Any company registered in Montenegro, managed and controlled there is considered to be resident and is subject to taxation. The flat corporate tax for a Montenegrin company is 9%, one of the lowest rates in Europe. The dividend tax in Montenegro is 9%, whether is paid to residents or non-residents. Taxation of dividends may be subject to tax treaties that stipulate reduced taxation. Our company formation specialists in Montenegro can help you comply with tax system in this country.
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Tax treatment of dividends in Montenegro
Dividends paid to legal entities are considered part of their income and are taxed in accordance with the Corporate Income Tax Law (CIT), at a 9% rate. Dividends are considered personal income when shareholders are individuals and taxation is regulated by Personal Income Tax Law (PIT). The same 9% tax rate is applied in this case. Businessmen who want to open a company in Montenegro must know that same legal treatment is applied to non-resident and local entities.
Dividend tax in Montenegro and double tax treaty provisions
If you want to open a company in Montenegro you have to pay taxes. The application of a double tax treaty in Montenegro may reduce or even eliminate the dividend tax rate of 9%. Depending on the provisions of a double tax treaty, the dividend tax rate can be reduced to 5% or completely eliminated. A non-resident company is eligible for the beneficial rates prescribed by the treaty if it proves tax residency of a relevant treaty country and ownership over the income.
The tax residency certificate is the document that qualifies a non-resident company for a preferential tax rate according to a double tax treaty. This certificate must be filled out and stamped by the relevant authorities of its country of residence. The Republic of Montenegro declared its independency in June 2006. All treaties which were applicable in Serbia and Montenegro State Union continue to be honored by the Montenegrin authorities.
If you want to benefit from the double taxation agreements concluded by this country, feel free to contact our Montenegro company formation experts.