. ### Occasional independent work Occasional work outside the taxpayer's main activity, or a work contract (ugovor o djelu) to make or repair something or perform a physical or intellectual task, if not taxed under another heading (art. 16(5)). If costs are not documented, standard expenses are 30% of receipts (art. 20(2)), so the base is 70% of the gross receipt and tax is 15% of that. A legal-person or entrepreneur payer withholds the tax at each payment; income received directly is taxed with the annual return (art. 48a). ### Classifying bank-statement lines | Line on the statement | Class | Rule | |---|---|---| | Client payments, fees, platform payouts (Stripe, PayPal, Wise, Upwork) into a registered business | Principal or supplementary business income | Arts. 16 to 18 | | ZARADA, PLATA, salary from an employer | Personal earnings, monthly bands | Arts. 10(1)(1), 14 and 15 | | ZAKUP, KIRIJA, rent received | Property income, 15% after expenses | Arts. 34 to 36 | | KAMATA, interest received | Capital income, 15% of gross (interest on Montenegrin government, central bank or municipal debt securities is not capital income) | Art. 37(1)(1) and (5) | | DIVIDENDA, dividend | Capital income, 15% of gross | Art. 37(1)(4) | | POVRAĆAJ POREZA, tax refund | Not income | Art. 42(6) | | Own-account transfers, loan principal, VAT payments | Neither income nor expense | Arts. 13 and 18 | | POREZ, PRIREZ, income tax paid; drawings | Not deductible | Art. 21 | | KAZNA, fines and penalties | Not deductible | Art. 21(7) | | Laptop, furniture, car over EUR 200 | Fixed asset, depreciate | Art. 23 | | DOPRINOSI, PIO, contributions | Track separately in the contribution workpaper | Contributions Law | ### Property income Rent from movable and immovable property (art. 34). Expenses are documented actual costs or, if not documented, 30% of rent (art. 35(1) and (2)). For rooms, apartments, houses and flats let to tourists, standard expenses are 50% if tourist tax was paid, or 70% under a lease with a travel agency or local tourist organisation giving average occupancy of at least 60 days a year (art. 35(3)). The route depends on the evidence, not on the larger percentage. Taxable income is rent less expenses in the same period (art. 36). A legal-person or entrepreneur tenant withholds 15% at each payment; rent received directly is taxed with the annual return (art. 49a). A licensed holiday-letting provider files a return even with no income in the year (art. 43(5)). Tourist tax, property tax and VAT are separate. ### Capital income Interest; the owner's private use of company assets and services; liquidation surplus above invested capital; dividends and profit shares in cash, shares or stakes; and shares that board members and employees receive or buy on preferential terms (art. 37(1) and (2), as amended by [160/25 art. 8][amend], which deleted point 2). No costs are deductible; the base is the gross amount (art. 37(3) and (4)). Interest on debt securities issued by the state, the Central Bank of Montenegro or a municipality is not capital income (art. 37(5)). The payer withholds 15% at payment (art. 50). ### Capital gains - **What.** Gains on the sale or transfer of real estate (land, buildings, flats, business units and other structures), stakes in legal persons and shares and other equity securities. A negative difference is a capital loss (art. 37a). - **Real estate.** Sale price is the contract price less documented reconstruction and sale costs; the tax authority sets the price if the contract price is below market, and an exchange uses market price (art. 37c). Acquisition cost is the price paid or the price the authority set on acquisition under the real-estate transfer tax law, or construction cost for a self-built property; for a gift or inheritance, the donor's or deceased's cost. It is indexed each year by retail price growth from acquisition to sale, using official statistics. Only if no cost can be established is acquisition cost 80% of the sale price (art. 37d). - **Company stakes.