Montenegro corporate tax - guide for international expansion

Are you planning to expand your business to Montenegro? Understanding the country's corporate tax landscape is essential for making informed decisions about your international operations.

Montenegro offers an attractive business environment in the heart of the Balkans, with competitive tax rates and a strategic location bridging Western and Eastern Europe. Whether you're considering establishing a subsidiary or exploring new markets, getting to grips with corporate tax obligations will help ensure your venture runs smoothly. Wise Business can help streamline your international payments and currency management as you navigate this exciting expansion opportunity.

💡 Learn more about Wise Business

This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Montenegro Corporate tax rate in 2026

Montenegro applies a progressive corporate income tax (CIT) rate on taxable profits, with the rate starting at 9% for profits up to €100,000, making it one of the most competitive initial rates in Europe and globally. The progressive structure continues with a 12% rate on profits between €100,000.01 and €1,500,000, and a 15% rate on profits exceeding €1,500,000. This tiered system provides a favorable initial rate for smaller enterprises while introducing higher rates for larger profits, offering clarity and predictability for business planning within each bracket.¹

Companies are considered tax residents if they are incorporated in Montenegro or have their place of effective management in the country and are taxed on their worldwide income. Non-resident companies are only taxed on income derived from Montenegrin sources.¹
Montenegro also offers additional incentives for certain activities. Those engaged in specific activities within Special Economic Zones may qualify for tax holidays of up to 10 years, and research and development activities can benefit from various tax reliefs.²

How to pay corporate tax in Montenegro

Companies are required to file their annual corporate tax returns and make payments through the Montenegro Tax Administration's electronic system.³

The tax year in Montenegro follows the calendar year, running from 1 January to 31 December. Companies must submit their annual corporate tax return (along with financial statements, which include the income statement and balance sheet) and pay the tax liability by the end of March of the following year.⁴

Let's calculate the annual tax liability for a company with a turnover of €1.5 million. Assuming a profit margin of 10%, the taxable profit would be €150,000. At Montenegro's corporate tax rate of 9%, the annual tax due would be: €150,000 × 9% = €13,500
When expanding your business to Montenegro, the right financial tools will make the process smoother. Using a platform like Wise Business makes it easy to manage international finances. A multi-currency account allows businesses to pay for incorporation costs, registration fees, and government taxes in local currency without paying high exchange rate fees.

Get started with Wise Business 🚀

Tax Compliance in Montenegro

The steps to ensure your company stays compliant with Montenegro’s tax regulations:

• Register for taxes early: After incorporation, register promptly for all applicable taxes, including Corporate Income Tax (CIT), VAT, payroll taxes, capital gains, and property taxes. Early registration helps avoid penalties and creates a foundation for effective corporate tax planning.⁵
• File annual corporate tax returns: Companies must file annual tax returns within three months after the end of the financial year. The tax year typically follows the calendar year. Holding companies and foreign branches cannot file consolidated returns, so each entity must file separately.
• Submit VAT returns on time: VAT-registered companies must file monthly returns for the previous reporting period by the 15th of each month. Late filing attracts penalties ranging from €3,000 to €40,000.⁶
• Prepare for audits: While tax audits are not mandatory, authorities can perform them either as office control (reviewing returns and records) or as field control at company premises. Field audits may last up to 90 working days and often focus on VAT refunds, corporate tax deductions, and withholding tax compliance.⁴
• Avoid penalties: Late or missing corporate income tax filings can result in fines from €550 to €16,500. Proactive planning and accurate recordkeeping are key to maintaining compliance.⁷

International Expansion to Montenegro

Investors looking to expand in Southern Europe will find Montenegro’s business environment attractive. The country is a NATO member and an advanced candidate for EU membership, already aligning its regulations with international corporate tax law. This gives foreign investors more confidence when entering the Montenegrin market.⁸

