Montenegro has spent a decade being described to foreign groups in a single number: nine per cent. That number now sits alongside a statute that guarantees a 15% floor for large groups, and the obvious inference — that Montenegro just became 6 points more expensive — is wrong in both directions. For most groups the tax cost is smaller than the headline suggests, and structurally capped. The obligation that actually bites is a filing, and it is penalised whether or not a cent of tax is due.
Article numbers below are from the Zakon o globalnom minimalnom porezu na dobit pravnih lica, published in "Službeni list Crne Gore" br. 033/26 of 10 March 2026, and from the consolidated Zakon o porezu na dobit pravnih lica, chain "Službeni list RCG" 065/01 through "Službeni list CG" 088/24 of 13.09.2024 and 104/26 of 17.07.2026. Both read on 5 September 2026. This is general information about Montenegrin law, not advice on a particular group.
What Montenegro actually enacted — and what it did not
The global rules come in three charging mechanisms: an income inclusion rule that taxes a parent on its low-taxed foreign subsidiaries, a backstop that reallocates undertaxed profit, and a domestic top-up tax that lets a jurisdiction collect the shortfall on its own profit first.
Montenegro enacted the third one, and only the third one.
The Act's single charging chapter is Chapter II, "Domaći dopunski porez" — the domestic top-up tax — and it contains one article. Article 5(1) states that the domestic top-up tax is calculated and collected in Montenegro. Article 5(2) extends the obligation to constituent entities of multinational groups located in Montenegro where their effective tax rate is below 15%.
There is no income inclusion rule in the text and no undertaxed-profits backstop. Across all 37 articles the only provision that identifies a taxpayer is Article 30(1), and it names "a constituent entity liable to the domestic top-up tax in Montenegro" — nothing in the Act charges tax on an entity located elsewhere.
The practical consequence for a group headquartered in Germany, the Netherlands or Ireland is narrow and worth stating plainly: this statute does not reach your foreign subsidiaries. It reaches the profit your Montenegrin entities earn, and it reaches it first — before the parent jurisdiction's own rules can pick up the same shortfall. That priority is the commercial logic of a domestic top-up tax: a group's Montenegrin exposure is bounded by what Montenegro itself under-taxes.
The arithmetic almost nobody runs
Article 28 of the Zakon o porezu na dobit pravnih lica sets Montenegro's corporate rate. Article 28(1) states the rates are progressive; Article 28(2) sets the bands: 9% up to €100,000 of taxable profit; €9,000 plus 12% on the amount above €100,000 up to €1,500,000; and €177,000 plus 15% on the amount above €1,500,000.
That top band is 15% — the same figure as the global floor. It is tempting to conclude that a large, profitable Montenegrin company is already at the floor and has nothing to worry about. The bands say otherwise.
Because the first €1.5 million is taxed at 9% and 12%, the blended statutory rate never reaches 15% at any level of profit. It approaches it and stops short, permanently:
| Taxable profit | Tax under Article 28(2) | Blended statutory rate | Shortfall against 15% |
|---|---|---|---|
| €100,000 | €9,000 | 9.00% | €6,000 |
| €500,000 | €57,000 | 11.40% | €18,000 |
| €1,500,000 | €177,000 | 11.80% | €48,000 |
| €5,000,000 | €702,000 | 14.04% | €48,000 |
| €20,000,000 | €2,952,000 | 14.76% | €48,000 |
| €100,000,000 | €14,952,000 | 14.95% | €48,000 |
The shortfall rises to €48,000 and then stays there. Every euro of profit above €1.5 million is taxed at exactly the floor rate, so the gap stops growing. A Montenegrin entity with €100 million of profit and one with €1.5 million have the same structural shortfall.
Two cautions before that table is used. First, the global rules do not compare statutory rates. Article 16(1) computes the effective tax rate as adjusted covered taxes of the Montenegrin constituent entities divided by their net income, both determined under the Act's own rules — Articles 6 to 9 for income, Articles 10 to 15 for taxes. Incentives, permanent differences and deferred tax movements can push the real figure below the blended statutory rate, or above it. Second, the calculation is made per jurisdiction, not per company: Article 16(2) aggregates the profits and losses of every constituent entity located in Montenegro before the rate is struck.
