Taxation of individuals’ income in Montenegro is based on their residence status.
Residents are subject to tax on their worldwide income from any source.
Non-residents are taxed on income related to a fixed base/permanent establishment (PE) in Montenegro and royalties, interest, and rental income from immovable property in Montenegro.
Personal income tax rates
Personal income tax (PIT) of 9% is levied on salaries, property-related income, and investment income (interest income earned by non-residents is subject to a 5% PIT).
In January 2016, the Montenegrin government increased the PIT rate from 9% to 11% for gross salaries exceeding average monthly salary (where the higher rate applies only on part of the salary exceeding the amount of average salary).
Although the increase of the tax rate was announced as a temporary measure, it is still applicable.
Local surtax exists in addition to PIT and is paid to the municipality where the taxpayer is domiciled. Surtax of 13% is applicable in all municipalities with the exception of Podgorica and Cetinje, where the rate is 15%.
The surtax base is the amount of PIT assessed.