{"id":4936,"date":"2025-02-10T16:16:30","date_gmt":"2025-02-10T16:16:30","guid":{"rendered":"https:\/\/kbplegal.me\/?p=4936"},"modified":"2025-11-07T12:06:48","modified_gmt":"2025-11-07T12:06:48","slug":"new-year-new-tax-adjustments-montenegros-2025-update","status":"publish","type":"post","link":"https:\/\/kbplegal.me\/me\/2025\/02\/10\/new-year-new-tax-adjustments-montenegros-2025-update\/","title":{"rendered":"New Year, New Tax Adjustments: Montenegro\u2019s 2025 Update"},"content":{"rendered":"<p class=\"p1\">One of the changes in the\u00a0<i>Corporate Income Tax Law\u00a0<\/i>is the introduction of incentives for businesses investing in agriculture and sports. Legal entities can now receive tax exemptions when reinvesting profits into agricultural projects or other agricultural entities \u2013 an attempt to boost Montenegro\u2019s agricultural sector by reducing businesses\u2019 tax liabilities. Additionally, companies can deduct up to 5% of their total revenue for contributions to national sports federations, supporting sports development in the country. The amendments also include clarifications on deductible expenses, helping businesses better understand what is eligible for tax deductions.<\/p>\n<p class=\"p1\">The\u00a0<i>Personal Income Tax Law<\/i>\u00a0reforms focus on modernizing Montenegro\u2019s tax system by broadening the tax base. A notable feature is the taxation of online activities, gaming, and gambling winnings. Income from these activities will be taxed at a flat rate of 15%, with gambling winnings taxed at the point of payout. This reform targets the rapidly growing digital and gambling sectors and seeks to address the challenges posed by the unregulated freelance economy and the expanding gambling industry. The reform introduces clearer guidelines for taxing occasional income and allows self-employed individuals to deduct up to 3% of income for legitimate business expenses.<\/p>\n<p class=\"p1\">The\u00a0<i>VAT Law<\/i>\u00a0has undergone significant revisions, including the introduction of a second reduced VAT rate of 15%. This rate applies to specific goods and services, such as books, accommodation, and educational services. The first reduced VAT rate of 7% will remain for essential goods and services like food, medicines, and public transportation. Notably, the 15% rate now applies to accommodation services in hospitality establishments defined by tourism laws, as well as food and beverage services in hospitality venues, excluding alcoholic drinks, sugary beverages, and coffee. These changes mark a significant shift in the taxation framework for Montenegro\u2019s tourism sector by virtually doubling the tax burden.<\/p>\n<p class=\"p1\">The reform also removes the zero VAT rate for the construction and equipping of high-end hospitality facilities, energy production facilities, and large-scale food production projects. Additionally, the zero VAT exemption on low-value imports (under EUR 75) has been removed \u2013 a measure that the EU implemented in 2021.<\/p>\n<p class=\"p1\">The\u00a0<i>Excise Law<\/i>\u00a0has been revised to enhance excise revenues and improve system efficiency. Key changes include extending excise duties to non-carbonated beverages with added sugar and introducing excise duties on still wines. Additionally, the government adopted the\u00a0<i>Customs Procedures for Goods Supplying Transport in International Traffic<\/i>, reintroducing the no-excise policy for private vessels. This policy, which allows private vessels to be supplied with fuel under customs supervision and without import duties before leaving territorial waters, had been abolished in 2022 by the previous administration.<\/p>\n<p class=\"p1\">To stimulate growth in underdeveloped regions, tax reforms encourage entrepreneurship, particularly in agriculture and fisheries. Tax exemptions for businesses operating in these areas aim to promote investment, create jobs, and strengthen local economies. Additionally, the income threshold for simplified taxation has been increased, allowing small businesses and freelancers to benefit from this regime for a longer period.<\/p>\n<p class=\"p1\">Montenegro has also introduced the\u00a0<i>Law on the Write-off of Interest on Outstanding Tax Liabilities\u00a0<\/i>to ease the burden of overdue tax debts. Under this law, taxpayers can have interest on tax liabilities waived if they submit all tax returns due by December 31, 2024, and pay the full principal tax debt within 60 days from the law\u2019s effective date (January 1, 2025). This provision encourages timely tax payments and supports businesses and individuals in resolving financial difficulties.<\/p>\n<p class=\"p1\">The 2024-2025 tax reforms are part of a broader effort by Montenegro\u2019s government to expand its tax base and offset budgetary losses from labor tax reductions. By modernizing the tax system and introducing targeted incentives, these reforms aim to stabilize government revenues and encourage economic growth. The government is also taking additional measures and planning further steps to transform the tax system, focusing on improving monitoring systems. While the full impact of these changes remains to be seen, they represent a promising move toward enhanced fiscal stability and a more efficient tax framework<\/p>\n<p><em>Article published <a href=\"https:\/\/ceelegalmatters.com\/by-practice\/28640-new-year-new-tax-adjustments-montenegro-s-2025-update\">https:\/\/ceelegalmatters.com\/by-practice\/28640-new-year-new-tax-adjustments-montenegro-s-2025-update<\/a><\/em><\/p>\n<p><em>CEE Legal Matters Issue 11.12. available <a href=\"https:\/\/ceelegalmatters.com\/magazine\/28648-cee-legal-matters-issue-11-12-subscribers-only\">https:\/\/ceelegalmatters.com\/magazine\/28648-cee-legal-matters-issue-11-12-subscribers-only<\/a><\/em><\/p>\n<p>&nbsp;<\/p>","protected":false},"excerpt":{"rendered":"<p>One of the changes in the\u00a0Corporate Income Tax Law\u00a0is the introduction of incentives for businesses investing in agriculture and sports. Legal entities can now receive tax exemptions when reinvesting profits into agricultural projects or other agricultural entities \u2013 an attempt to boost Montenegro\u2019s agricultural sector by reducing businesses\u2019 tax liabilities. Additionally, companies can deduct up&#8230;<\/p>","protected":false},"author":5,"featured_media":4937,"comment_status":"closed","ping_status":"open","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4936","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-posts"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>New Year, New Tax Adjustments: Montenegro\u2019s 2025 Update - KBP Legal<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/kbplegal.me\/me\/2025\/02\/10\/new-year-new-tax-adjustments-montenegros-2025-update\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"New Year, New Tax Adjustments: Montenegro\u2019s 2025 Update - KBP Legal\" \/>\n<meta property=\"og:description\" content=\"One of the changes in the\u00a0Corporate Income Tax Law\u00a0is the introduction of incentives for businesses investing in agriculture and sports. 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