** Sale and purchase values are those in the contract; the authority sets the sale value if below market; a stake acquired on founding costs the founding contribution plus increases (art. 37e). - **Shares.** Listed shares cost the documented price paid; unlisted shares the documented price, or nominal value if no price is documented. Repeated purchases of the same issuer use FIFO. Bonus shares paid as a dividend cost the value at which they were acquired (art. 37f). - **Exempt** (art. 37g): a property that was the taxpayer's only and main residence (domicile); transfers between spouses or life partners linked to marriage, partnership, divorce, its end or inheritance; gifts to first-order heirs. - **Losses.** A capital loss is set only against capital gains of the same tax period (art. 37h). - **Tax.** 15%, computed annually and paid with the annual return (art. 50a). A gain recorded in business books goes in the tax balance, not a separate return (art. 43(6a)); never report it twice. ### Sport, copyright, other receipts, internet and gaming - **Sport** (arts. 37i to 37k): income of professional and amateur athletes, coaches and sports professionals, transfers and fees, that is not salary. Documented costs, or standard 30%; amateur athletes 90%. - **Copyright, related rights, patents, trademarks, cultural professionals** (arts. 37l to 37m): documented costs, or standard 60% for fine art, 50% for architecture, urban and landscape planning, 30% for performers' rights and 30% for everything else. - **Other receipts** (art. 37n): awards and payments to people not employed by the payer, officials' pensions under the officials' salary law (point 1a, added by [160/25 art. 9][amend]), receipts above art. 5a limits, pay of board and assembly members not employed by the payer, bankruptcy trustees and lay judges, severance on agreed termination, sales-agency income and all other untaxed income. Taxed on gross (art. 37n(3)). - **Internet and video games** (arts. 37o to 37r): income from an activity carried on through the internet, if not taxed under another heading, with a fixed 15% expense; income from video-game competitions and other gaming that is not salary, with documented costs or 20% standard. These percentages are expenses; the tax rate is 15%. Do not use both actual and standard costs, and do not move salary or business income into the internet heading. ### Gambling winnings Taxable winnings are each individual winning from lottery games, betting and global jackpots, less the stake for that winning (art. 37s, as replaced by [160/25 art. 10][amend]). Prize games are not income (art. 5(10)). Rates: progressive bands for winnings paid to 20 May 2026; 12% for winnings paid from 21 May 2026 ([70/26][may]). The game organiser withholds at each payment or transfer (art. 50f). ### Reliefs - **Underdeveloped municipalities** (arts. 32 and 32a): a taxpayer who starts an activity there pays no tax for the first eight years from registration, capped at EUR 200,000 in total including other state aid. Not available to someone who closed the same or a similar activity in the previous three years, to recipients of aid for firms in difficulty, or in transport, shipbuilding, steel, trade and hospitality (except primary hospitality establishments). Apply within 30 days of registration; the authority decides; a statement of other state aid goes with each annual return. - **New hires there** (art. 32b): a permanent or at least five-year hire of a person registered with the Employment Agency for over three months and living in an underdeveloped municipality frees the salary tax for four years, if headcount rises above the 12-month average. If the employer ends the contract within five years (other than at the employee's request or for serious breach), the tax is repaid within 30 days. - **Expired** (art. 32c): the 2021 to 2023 new-hire relief. - **Research and innovation; digital nomads** (art. 32d): exemption for beneficiaries of research and innovation incentives, and for income from a foreign employer earned under digital-nomad status, each under its own law. ### What sits on top of PIT - **Municipal surtax (prirez).