Montenegro VAT Guide
If you’re a sole proprietor, VAT-registered individual, or limited liability company providing goods or services, you must charge Value-Added Tax (VAT) on all domestic – and certain international – sales once your turnover exceeds the VAT threshold of 30.000,00€. In Montenegro, Value-Added Tax is collected by businesses and then paid monthly to the government.
VAT is a consumption tax collected at each stage of production or distribution of a good or service, and it is ultimately borne by both consumers and businesses. Value-Added Taxes can be complex and carry strict penalties; it is essential to understand how they work and to calculate the correct amount applicable to your business.
Read on to learn more about current VAT rates in Montenegro, registration thresholds, and the transactions on which you are required to charge this tax.
The Basics
Broadly speaking, businesses do not suffer the burden of VAT, but the final consumer does. However, sellers are responsible for collecting it and remitting it to the Tax Administration of Montenegro. At every point in the supply chain where value is added to a product or service, each supplier, business, or customer is charged VAT on taxable supplies delivered to them, given that they are provided by a VAT-registered supplier.
As a consequence, businesses can reclaim Input Value-Added Tax paid on purchases for standard-, reduced-, and zero-rated supplies, which reduces their costs and increases profits. Businesses that are not able to recover Input VAT, however, do face an additional cost. To understand how Value-Added Tax works in practice, see the example below:
Example
A manufacturer sells a kitchen to a wholesaler for 10.000,00€ and charges him Value-Added Tax (VAT) at Montenegro’s standard rate of 21%. The kitchen manufacturer then transfers the amount that is due for VAT – 2.100,00€ – to the tax authorities when submitting the mandatory monthly VAT return.
The wholesaler then sells the kitchen to a retailer for 20.000,00€ plus 21% VAT, for a total of 24.200,00€. The (VAT-registered) wholesaler is also obliged to file a monthly VAT return, and must pay Output VAT of 4.200,00€ on the kitchen. He can offset the 2.100,00€ already paid to the manufacturer as Input VAT, leaving 2.100,00€ to remit to the Tax Administration of Montenegro.
When a customer buys the kitchen from the retailer, VAT must be added to the selling price. The retailer sells the kitchen for 30.000,00€, plus 21% VAT, resulting in a total price of 36.300,00€ for the customer. The retailer’s net VAT (Output VAT of 6.300,00€ minus Input VAT of 4.200,00€) results in a payment of 2.100,00€ to the tax authorities.
Montenegro’s tax authorities have thus received 21% of the price paid by the consumer for the kitchen, amounting to 6.300,00€. The kitchen manufacturer, wholesaler, and retailer each only remitted the VAT they charged to the next buyer in the supply chain.
KEY TAKEAWAYS
- VAT is charged on supplied, bartered, and imported goods and services.
- VAT is also due on self-supply (from a business to its stakeholders) and on the private use of goods and services.
- Montenegro has four VAT rates: 21% (standard rate), 15% (reduced rate I), 7% (reduced rate II), and 0% (zero-rated goods and services).
- The VAT threshold is 30.000,00€.
- VAT returns have to be submitted by the 15th of each month.
- The VAT rate on the import of new and used motor vehicles is 21%.
- No VAT is levied on the transfer of land.
The VAT Threshold
If your company generates turnover in excess of Montenegro’s VAT threshold, you must register for VAT and begin charging Value-Added Tax on your products and services, regardless of your company type. If you fail to register on time with the tax authorities, you are still required to pay VAT from the date you became liable.
You may have to register for VAT if either of the following applies:
- Your taxable turnover (i.e., the total value of issued invoices) over the previous 365 days (12-month rolling period, not the calendar year) exceeds the VAT registration threshold (currently 30.000€).
- You anticipate that your turnover will soon exceed this threshold.
If you surpass the VAT threshold of 30.000,00€, you are required to register for Value-Added Tax by the 20th of the month following the event. You must also register if you have reason to believe your sales will exceed the threshold in the next month. Once registered, you will be issued a VAT certificate within 7 days.
Example – reaching the VAT registration threshold
- As of September 11, 2025, your VAT taxable turnover for the previous 12 months is 29.300,00€.
- You must register for Value-Added Tax by September 20, 2025.
- Typically, you will begin charging VAT on your taxable sales starting October 1, 2025.
Deregister for VAT
Once registered, you are legally required to charge Value-Added Tax on all taxable supplied goods or services, until you cease business operations or stop providing VAT-taxable supplies. If your turnover has fallen below 30.000,00€ in the previous calendar year or 12-month rolling period, you can request that the tax authorities cancel your VAT registration.
Voluntary VAT Registration
Although VAT registration is not mandatory for small businesses operating below the VAT threshold, it can still be advantageous for them in certain situations. The ability to reclaim Input VAT on business-related purchases can lead to substantial cost savings, particularly for trading companies and those requiring investments in long-term assets such as machinery.
Additionally, being VAT-registered can enhance your business’s credibility and brand image in the eyes of potential clients and partners. It suggests a level of professionalism and stability, making it instantly seem more trustworthy and legitimate.
VAT Number Format
A VAT number (Montenegrin: PDV registracioni broj) is a unique identifier assigned to every business upon registering for Value-Added Tax. The VAT number is used on invoices and when filing monthly VAT returns. In Montenegro, it consists of 10 digits in the following format: 91/31-02896-8.
