Blog

Business Relocation to Montenegro 2026: A Complete Guide to Taxes, Contributions, and Incentives

February 23, 2026

In 2026, Montenegro solidifies its position as one of Europe’s most attractive destinations for business relocation. It offers a unique combination of progressive corporate income tax, zero pension contributions for employers, and high administrative predictability. For service-based firms, the IT sector, and international structures, it is currently one of the most competitive jurisdictions in the region.

This guide provides a detailed analysis of the tax framework based on the latest legislative updates as of February 2026.

1. Corporate Income Tax (CIT): Progressive Rates from 9% to 15%

Corporate tax in Montenegro is calculated on a progressive scale, ensuring that small and medium-sized enterprises (SMEs) enjoy the lowest rates.

Example: A company with a taxable profit of €600,000 pays an effective tax rate of 11,5% (totaling €69,000 in tax).

2. VAT System: New Rules and Deadlines

Following the legislative amendments from February 2026 (Official Gazette of Montenegro 12/26), the system is now fully digitized.

• Standard Rate: 21%.
• Reduced Rates: 7% and 15% (tourism/catering, solar panels, books, and hair salons).
• Registration Threshold: Mandatory if turnover exceeds €30,000 within a 12-month period.
• Key Date: VAT filing and payment must be submitted electronically by the 15th of each month for the previous month.

3. Salaries and Contributions: Why Montenegro is “Employer-Friendly”

Montenegro has significantly reduced the tax burden on labor. While Personal Income Tax (PIT) is progressive (0%, 9%, 15%), the contribution structure is the primary advantage.

Social Contribution Structure (2026):

• Pension Fund (PIO): 10% paid by the employee, 0% paid by the employer.
• Unemployment Insurance: 0.5% paid by the employee and 0.5% paid by the employer.

Local Surtax: Municipalities levy a surtax on the calculated income tax (up to 13%, while the capital Podgorica and Cetinje go up to 15%). This surtax also applies to dividend payments.

4. Relocation and Registration Process (Timeline)

Setting up a Limited Liability Company (D.O.O.) is efficient, with a minimum share capital of just €1.

5. Incentives that Change the Equation

1. Northern Region: Newly established companies in underdeveloped municipalities may be 100% exempt from corporate tax for up to 8 years (up to a €200,000 limit). Establishing real “substance” (employees and physical space) in these municipalities is crucial.
2. Innovation and Startups: Based on the 2025/2026 laws, companies with “Innovation Entity” status can achieve significant reductions in PIT and CIT by reinvesting profits into R&D.

6. Risks: What to Watch Out For

• Transfer Pricing: If you conduct business with related parties, documentation is mandatory if transactions exceed €75,000 annually.
• Withholding Tax (WHT): The standard rate is 15%, but it jumps to 30% for payments to entities in “tax havens” (jurisdictions without data exchange).
• Real Substance: Both tax authorities and international standards value authenticity. A company must have its “place of effective management and control” in Montenegro to be considered a tax resident.

FAQ

What is the deadline for the annual tax return?

The annual CIT return must be submitted within three months of the end of the fiscal year (usually by March 31st).

Are there incentives for Digital Nomads?

Yes, the Law on Contributions provides specific exemptions for digital nomads under conditions defined by the law governing the stay and work of foreigners.

What is the actual dividend tax in Podgorica?

A 15% surtax is added to the 15% dividend tax, resulting in an effective tax burden of 17.25%.

Conclusion and Next Steps

Relocating a business to Montenegro in 2026 is a strategically sound move, provided you follow the “15th of the month” rule for reporting and establish a correct transfer pricing policy.