** A municipality can levy a surtax on the PIT on salary, independent activity, property and property rights, and capital income, at up to 13% of the tax, or up to 15% in the Capital City and the Old Royal Capital (Local Self-Government Financing Law art. 8). The actual rate is the municipality's own decision (art. 9). It is a tax on the tax, never added to the income rate: at a 13% surtax the top business rate becomes 15% × 1.13 = 16.95%; at 15% it is 17.25%. The law lists only these four bases; capital gains and gambling winnings are not among them. - **Social contributions.** Employees pay 10% PIO and 0.5% unemployment; the employer pays 0% PIO and 0.5% unemployment (Contributions Law arts. 15 and 18). The health contribution provisions are deleted (art. 17). The annual PIO ceiling is set each year by Ministry of Finance act (art. 14(3) and (4)). Older secondary guides still show 15% employee pension and 8.5% health; those rates are out of date. Details, bases and the self-employed rules are in the [social contributions skill](montenegro-social-contributions.md). - **VAT.** Standard rate 21% (VAT Law art. 24); a business whose turnover in the last 12 months, or a shorter period, exceeds EUR 30,000 must apply for registration by the 20th of the following month (arts. 42 and 55). A VAT-registered taxpayer cannot pay lump-sum PIT (PIT Law art. 49(12)). See the [VAT skill](montenegro-vat.md). ## Deadlines and filing - **Annual return.** Form GPP-FL with schedules A, PPG, A1, B, B1, C, D, D1, E, E1, F, G and H ([return rulebook art. 3][return]), filed by the end of April for the previous year (PIT Law art. 43(2)). Tax is self-assessed and paid when the return is filed; advances and withholding on all sources are credited (art. 42(2), (4) and (5)). An overpayment is refunded on request or credited to the next year's advances (art. 42(6)). - **Who files** (art. 43(4) to (6)): residents with a principal independent activity (unless on lump-sum tax), supplementary entrepreneurship, or occasional work not taxed by withholding; rent, unless the payer is a legal person or entrepreneur; capital gains; foreign income; salary from two or more payers with total monthly gross above EUR 700; sport; copyright and related income; internet and gaming income. A licensed holiday-letting provider files even with no income. A nonresident files for Montenegrin income on which no withholding is prescribed. - **Where and how.** A resident files with the tax office of his or her domicile, a nonresident with that of his or her stay, in person, by post or electronically; the taxpayer or an authorised person signs ([return rulebook arts. 4 and 5][return]; PIT Law art. 43(7)). - **Cessation.** A taxpayer who stops an independent activity files within 30 days of deletion from the register (art. 43(2a)). - **Late or missing return.** The tax authority files a return on the taxpayer's behalf ex officio (art. 43(6b)). - **Two or more employers.** The authority assesses the tax by decision within 30 days of the return, from the return and its own records (art. 43a). - **Business advances.