Montenegro VAT Rates
The current standard rate of VAT in Montenegro is 21%, and is charged on all goods and services that are not classified as reduced or zero-rated. Montenegro’s VAT tax code was recently amended. The current rates are as follows:
Standard-Rated Items 21%
Once your turnover exceeds the 30.000,00€ VAT threshold, you must charge Value-Added Tax on all taxable goods and services. In Montenegro, standard-rated items include:
- Diesel and petrol
- Car parts
- Alcohol
- Durable goods (e.g., consumer electronics, home appliances, toys, furniture)
- Consultancy services, including bookkeeping and accounting
- New construction
- Motor vehicles
- Jewellery and cosmetics
- Office equipment
- Bottled water
Reduced-Rated Items 7%
The reduced VAT rate of 7% applies to a select range of goods and services in Montenegro, including:
- Basic food items, such as bread, eggs, flour, dairy products, meat, and infant formulas
- Pharmaceutical products for human and veterinary use
- Prostheses (artificial body parts)
- School supplies and textbooks
- Newspapers
- Animal feed, seeds, and fertilizers
- Diapers
- Sanitary hygiene products
Reduced-Rated Items 15%
VAT-registered businesses can apply the recently introduced reduced VAT rate of 15% to the following taxable goods and services in Montenegro:
- Holiday accommodations: hotels, guesthouses, registered vacation rentals, campsites, etc.
- Restaurant and catering services (excluding coffee, alcohol, and soft drinks)
- Books and magazines
- Marina services
- Hairdressing services
- Supply and installation of solar panels
- Entry tickets to concerts
Zero-rated items 0%
Although zero-rated goods and services still count as taxable supplies, the Value-Added Tax charged on them is zero percent. Examples of zero-rated items for VAT purposes in Montenegro include:
- Goods exported from Montenegro to other countries
- Most services exported from Montenegro to other countries
- Goods supplied to another VAT-registered business in Montenegro
- Supply of marine or aviation fuels for crafts on commercial flights or vessels leaving Montenegro
Exempt items
Although they may sound similar, there is a difference between VAT-exempt and zero-rated items. VAT-registered businesses supplying zero-rated goods or services can reclaim VAT on their taxable inputs, whereas this is not possible for supplies that are exempt from VAT. Examples of VAT-exempt items include:
- Health-related social and medical services
- Public postal services
- Private health insurance and pension schemes
- Preschool education and training
- Cultural and sports events organized by nonprofits
- Services offered by nonprofits
- Services from insurance providers and their representatives
- Real estate transactions (secondary market; VAT is due on new build developments)
- Long-term rentals (60 days or longer)
- Banking services
Import VAT (for consumers)
If you order goods online or bring them personally into Montenegro (by car, train, or plane), you will be charged import duty plus Value-Added Taxes upon their arrival. This includes goods bought online on platforms such as Amazon or Aliexpress, and by mail order. VAT is charged at the standard rate of 21%.
From 1 January 2025, the VAT exemption for low-value import shipments (up to 75€) no longer applies. As a result, all goods entering Montenegro are subject to Value-Added Tax at the standard rate of 21%. Additionally, excise duty is payable on coffee, alcohol, and tobacco products, and it is separate from both VAT and customs duty.
VAT Refunds
Non-residents of Montenegro may claim a VAT refund on goods purchased during their trip, provided the goods are presented to customs upon departure within three months of purchase. You must also present the original invoice along with the ‘PDV-PP’ VAT refund form, which must be completed and signed/stamped by the vendor.
Here are some additional points to consider:
- The invoice value must be at least 100,00€
- No VAT refund is available for alcoholic beverages, tobacco products, or mineral fuels
- Spare parts for cars and vessels installed in Montenegro are eligible for a refund
- The claim must be validated by Montenegro’s customs authority before you leave the country
The certified ‘PDV-PP’ form must then be sent or returned to the vendor within six months of purchase, so they can process the VAT refund, either in cash or via wire transfer
VAT Returns
If you are registered for Value-Added Tax, whether as an individual, sole trader, or corporation, you (or, more accurately, your accountant) are required to file your monthly VAT returns electronically with Montenegro’s tax office by the 15th of each month, even if no taxable transactions occurred during that period.
The monthly VAT return shows:
- Output VAT: the amount of Value-Added Tax you have charged your customers for goods or services during the period
- Input VAT: the Value-Added Tax you have paid on your business purchases
If the VAT you have paid to your suppliers is less than the VAT you have charged your customers (that is, if your total Output VAT is greater than your total Input VAT), you must calculate and pay the difference (the net VAT) to the Tax Administration of Montenegro when filing your monthly VAT return.
Otherwise, when Input VAT > Output VAT – which is typical for export-oriented businesses – you are entitled to a refund of the excess input tax. This refund can also be paid upon request within 60 days, or within 30 days after three consecutive months.
Penalties for late filing or late payment
Because Value-Added Tax plays a crucial role in financing Montenegro’s state budget, penalties for non-compliance with VAT regulations can be severe. If your VAT return is filed late or the taxes owed are paid after the deadline, you may be charged a penalty of up to 10.000,00€, along with late payment interest.
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