Its economy is driven by tourism, energy, and agriculture. Tourism alone contributes about one quarter of GDP, even more when accounting for the informal economy. The sector attracts millions of visitors annually, creating strong demand for services, hospitality, and retail.
Energy exports also play a critical role, particularly through renewable transformation projects and a direct electricity link to Italy. Infrastructure development, including new highways and expressways by 2030, adds further opportunities for international businesses.⁸

Moreover, Montenegro’s fiscal framework is appealing to entrepreneurs. The Montenegro corporate tax rate is only 9%, which is far lower than the global minimum corporate tax rate of 15%, which is being adopted in many jurisdictions.⁹ Companies exploring how to reduce corporate tax legally may find the country’s system favourable compared to ongoing corporate tax reforms in other parts of Europe. Low rates and a stable currency (the euro) support a predictable business environment.

The nation has also improved its debt position, reducing the public debt-to-GDP ratio from over 100% in 2020 to about 60% in 2023. Foreign direct investment reached nearly EUR 857 million in 2023, signalling investor trust in Montenegro’s growth potential.⁸

The steps to set up a business in Montenegro are:¹⁰

• Start with market research and a business plan tailored to your target sector.
• Choose a location and select the right business entity type.
• Register the name with the Central Registry of Business Entities (CRBE).
• Obtain a Tax Identification Number and register for VAT if revenue crosses the threshold.
• Open a bank account and set up a record-keeping system.

In short, the way Montenegro's economy combines low taxes with strong growth potential makes it a solid hub for companies looking to expand into Southern Europe and the Balkans.

Incorporation of Business in Montenegro

To incorporate a business in Montenegro, you must register through the Central Registry of Business Entities (CRBE). Listed below are the main requirements:¹¹

• Articles of Incorporation: prepared for either a single founder or multiple founders.
• Decision or Incorporation Agreement: depending on the number of founders involved.
• Payment of state fees: €10 to the Tax Administration and €12 to the Official Gazette.
• Certified identification documents: a national ID for Montenegrin founders or a notarised passport copy for foreign founders.
• Notarisation: A court or notary must certify incorporation documents and payment slips.
• Registration form (PS-01): includes an option to request a tariff number if the company will import or export goods.
• VAT or excise duty registration: It is optional, and is completed simultaneously if applicable.
• Certificate of Registration: typically issued within seven days once all documents are submitted.

The minimum founding stake for a limited liability company (LLC) is just €1, making Montenegro one of the countries with lowest corporate tax and entry requirements for new businesses. After registration, companies are expected to:

• Maintain proper accounting records.
• Manage regular corporate tax payments.
• Be prepared for corporate tax audits to ensure compliance with international standards.

Business Entities in Montenegro

Under the Montenegro Company Law, businesses can choose from several entity types:¹², ¹³

• Sole Proprietorship: The simplest form of business. It has no minimum capital requirement, but the owner is personally liable for company debts.
• Limited Liability Company (LLC): The most common structure. Requires at least one shareholder (maximum 30) and just €1 in share capital. If capital exceeds €25,000, it may be reorganised as a joint stock company.
• Joint Stock Company (JSC): Designed for larger ventures. Requires €25,000 minimum capital, a board of directors, and annual audits. This structure suits high-capital investors planning public operations.
• General Partnership: Formed by two or more individuals who share full liability for the company’s debts. No minimum capital is required.
• Limited Partnership (LLP): Includes both general partners (with full liability) and limited partners (liable only to the extent of their investment). Limited partners have no decision-making authority.
• Branch Office or Subsidiary: Foreign businesses may register either. A branch depends entirely on the parent company, whereas a subsidiary operates as an independent Montenegrin entity, subject to local taxation.

Montenegro’s streamlined process, low costs, and flexible system offer investors an efficient way to establish a presence in the Balkans and beyond.

International corporate tax best practices

Managing corporate tax obligations across multiple jurisdictions requires a strategic approach to ensure compliance while optimizing your tax position.

Stay compliant with local and international tax laws by completing proper legal registration in every country where your business operates. File all required tax returns on time to avoid penalties, and maintain up-to-date knowledge of local tax regulations. Montenegro's relatively simple tax system makes compliance more straightforward, but businesses should still ensure they understand all obligations.