But the direction the table shows is real, and it explains something a group needs to understand before it models anything: Montenegro's rate structure produces a permanent, bounded shortfall rather than a large one.
The election that reduces most of this to zero
Article 20 is the provision that decides the outcome for the majority of Montenegrin subsidiaries, and it is easy to miss because it is one page of a long statute.
Article 20(1) provides that, on the election of the filing constituent entity, the top-up tax payable by constituent entities located in Montenegro is equal to zero for a fiscal year where both of the following are true:
- average revenue of all constituent entities located in Montenegro is less than €10,000,000; and
- average profit or loss of all constituent entities located in Montenegro is a loss, or is less than €1,000,000.
Article 20(3) defines "average" across the fiscal year and the two preceding years; Article 20(4) drops any of those years with no Montenegrin constituent entities.
Both tests must be met. A distribution company with €30 million of Montenegrin revenue and €400,000 of profit fails the first and does not qualify, however modest its profit.
The trap is in Article 20(2): the relief is an election, made once a year under Article 29(4) and (5). It is not automatic. A group that meets both thresholds comfortably but does not make the election in its return is not relieved by arithmetic — it is left computing an effective tax rate and a top-up under Articles 16 to 19. Article 29(5) then keeps the election running from year to year unless the filing entity revokes it at year end.
For a great many groups with a genuine but small Montenegrin operation — a services company, a regional office, a single hotel, a development vehicle between projects — Article 20 is the whole answer, and the work is to make the election rather than to compute the tax.
The carve-out for groups that are actually here
Where the de minimis thresholds are exceeded, the top-up is not charged on all profit. Article 17(5) charges it on "excess profit" — net profit less the substance-based income exclusion of Article 18.
Article 18(3) excludes a percentage of eligible payroll costs for qualifying employees working for the group in Montenegro. Article 18(4) excludes a percentage of the carrying value of eligible tangible assets located in Montenegro — property, plant and equipment, natural resources, a lessee's right of use, and a government licence involving significant tangible investment. Article 18(4)(1) removes property held for sale, lease or investment from that base, which matters directly to a development or rental structure.
The long-run percentage is 5% each. Article 32 replaces it with a declining transitional schedule:
| Fiscal year beginning 1 January | Payroll exclusion (Art. 18(3)) | Tangible asset exclusion (Art. 18(4)) |
|---|---|---|
| 2026 | 9.4% | 7.4% |
| 2027 | 9.2% | 7.2% |
| 2028 | 9.0% | 7.0% |
| 2029 | 8.2% | 6.6% |
| 2030 | 7.4% | 6.2% |
| 2031 | 6.6% | 5.8% |
| 2032 | 5.8% | 5.4% |
Read that table against the €48,000 shortfall. A group with real Montenegrin payroll and real Montenegrin property is deducting 9.4% of one and 7.4% of the other from the profit the top-up percentage is applied to. It does not take a large establishment before the excess profit — and the top-up with it — is extinguished by the carve-out alone.
A holding company with profit and no people has no carve-out. An operating company with staff, premises and equipment in Montenegro carries a shield the holding company does not.
What survives even when the tax is nil
The obligation that does not disappear is the return.
Article 28(2) requires a constituent entity located in Montenegro, or a designated domestic entity on its behalf, to file a top-up tax information return with the tax authority. Article 28(6) sets the deadline: electronically, no later than 18 months after the last day of the fiscal year. Article 28(5) lists what it contains, including identification of every constituent entity, the group's corporate structure, the information needed to compute the effective tax rate and top-up for each jurisdiction, and a record of the elections made.
Article 28(3) relieves the local entity from filing where the ultimate parent, or a designated filing entity, has filed in a jurisdiction that has a qualifying competent authority agreement with Montenegro. That relief is not silence: Article 28(4) still requires the Montenegrin entity to notify the tax authority of the identity of the filer and the jurisdiction where it is located. Article 28(7) requires groups with two or more Montenegrin constituent entities to designate one responsible entity.
