Montenegro taxes corporate profit on a progressive scale that begins at 9%. The headline number is widely quoted and just as widely misread: 9% is the rate on the first tranche of taxable profit, not a flat rate on all of it, and the rate steps up at two thresholds above that. The scale is set out in the Zakon o porezu na dobit pravnih lica, član 28.
This page states the rate rules with their article numbers, works two calculations, sets out what it costs to take the money out, and corrects the single most common error in English-language summaries of Montenegrin tax — the VAT registration threshold.
The progressive profit tax scale
Montenegro replaced its flat corporate rate with a progressive scale by the amendments published in Sl. list CG 146/21 of 31 December 2021, applying from 1 January 2022. The rate attaches to bands of taxable profit rather than to the whole of it, which is the detail most summaries lose. Član 28 stav 2 sets the bands exactly as follows:
| Taxable profit | Tax under član 28 stav 2 | Marginal rate |
|---|---|---|
| Up to €100,000.00 | 9% of the amount | 9% |
| €100,000.01 – €1,500,000.00 | €9,000.00 + 12% of the amount over €100,000.01 | 12% |
| Over €1,500,000.01 | €177,000.00 + 15% of the amount over €1,500,000.01 | 15% |
Two worked figures show what that means in practice.
A company that closes the year with €80,000 of taxable profit is entirely inside the first band: €80,000 × 0.09 = €7,200.
A company with €150,000 of taxable profit is not taxed at 12% on the whole figure. The first €100,000 carries €9,000. The remaining €50,000 is taxed at 12%, which is €6,000. The total is €15,000 — an effective rate of 10% across the whole figure, because only the portion above the threshold carries the higher rate. The same logic applies at the second threshold: a company only reaches an effective rate near 15% when its profit is far above €1.5 million.
Note what the base is. The tax attaches to taxable profit — the accounting result adjusted by the statute — not to turnover and not to the cash in the bank at year end.
The VAT threshold: €30,000, not €100,000
English-language guides to Montenegro repeat a "€100,000 VAT threshold" that does not exist in the statute. The figure in the Zakon o porezu na dodatu vrijednost is €30,000.
Član 42 stav 1 provides that a person whose supplies of goods and services do not exceed — and are not likely to exceed — €30,000 is not a taxable person under the Act. Član 42 stav 2 sets out what follows: that person may not calculate or state VAT on invoices, has no right to deduct input VAT, and does not keep books under the VAT Act. Član 42 stav 3 allows voluntary registration.
The practical consequence of getting this wrong is not academic. A business that plans around €100,000 and passes €30,000 has been trading outside the register while it was required to be inside it, and the input VAT it did not deduct along the way is not recovered by realising the error later.
The rates themselves sit in the three articles immediately before it:
| Rate | Article | Applies to |
|---|---|---|
| 21% standard | Član 24 | All supplies and imports except those given a reduced or zero rate |
| 15% reduced | Član 24a stav 2 | Books and publications; accommodation in hospitality accommodation facilities as defined by the tourism law; preparing and serving food and drink, excluding alcohol, sugared drinks and coffee; certain copyright and educational, literary and artistic services |
| 7% reduced | Član 24a stav 1 | Basic foodstuffs, medicines, orthotic and prosthetic devices, textbooks and teaching materials, non-bottled drinking water, daily press, menstrual products, baby nappies and the rest of the statutory list |
Accommodation is the item most often misreported. It sits at 15% under član 24a stav 2 tačka 2, not at 7% — a second reduced rate exists and hospitality is in it. Anyone modelling a rental or hotel operation on 7% is out by eight percentage points on their principal revenue line.
Export of services is a separate question from the threshold. Where the place of supply falls outside Montenegro under the place-of-supply rules, Montenegrin VAT is not charged on that supply — but that treatment depends on the place-of-supply article that applies to the specific service and the status of the recipient, not on a general rule that "foreign clients are exempt". It is worth confirming per service line rather than assuming.
Taking the money out
Taking profit out is a second, separate charge, and which statute applies depends on who receives it.
Where the shareholder is a company, Zakon o porezu na dobit pravnih lica, član 29 stav 1 tačka 1 requires the payer to withhold on dividends and profit shares paid to legal persons, resident and non-resident alike, and stav 4 fixes that at 15% of the gross amount at the moment of payment.
Where the shareholder is an individual — the ordinary case for a founder — a different statute applies, and the answer is the same number for a different reason. Zakon o porezu na dohodak fizičkih lica, član 37 stav 1 tačka 4 treats dividends and profit shares as income from capital; član 50 stav 1 obliges the payer to calculate, withhold and pay the tax at the moment of payment.
There is a third route founders try, and the statute closes it. Član 28a stav 1 of the profit tax Act requires withholding on payments made to individuals by way of a loan — with or without interest, and including an extension of the repayment period — with an exception for loans up to €5,000 a year to an individual who is not a related party under član 38. Član 28a stav 2 sets that withholding at 15% of the gross amount at the moment of payment. A "shareholder loan" that is really an extraction is taxed as one.
Where the recipient is resident in a treaty country, the treaty may reduce the rate on dividends below the domestic 15%, but the reduction is not automatic — it follows the procedure and residence evidence the treaty and the domestic rules require. Our note on Montenegro's double tax treaty network sets out how that works and where it does not.
Which costs actually reduce taxable profit
Expenses reduce taxable profit only so far as the statute allows. Zakon o porezu na dobit pravnih lica, član 11 refuses any cost that was not incurred for the purpose of the business and any cost that cannot be documented — those first two points decide most disputes on their own.
Two further limits are the ones commonly missed. An asset with a useful life over one year and a value above €300 is not expensed at all but capitalised and depreciated under član 13. Entertainment costs are recognised only up to 1% of total revenue, and only where they were incurred to advance the business, are documented, and the recipient is not a related party (član 15).
Within those rules, the categories that commonly arise are vehicles and operative leasing, fuel and municipal parking; business travel, flights and accommodation; computers, office equipment, cloud subscriptions and telephony; and business entertaining within the 1% ceiling.
Transactions with related parties are a separate regime again: they are tested against arm's length under the transfer pricing rules rather than simply deducted, which is dealt with in our note on transfer pricing and related-party transactions.
What the rate does and does not tell you
Montenegro is an EU candidate with an onshore corporate tax system: resident companies file returns under the same statute and keep their books under IFRS. It is not, however, outside the international transparency file. Montenegro has been on Annex II of the EU list of non-cooperative jurisdictions since October 2025 and was still there at the ECOFIN update of 17 February 2026 — Annex II lists jurisdictions whose commitments are still outstanding, not the Annex I blacklist. The substance behind the listing is automatic exchange of information: the OECD Global Forum's peer review update published in December 2025 records Montenegro as having committed to begin exchanges from 2023 and not yet having begun them.
None of that changes what a company owes here, and none of it is a reason to treat a Montenegrin company as invisible to anyone. It is a reason to get your own reporting position right in the country where you are tax resident — the rate a company pays in Montenegro is one input into that, not the answer to it.
Where the company sits inside a wider group, the ownership layer matters as much as the rate; our note on holding structures covers that. If the company does not exist yet, the formation rules changed on 1 January 2026 and are set out in our company formation guide.
Figures on this page are stated as at 26 August 2026, from the consolidated texts of the Zakon o porezu na dobit pravnih lica and the Zakon o porezu na dodatu vrijednost. Tax rates and thresholds change by amendment to those Acts; confirm the position for the fiscal year you are actually filing.
If you need the rate and threshold position checked against your own numbers before you commit to a structure, our team can review it with you.
