Montenegro has shifted from a flat‑rate tax system to a progressive structure for both corporate and personal taxes, affecting the cost of doing business and the attractiveness of residency for foreign investors.
Corporate tax reform
- €0 – €100,000 of profit: 9 %
- €100,001 – €1.5 million of profit: 12 %
- Above €1.5 billion: rate not specified in the transcript (unclear)
The change replaces the previous flat 9 % corporate tax, making higher‑earning companies face a steeper rate while keeping small‑profit businesses at the original level.
Personal income tax changes
- The former uniform 9 % rate on personal income, dividends, rents and royalties has been increased to 50 % for those categories.
- For foreign residents, the current rates are:
- Dividends and capital gains: 15 %
- Worldwide income: roughly 9 % in some cases, but typically 15 % for most foreigners.
These adjustments bring Montenegro’s personal tax burden closer to levels seen in many other European jurisdictions.
Employment cost reduction
Montenegro has lowered the health‑contribution portion of payroll taxes, reducing the overall cost of hiring staff. The policy aims to raise average wages for Montenegrin citizens while making it cheaper for businesses to employ local workers.
When a Montenegrin company makes sense
- Operating locally – If the business conducts its activities within Montenegro, the progressive corporate rates apply.
- Residency‑based funneling – Individuals who move to Montenegro can channel foreign earnings through a Montenegrin entity, benefiting from the lower corporate tax on the first €100,000 of profit and the reduced payroll contributions when hiring locally.
For purely remote or internationally‑focused enterprises, other jurisdictions may offer more favorable tax regimes.
Residency and lifestyle considerations
- Montenegro remains a relatively low‑tax option compared with most European countries, appealing to citizens of the United States, Canada, Australia, and South Africa (U.S. citizens face additional specific tax rules).
- The residency process is described as straightforward, involving standard paperwork rather than the more complex Schengen‑zone visa requirements.
Key take‑aways
- Corporate tax is now tiered (9 % up to €100k, 12 % up to €1.5 m, higher rate above €1.5 bn).
- Personal tax on dividends, rents, royalties, and other income has risen sharply, with a 50 % rate for many categories and a 15 % rate for foreign‑resident dividends and capital gains.
- Payroll health contributions have been cut, lowering employment costs.
- The reforms favor businesses that operate locally or residents who wish to channel foreign income through a Montenegrin company, while remote‑only setups may find better alternatives elsewhere.