Article 30(1) is a separate obligation with the same clock: an entity liable to the domestic top-up tax files a domestic top-up tax return electronically and pays the tax shown in it within the same 18 months. Article 30(3) makes all Montenegrin constituent entities jointly answerable for that liability in proportion to their own share.
The penalties are set out in Chapter IX, and they attach to the filing rather than to the tax:
| Breach | Penalty on the entity | Penalty on the responsible person |
|---|---|---|
| Failure to designate a responsible entity (Art. 28(7)); failure to file and pay within 18 months (Art. 30(1)) | €3,000 – €40,000 (Art. 33(1)) | €500 – €4,000 (Art. 33(2)) |
| Failure to notify the identity and jurisdiction of the filer (Art. 28(4)); failure to submit the information return (Art. 28(6)) | €3,000 – €20,000 (Art. 34(1)) | €500 – €2,000 (Art. 34(2)) |
A group that qualifies for the Article 20 de minimis, owes nothing and files nothing is exposed to the Article 34 range. The compliance cost of this statute is not the tax. It is the return.
Where the text still needs reading alongside the guidance
Three features of the published text should be flagged rather than smoothed over.
Article 37 brings the Act into force on the day of publication — 10 March 2026 — rather than on the eighth day, which is the usual Montenegrin rule. The Act contains no separate provision setting a date from which it applies, yet Article 35 refers to a "start of application" and requires the regulations under Articles 28 and 30 to be adopted within one year of that date. The only date anchor inside the Act is the Article 32 table, which begins with fiscal years beginning 1 January 2026 and matches the international transitional schedule from that year forward. The first affected fiscal year is therefore very likely 2026, with the first returns due in mid-2028 — but a group should confirm the application date and the availability of the forms with the tax authority rather than infer it from Article 32.
Article 18(2) as published states that where the filing entity elects not to apply the substance-based income exclusion, net profit is reduced by the payroll and tangible asset exclusions. Read literally that reverses the intended effect. Article 17(5) requires the exclusion to be subtracted when computing excess profit, and Article 29(4) treats the Article 18(2) decision as a one-year election, both of which point to the exclusion applying by default with an annual election to switch it off. The discrepancy is worth confirming before a return is filed on either reading.
Article 22 allows a filing entity to elect a zero top-up where the jurisdiction satisfies a qualified international safe harbour agreement, but the Act does not set out the tests — and Article 22(2) defines that agreement by reference to rules agreed by "all Member States", language carried over from the European directive the Act follows. Montenegro is not a Member State.
Article 36 is how these gaps are meant to close: it directs the tax authority to apply the global rule in accordance with all agreed Administrative Guidance of the OECD/G20 Inclusive Framework. In practice this statute is not self-contained, and a Montenegrin position taken from the Act alone, without the guidance it defers to, is incomplete.
One further transitional rule deserves attention in any group that has moved assets recently. Article 31(7) provides that where assets other than shares were transferred between constituent entities after 30 November 2021 and before the transition year, the acquiring entity's basis is the transferring entity's carrying value. A step-up achieved in that window does not survive into the effective tax rate calculation.
What this changes about Montenegro
For a group under the €750 million consolidated revenue threshold in Article 2(1) — measured in at least two of the four preceding fiscal years — nothing here applies, and the 9% band still means what it always meant.
For a group above it, Montenegro's position has changed less than the headline suggests. The shortfall is bounded, the de minimis election removes it for most small operations, and the substance carve-out removes much of the rest for operations that are genuinely here. What has changed is that the country now has an annual filing that carries a penalty of its own, and a statute that leans on guidance published elsewhere.
The question worth putting to an adviser is not "how much will the top-up cost". For most groups the honest answer is nothing. The question is which elections have to be made, by which entity, and by when.
If your group is testing the €750 million threshold or already inside it, our international tax work covers residence, withholding and the minimum tax rules together, and company formation covers the entity and reporting structure that sits underneath them.
