Tax consolidation is permitted for a group of companies in which all of the members are Montenegrin residents and the parent company directly or indirectly controls at least 75% of the shares in the other companies. Each company files its own tax return, and the parent company files a consolidated tax return for the entire group.
Each company is taxed based on its contribution to the consolidated taxable profit (or loss) of the group.
Tax consolidation is binding for at least five years.
The difference between the transfer price and arm’s-length price is included in the taxable profit and is taxed accordingly. Parties considered to be related are the parties between whom special relations exist, which could directly impact the conditions or economical results of the transaction between them.
Methods permitted in determining arm’s-length price are the comparable uncontrolled price (CUP) method (as the primary method), resale minus method, or cost plus method.
There are no other rules or guidelines introduced apart from the above rules in respect to transfer pricing.
There are no thin capitalisation provisions in place in Montenegro.
Controlled foreign companies (CFCs)
There are no CFC rules in Montenegro.