** Principal and supplementary business tax is paid in monthly advances of 1/12 of the previous year's tax, by the end of each month for the previous month (art. 48(1) and (2)). A new business files an information return with its estimated income within 15 days of registration (art. 48(4)). - **Lump-sum tax** (art. 49): available on request to a principal independent activity with turnover below EUR 30,000.01. Apply by the end of January, or within five days of registration for a new activity; the authority decides within 15 days. Tax is paid monthly at 1/12 by the end of the month for the previous month; seasonal activities of up to six months pay by the 5th of the month for the current month. Turnover books must be kept. Not available for lawyers, notaries, auditors, accountants, health, consulting, design, surveying, enforcement officers and other professional and intellectual activities, hairdressing, billiards and amusement games, wholesale and retail trade, hospitality, hotels, financial intermediation, real estate, or VAT-registered taxpayers; the authority can approve lump-sum tax for trade or hospitality in a kiosk, trailer or mobile unit only where the taxpayer produces and sells only its own products (art. 49(10) and (11)). If circumstances justify it, the authority orders a change of method by decision (art. 49(7)). The scale is set by Ministry rulebook (art. 49(2)). - **Withholding by the payer, at payment:** salary (art. 46), occasional work (art. 48a), rent paid by a legal person or entrepreneur (art. 49a), capital income (art. 50), sport and copyright income earned in Montenegro (arts. 50b(1) and 50c(1)), other receipts (art. 50d). Gambling: the organiser withholds at payment and pays by the 15th of the following month (art. 50f). - **Paid with the annual return:** capital gains (art. 50a), internet and gaming income (art. 50e), sport and copyright income earned abroad (arts. 50b(2) and 50c(2)), and occasional work or rent received directly (arts. 48a(2) and 49a(2)). - **Self-assessed within five days:** salary from abroad, and salary from a foreign diplomatic mission or international organisation (art. 46(6) and (7)). - **Employer reports.** Monthly report of taxes and contributions by the 15th of the month for the previous month (art. 47(3)); annual statement of salary and tax to each employee by 31 January (art. 47(1)); other payers give recipients a statement by 31 January (art. 47(5)). - **Records.** Keep identity and residence evidence, income records, accounts and loss registers, asset, valuation and indexation evidence, relief decisions, foreign tax and treaty evidence, payer statements, advance payments, the signed return and payment records. ## Penalties and interest - **Individual:** EUR 500 to 2,000 for not filing the return by the end of April (or within 30 days of cessation), wrong computation or not paying with the return; for a resident with foreign or diplomatic-mission salary not paying within five days; and for rent withholding failures (art. 53v). - **Entrepreneur:** EUR 1,000 to 6,000 for not filing or paying the annual return, not paying advances on time, not filing the information return within 15 days of registration, not paying lump-sum tax on time, or not keeping turnover books; a ban on the activity of one to three months can be added (art. 53a(3) and (4)). For an individual, not keeping turnover books brings a EUR 200 misdemeanour order (art. 53b). - **Legal-person payer:** EUR 2,000 to 20,000 for failing to compute, withhold or pay tax on salary, rent, capital, sport, copyright, other receipts or gambling winnings, or to give salary data or the monthly report; the responsible person EUR 500 to 1,000 (art. 53a(1) and (2)). - **Interest, appeals, enforcement.** The PIT Law refers these to the tax procedure law (art. 53). Late-payment interest runs from the day after the due date: 0.03% a day until 17 July 2026, then 5.4% a year for 18 July to 31 December 2026 (ECB main refinancing rate plus 3 points, set each half-year) (Tax Administration Law art. 95, as amended by 104/26 arts. 20 and 26; Tax Administration decision of 24 July 2026). - A fine follows a specific offence; an arithmetic difference is not by itself a penalty. ## Cross-border points - **Nonresidents** are taxed only on Montenegrin income (art. 4(2)), with no loss carry-forward (art. 8). They file only for Montenegrin income on which no withholding is prescribed (art. 43(6)). - **Foreign tax credit.