Companies should also be aware of international frameworks such as the OECD's Base Erosion and Profit Shifting (BEPS) initiatives and the global minimum tax under Pillar Two. While Montenegro is not yet an OECD member, it has committed to implementing these international standards to maintain transparency and prevent tax avoidance.

Leverage double taxation treaties (DTTs) to avoid being taxed twice on the same income. Montenegro has signed double taxation agreements with over 50 countries, including major economies such as Germany, France, Italy, and the United Kingdom. These treaties can significantly reduce withholding taxes on dividends, royalties, and interest payments.

Maintain comprehensive and transparent financial records to ensure accurate tax reporting and simplify audit processes. Good record-keeping also helps identify potential tax savings and ensures you can take advantage of available incentives and reliefs.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to Montenegro efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.
• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.
• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.
• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from registration to receiving international payments and managing your global treasury.

Get started with Wise Business 🚀

Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QuickPay QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

FAQs - Corporate tax in Montenegro

Who is liable for corporate tax in Montenegro?

All companies incorporated in Montenegro are liable for corporate income tax on their worldwide income. Foreign companies are only taxed on income derived from Montenegro sources, such as income from a permanent establishment or Montenegro-source investment income. The tax applies to legal entities, including joint stock companies, limited liability companies, and branches of foreign companies.

Are there any tax incentives for businesses in Montenegro?

Yes, Montenegro offers several tax incentives to encourage investment. Companies investing in underdeveloped regions can qualify for corporate tax holidays of up to 10 years, depending on the investment amount and the number of jobs created. Additional incentives are available for investments in tourism, agriculture, manufacturing, and research and development activities. Free zones also offer various tax benefits, including exemption from corporate income tax for the first eight years of operation.

What is the tax treatment of dividends in Montenegro?

Dividends paid by Montenegro companies to residents are subject to a 9% withholding tax. However, dividends paid to non-residents may be subject to different rates depending on applicable double taxation treaties. Many treaties reduce the withholding tax rate to 5% or 10%. Dividends received by Montenegro companies from foreign subsidiaries may qualify for participation exemption under certain conditions.

What is the process for registering for corporate tax in Montenegro?

Companies must register with the Montenegro Tax Administration within 15 days of incorporation or commencing business activities. The registration process involves submitting the company's founding documents, obtaining a tax identification number, and registering for relevant taxes, including corporate income tax, VAT (if applicable), and social security contributions. The process can typically be completed online through the Tax Administration's electronic system.

What are the common pitfalls to avoid regarding corporate tax in Montenegro?

Common mistakes include not maintaining proper documentation for tax deductions and misunderstanding transfer pricing rules for related-party transactions. Companies should also ensure they properly classify income and expenses, maintain adequate substance for tax residency purposes, and comply with thin capitalization rules that limit the deductibility of interest on excessive debt financing. Regular consultation with local tax advisors can help avoid these pitfalls.

Sources used in this article:

1. PwC Tax Summaries: Montenegro Taxes on Corporate Income
2. PwC Tax Summaries: Montenegro Tax Credits and Incentives
3. Montenegro Tax Administration: E-Filing Portal (TaxisPortal)
4. PwC Tax Summaries: Montenegro Tax Administration
5. Montenegro Guides: Business Tax Guide
6. Lawyers Montenegro: Taxes in Montenegro
7. Eurofast: Montenegro Tax Card 2025 (PDF)
8. U.S. Department of State: 2024 Investment Climate Statements - Montenegro
9. Montenegro Prospects: Why Invest in Montenegro
10. Multiplier: Montenegro Company Registration
11. Turkish Ministry of Trade: Montenegro Investment and Business Opportunities (MIBO) July 2019 (PDF)
12. E-Regulations Montenegro: Law on Business Organization (PDF)
13. Company Formation Montenegro: Types of Companies

Sources last checked 07/10/2025