VAT

Last reviewed 21 Aug 2023

Tax rates

Supply of goods

Supplies of goods with consideration, withdrawal for private use (self-supply) as well as any other supply without consideration on the territory of Montenegro are taxable.

Import of goods in Montenegro is taxable.

Taxable are trade in natural gas, electricity and heating or cooling energy and use of the products of the taxpayer or persons employed by the taxpayer for non-business purposes, when the input VAT on these products can be deducted.

Place of supply of goods

Principally the place where the item is located at the time disposal is transferred.

In case of dispatch/transportation by the supplier or purchaser: the place where dispatch/trans- portation begins. If the dispatch, or the transport of products commences outside of Montenegro, it is considered that the importer has performed supply of these goods in Montenegro

Importation from third country: Import country.

The place where natural gas, electricity and heating or cooling is traded is considered to be:
- the place of delivery of natural gas through a natural gas system located in the territory of Montenegro or a network connected to that system, the supply of electricity and the supply of energy for heating or cooling through the heating or cooling networks of a person who performs wholesale of energy products,
- the registered office of the person who performs wholesale of energy products, i.e. the residence or residence of the person for whom these products are supplied,
- the place of delivery where the person to whom the products are supplied uses those products, if they are not included in the supply within the meaning of paragraphs 1 and 2 of this paragraph.

If the person referred to in paragraph 1, indent 3 of this Article does not use up the delivered products in full, the place of delivery of these products shall be considered to be the place referred to in paragraph 1, indent 2 of this Article.

Supply of services

Supply of services with consideration, private use as well as supply of services without consideration for non-business purposes are taxable.

Place of supply of services

If supply is made to taxable person, place of supply is place of recipient (place where the recipient has established its business or has permanent place of business) - B2B rule

If supply is made to non-taxable person, place of supply is place of supplier - B2C rule

Certain special cases are prescribed for particular type of services.

For purposes of determining the place of the supply of services,

• taxable persons and
• non-taxable legal entities holding a VAT registration number will be considered as “taxable persons”

Basic rule

B2B	B2C
Place of recipient (the place where the recipient of services has established its business)	Place of supplier (the place where the supplier of services has established its business)

Special cases

	B2B	B2C
Supplies of services by intermediaries	Place of recipient (basic rule)	Place of the underlying transaction Special regulations related to properties
Property services	Place of property	Place of property
Cultural, artistic, scientific, educational, sports, entertainment or similar services, like services in connection with fairs and exhibitions including services of the respective organizer; not applicable for admission and services relating thereto	Where the services are physically carried out	Where the services are physically carried out
Cultural, artistic, scientific, educational, sports, entertainment or similar services, like services in connection with fairs and exhibitions including services of the respective organizer; not applicable for admission and services relating thereto - in electronic form	Place of recipient (basic rule)	Place of recipient
Passenger transport	Distances covered	Distances covered
Transportation of goods (without intra-community goods transportation)	Place of recipient (basic rule)	Distances covered
Ancillary transport services	Where the services are physically carried out	Place of supplier
Appraisal and processing of movable tangible objects	Where the services are physically carried out	Place of supplier
Restaurant and catering services	Where the services are physically carried out	Where the services are physically carried out
Restaurant and catering services in connection with intra-Community passenger transport	Place of beginning of passenger transportation	Place of beginning of passenger transportation
Renting of means of transport for up to 30 days	Where the means of transport is actually put at the disposal of the customer	Where the means of transport is actually put at the disposal of the customer
Renting of means of transport for over 30 days	Place of recipient (basic rule)	Place of recipient Special regulations for renting pleasure boats
Electronically supplied services, such as telecom, radio and TV services 2)	Place of recipient (basic rule)	Place of recipient (basic rule) Special regulations for provision of services in Montenegro and in transportation

Mini-One-Stop-Shop (MOSS) / One-Stop-Shop (OSS)

n/a

Reverse charge (reversal of tax liability)

For all supplies made by non-residents taxable in Montenegro (certain exceptions to this general rule apply).

Requirements

The supplier has no domicile or habitual abode in Montenegro, nor a permanent establishment in Montenegro involved in supply.

Consequences

The recipient owes the VAT. If general conditions for VAT deduction are met, VAT charged by recipient could be claimed back (no cash flow implications for the recipient).

Application also

N/A

Tax reliefs

Exemption (Input VAT deductible even though no VAT chargeable on supply of goods and services)

• export of goods and transport and other services in direct relation to the export or import of goods;
• services performed on temporary imported goods;
• supply of fuel and other goods necessary for supply of vessels intended for sailing in the open sea, rescue boats and warships;

• supply of goods and services used in connection with international air and maritime transport;
• supply of goods and services to diplomatic and consular missions, international organizations, etc;
• supply of listed drugs and medical devices;
• supply of goods and services used to explore oil wells on the open sea;
• supply of goods and services for the construc- tion and furnishing of hospitality facility in the category of five and more stars;
• supply of goods and services for the construc- tion of the energy facility for the production of electricity with an installed capacity of more than 10 MW and capacity for the production of food products classified within Sector C;
• supply of goods in the customs warehouses;
• entering of goods into the free zones and supply of goods in the free zones;
• supplies of goods and services in relation to donation agreements concluded with the Montenegro which stipulate that tax is not to be paid from donation funds;
• supplies of goods and services carried out in the line with credit and/or loan agreements concluded between Montenegro and an international financial organization or another state or agreements between a third party and international financial organization or other states, where Montenegro is the guarantor or if agreements state that tax will not be covered from the obtained funds.

Zero rates (non-genuine tax exemption) (Input VAT is not deductible)

The following supplies are VAT exempt without credit:

• financial, banking and insurance services;
• supplies of immovables, except for the first transfer of ownership right;
• the lease of immovable property for residential purposes;
• the lease of agricultural land or forest;
• supply of valid postage stamps, administrative and court fees and tax stamps;
• supply of gold and other precious metals purchased by the Central Bank of Montenegro;
• services of games of chance.

Deductible input VAT

Input VAT correction

Real estate

Rentals

Renting of immovable property is subject to 21% VAT.

Exception:

Renting for residential purposes is tax exempt.

Sales

First transfer of buildings and economically separable units is subject to 21 % VAT.

Second and every subsequent transfer of real estate is subject to 3 % transfer tax.

Refund of input VAT for Austrian taxable persons within the EU

N/A

Foreign taxable persons

Taxable persons without domicile or permanent establishment in Montenegro

Registration

Available for foreign entities via VAT representative in Montenegro and also for Montenegrin companies under certain conditions.

Refund of input VAT for taxable persons domiciled in the EU

N/A

Refund of input VAT for taxable persons not domiciled in the EU

N/A