** A resident who pays income tax abroad gets a credit for it, capped at the Montenegrin tax on that income (art. 44). Compute the cap with the right class rate and base: a principal business uses the progressive bands, not a flat 15%. Do not credit social contributions, refundable treaty excess or unproved tax. The law gives no carry-forward of unused credit. - **Treaties** prevail over the PIT Law (art. 45(1)). The Ministry sets the form and procedure for residence certificates (art. 45(2)). - **Foreign salary** is self-assessed and paid within five days of receipt (art. 46(7)); a nonresident organisation with a seat or permanent unit in Montenegro withholds like a local employer (art. 46(5)). - **Foreign sport and copyright income** is taxed annually with the return (arts. 50b(2) and 50c(2)). - **Posted workers.** An individual sent abroad by a Montenegrin resident or for an international organisation remains resident (art. 3(2)). - **Digital nomads.** Income from a foreign employer earned under digital-nomad status is exempt under art. 32d. - **Payments to nonresidents in a business.** Interest above the usual commercial rate and payments to a nonresident head office are not deductible (art. 21(4) and (5)). ## Worked examples All figures are EUR for 2026. Facts are as stated; there is no surtax, social contribution, VAT or relief unless stated. ### 1. Principal business: accounts to tax, and the annual balance Total revenue 80,000; accounting profit 25,000 after all booked costs. Add back private costs 1,200 and book depreciation above tax depreciation 800. Qualifying-purpose spending 3,000 exceeds the 3% cap (2,400) by 600; representation 1,000 exceeds 1% (800) by 200; memberships 120 exceed 0.1% (80) by 40. Adjusted profit is 27,840. An unused business loss of 3,000 within its five years brings the base to 24,840. PIT is 3,600 × 9% = 324 plus 12,840 × 15% = 1,926, total 2,250. Advances paid 1,800, so 450 is due with the return. [Arts. 17 to 33, 42 and 48][law] ```oa-check name: Montenegro principal business annual profit and settlement inputs: revenue: 80000 accounting_profit: 25000 private_expense: 1200 depreciation_adjustment: 800 qualifying_spend: 3000 representation: 1000 memberships: 120 available_loss: 3000 paid_advances: 1800 steps: - purpose_excess: max(qualifying_spend - revenue * 0.03, 0) - representation_excess: max(representation - revenue * 0.01, 0) - membership_excess: max(memberships - revenue * 0.001, 0) - adjusted_profit: accounting_profit + private_expense + depreciation_adjustment + purpose_excess + representation_excess + membership_excess - loss_used: min(available_loss, max(adjusted_profit, 0)) - taxable_business: max(adjusted_profit - loss_used, 0) - annual_pit: max(min(taxable_business, 12000) - 8400, 0) * 0.09 + max(taxable_business - 12000, 0) * 0.15 - settlement_due: annual_pit - paid_advances expected: purpose_excess: 600 representation_excess: 200 membership_excess: 40 adjusted_profit: 27840 loss_used: 3000 taxable_business: 24840 annual_pit: 2250 settlement_due: 450 ``` ### 2. Principal versus supplementary business The same taxable profit of 10,000. As a principal activity, PIT is 1,600 × 9% = 144. As supplementary entrepreneurship, PIT is 15% = 1,500. The class follows the facts and registration; it is not an election. [Arts. 10, 12 and 16][law] ```oa-check name: Montenegro principal versus supplementary income rates inputs: taxable_profit: 10000 steps: - principal_pit: max(min(taxable_profit, 12000) - 8400, 0) * 0.09 + max(taxable_profit - 12000, 0) * 0.15 - supplementary_pit: taxable_profit * 0.15 expected: principal_pit: 144 supplementary_pit: 1500 ``` ### 3. Occasional work paid by a company Gross fee 2,000, no documented costs, paid by a company. Standard expenses 600, base 1,400, PIT withheld 210. The 1,790 left is before any contribution due on the fee. [Arts. 16(5), 20(2) and 48a][law] ```oa-check name: Montenegro occasional independent work withholding inputs: gross_receipt: 2000 steps: - standard_expenses: gross_receipt * 0.30 - taxable_base: gross_receipt - standard_expenses - pit_withheld: taxable_base * 0.15 - receipt_after_pit_only: gross_receipt - pit_withheld expected: standard_expenses: 600 taxable_base: 1400 pit_withheld: 210 receipt_after_pit_only: 1790 ``` ### 4. Rent with standard expenses Gross rent 20,000, no documented costs. Ordinary letting: base 14,000, PIT 2,100. Tourist letting with tourist tax paid: base 10,000, PIT 1,500. Tourist letting under an agency or local tourist organisation lease with at least 60 days' average occupancy: base 6,000, PIT 900. These are three different sets of facts. [Arts. 35, 36 and 49a][law] ```oa-check name: Montenegro rental standard expense alternatives inputs: gross_rent: 20000 steps: - ordinary_base: gross_rent * (1 - 0.30) - ordinary_pit: ordinary_base * 0.15 - qualifying_50_base: gross_rent * (1 - 0.50) - qualifying_50_pit: qualifying_50_base * 0.15 - qualifying_70_base: gross_rent * (1 - 0.70) - qualifying_70_pit: qualifying_70_base * 0.15 expected: ordinary_base: 14000 ordinary_pit: 2100 qualifying_50_base: 10000 qualifying_50_pit: 1500 qualifying_70_base: 6000 qualifying_70_pit: 900 ``` ### 5. Property gain with a same-year capital loss Sale of a property that was not the only and main residence for 150,000, with documented reconstruction 7,000 and sale costs 3,000; the price is not below market. Indexed acquisition cost is 110,000. Adjusted sale price 140,000, gain 30,000. A capital loss of 5,000 on shares sold in the same year reduces the taxable gain to 25,000; PIT 3,750, paid with the return. [Arts. 37a to 37d, 37g, 37h and 50a][law] ```oa-check name: Montenegro property gain and current capital loss inputs: sale_price: 150000 reconstruction: 7000 sale_costs: 3000 established_indexed_cost: 110000 current_capital_loss: 5000 steps: - adjusted_sale: sale_price - reconstruction - sale_costs - gain: adjusted_sale - established_indexed_cost - taxable_capital_gain: max(gain - current_capital_loss, 0) - pit: taxable_capital_gain * 0.15 expected: adjusted_sale: 140000 gain: 30000 taxable_capital_gain: 25000 pit: 3750 ``` ### 6. Shares under FIFO Buy 100 shares at 10, then 100 at 15, of the same issuer; sell 150 at 20. FIFO cost is 100 × 10 + 50 × 15 = 1,750; gain 1,250; PIT 187.50. Fifty shares at 15 remain. [Arts. 37a, 37f and 50a][law] ```oa-check name: Montenegro securities FIFO gain inputs: first_units: 100 first_price: 10 second_units: 100 second_price: 15 units_sold: 150 sale_price_each: 20 steps: - first_used: min(first_units, units_sold) - second_used: units_sold - first_used - proceeds: units_sold * sale_price_each - fifo_cost: first_used * first_price + second_used * second_price - gain: proceeds - fifo_cost - pit: gain * 0.15 - remaining_second_units: second_units - second_used expected: first_used: 100 second_used: 50 proceeds: 3000 fifo_cost: 1750 gain: 1250 pit: 187.50 remaining_second_units: 50 ``` ### 7. Internet income versus video-game income Two receipts of 10,000 each, neither salary nor taxed under another heading. Internet income: 15% expenses, base 8,500, PIT 1,275. Video-game competition income with no documented costs: 20% standard, base 8,000, PIT 1,200. [Arts. 37o to 37r and 50e][law] ```oa-check name: Montenegro residual internet and video game bases inputs: internet_receipts: 10000 game_receipts: 10000 steps: - internet_base: internet_receipts * (1 - 0.15) - internet_pit: internet_base * 0.15 - game_base: game_receipts * (1 - 0.20) - game_pit: game_base * 0.15 expected: internet_base: 8500 internet_pit: 1275 game_base: 8000 game_pit: 1200 ``` ### 8. Foreign dividend with a capped credit A resident receives a foreign dividend of 10,000 gross and proves 2,000 of foreign income tax paid. Montenegrin tax is 1,500, so the credit is capped at 1,500 and nothing is left to pay. The 500 excess is not carried forward, refunded or set against other income. [Arts. 37, 44 and 45][law] ```oa-check name: Montenegro private foreign dividend credit cap inputs: foreign_gross_dividend: 10000 qualifying_foreign_tax: 2000 steps: - domestic_tax_on_foreign: foreign_gross_dividend * 0.15 - allowed_credit: min(qualifying_foreign_tax, domestic_tax_on_foreign) - residual_domestic_pit: domestic_tax_on_foreign - allowed_credit - excess_not_claimed: qualifying_foreign_tax - allowed_credit expected: domestic_tax_on_foreign: 1500 allowed_credit: 1500 residual_domestic_pit: 0 excess_not_claimed: 500 ``` ### 9. Fine-art royalty and amateur sport Fine-art rights 5,000 with no documented costs: 60% standard, base 2,000, PIT 300. Amateur sport income 5,000 (not salary) with no documented costs: 90% standard, base 500, PIT 75. [Arts. 37i to 37m, 50b and 50c][law] ```oa-check name: Montenegro fine art royalty and amateur sport inputs: fine_art_rights: 5000 qualifying_amateur_sport: 5000 steps: - royalty_base: fine_art_rights * (1 - 0.60) - royalty_pit: royalty_base * 0.15 - sport_base: qualifying_amateur_sport * (1 - 0.90) - sport_pit: sport_base * 0.15 expected: royalty_base: 2000 royalty_pit: 300 sport_base: 500 sport_pit: 75 ``` ### 10. Sole proprietor with municipal surtax Principal-business taxable profit 20,000; the municipality's surtax decision sets 13%. PIT is 324 + 8,000 × 15% = 1,524. Surtax is 13% of the PIT, 198.12. Total 1,722.12. Contributions are computed separately. [PIT Law art. 10(1)(2)][law]; [Local Self-Government Financing Law arts. 8 and 9][local] ```oa-check name: Montenegro principal business PIT with municipal surtax inputs: taxable_profit: 20000 surtax_rate: 0.13 steps: - pit: max(min(taxable_profit, 12000) - 8400, 0) * 0.09 + max(taxable_profit - 12000, 0) * 0.15 - surtax: round(pit * surtax_rate, 2) - total: pit + surtax expected: pit: 1524 surtax: 198.12 total: 1722.12 ``` ### 11. Gambling winning before and after 21 May 2026 A betting winning of 1,500 after deducting the stake. Paid on 10 March 2026, the bands apply: 1,450 × 10% = 145. Paid on 10 June 2026, the flat rate applies: 1,500 × 12% = 180. The organiser withholds and pays by the 15th of the next month. [PIT Law arts. 10(1)(4), 37s and 50f][law]; [70/26 arts. 1 and 3][may] ```oa-check name: Montenegro gambling winning before and after the 70/26 change inputs: winning: 1500 steps: - tax_before_21_may: max(min(winning, 1500) - 50, 0) * 0.10 + max(winning - 1500, 0) * 0.15 - tax_from_21_may: winning * 0.12 expected: tax_before_21_may: 145 tax_from_21_may: 180 ``` ## Ask the client first 1. Residence: domicile, centre of vital interests, days in Montenegro in 2026, and any posting abroad or digital-nomad status. 2. Which income classes: salary (and from how many payers), registered business as main or supplementary activity, occasional contracts, rent (and whether to tourists, with a licence), interest and dividends, sales of property, stakes or shares, sport, royalties, internet or gaming income, gambling winnings. 3. For a business: accounts, fixed-asset register, unused losses by year, advances paid, VAT registration, lump-sum decision, and any underdeveloped-municipality or other relief decision. 4. Municipality of activity or residence, and its surtax decision. 5. Who paid each receipt (legal person, entrepreneur or private individual) and what tax was withheld. 6. Foreign income and foreign tax paid, with proof and the treaty country. ## Sources | Source | URL | Read on | |---|---|---| | Personal Income Tax Law, consolidated through 160/25 (Ministry of Finance publication), arts. 1 to 10a, 12 to 37s, 42 to 53v, 62 | https://wapi.gov.me/download/b8465a42-2073-4894-9be0-3b965c2f7195?version=1.0 | 2026-10-30 | | Law amending the Personal Income Tax Law, Official Gazette 160/25, arts. 1 to 21 (application from 1 January 2026, art. 21) | https://wapi.gov.me/download/47bea12c-f250-4cdc-b481-3afc30fba94f?version=1.0 | 2026-10-30 | | Law amending the Personal Income Tax Law, Official Gazette 70/26, arts. 1 to 3 (12% gambling rate) | https://www.sluzbenilist.me/propisi/394390/download | 2026-10-30 | | Official Gazette record for 70/26: published 20.05.2026, in force 21.05.2026 | https://www.sluzbenilist.me/propisi/394390 | 2026-10-30 | | Ministry of Finance, notice on taxation of gambling winnings, 5 January 2026 (bands from 1 January 2026) | https://www.gov.me/clanak/jasna-pravila-oporezivanja-dobitaka-od-igara-na-srecu-zakon-se-primjenjuje-jednako-na-sve | 2026-10-30 | | Rulebook on the form and content of the annual PIT return (GPP-FL), through 103/2025, arts. 1 to 5 | https://wapi.gov.me/download/afb50b45-7e83-4dac-b69e-2a1e280d3ffc?version=1.0 | 2026-10-30 | | Local Self-Government Financing Law, through 149/2025, arts. 8 and 9 (surtax) | https://wapi.gov.me/download/98dd2203-4c4e-4751-bbb9-9ad1e13564bd?version=1.0 | 2026-10-30 | | Law on Contributions for Mandatory Social Insurance, through 160/2025, arts. 14, 15, 17 and 18 | https://wapi.gov.me/download/97253561-f373-4456-a024-b15f6596a0f2?version=1.0 | 2026-10-30 | | VAT Law, consolidated through 12/26, arts. 24, 42 and 55 | https://wapi.gov.me/download/795cb7a3-2699-44bd-baa6-b11802121045?version=1.0 | 2026-10-30 | | Tax Administration Law, Ministry consolidation published March 2026 (before 104/26), art. 95(1) (0.03% a day) | https://wapi.gov.me/download/2dd530ac-eec4-4d0c-9d8f-0c9e7ebc5b86?version=1.0 | 2026-10-30 | | Law amending the Tax Administration Law, Official Gazette 104/26, arts. 20 and 26 (ECB + 3 points from 18 July 2026) | https://wapi.gov.me/download/c22f3c59-7e52-4213-bbe4-3cd9d8d3a373?version=1.0 | 2026-10-30 | | Tax Administration decision on the default interest rate for 18 July to 31 December 2026 (5.4% a year) | https://wapi.gov.me/download/6d6ec964-3dd6-4588-b81a-a5affc153f6e?version=1.0 | 2026-10-30 | [law]: https://wapi.gov.me/download/b8465a42-2073-4894-9be0-3b965c2f7195?version=1.0 [amend]: https://wapi.gov.me/download/47bea12c-f250-4cdc-b481-3afc30fba94f?version=1.0 [may]: https://www.sluzbenilist.me/propisi/394390/download [mayrecord]: https://www.sluzbenilist.me/propisi/394390 [return]: https://wapi.gov.me/download/afb50b45-7e83-4dac-b69e-2a1e280d3ffc?version=1.0 [local]: https://wapi.gov.me/download/98dd2203-4c4e-4751-bbb9-9ad1e13564bd?version=1.0 [contrib]: https://wapi.gov.me/download/97253561-f373-4456-a024-b15f6596a0f2?version=1.0 [vat]: https://wapi.gov.me/download/795cb7a3-2699-44bd-baa6-b11802121045?version=1.0 Not yet confirmed: the GPP-FL schedules and their box layout (the rulebook PDF omits the attachments) and the e-filing portal; the PIT-specific rulebook classifying assets into depreciation groups (art. 23(8)); the lump-sum tax scale (art. 49(2)); each municipality's current surtax rate (only the 13% and 15% caps are confirmed); the 2026 PIO annual ceiling (the old EUR 68,765 was a 2024 figure); the treatment of government grants in business income; the dual net minimum wage of EUR 670 and 800 and the employer Labour Fund and Chamber levies (see the payroll skill); the list of underdeveloped municipalities; and a September 2026 Government proposal to change salary taxation from 1 January 2027, not found enacted. > Contributed by Michael Cutajar.