Employer Tax Contributions

Tax Type	Rate	Base
Pension and Disability Insurance	5.5%	Gross Salary
Health Insurance	2.3%	Gross Salary
Unemployment Insurance	0.5%	Gross Salary
Labor Fund	0.2%	Gross Salary

Filing & Compliance

• Monthly payroll submissions are required by the 15th day of the following month.
• Employers withhold personal income tax from employee salaries monthly.
• Annual income statements summarizing earnings and taxes withheld may be required for employees.

In Montenegro, employee tax deductions primarily involve income tax and social security contributions. These are typically withheld by the employer.

Income Tax

• Progressive Rates: Income tax in Montenegro is progressive, meaning higher earners pay a higher percentage. The specific rates for 2025 are 0% for income up to 700 EUR, and above this amount a higher tax band applies.
• Tax Incentives: Tax incentives exist for specific sectors and situations. For instance, certain employees of startups in underdeveloped areas might be exempt from income tax for a period of time.

Social Security Contributions

• Employee and Employer Contributions: Both employees and employers contribute to social security. Current rates for employees are 10% of their gross salary for pension contributions. Employer contributions are subject to changes and updates.
• Contribution Calculation: The contribution is calculated based on the employee's gross salary.

Other Deductions

• Municipal Surtax: A municipal surtax, which can be up to 15% of the employee's salary, might be applicable depending on the municipality.

Employer Responsibilities

• Withholding and Reporting: Employers are responsible for withholding income tax and social security contributions from employees' salaries and remitting these amounts to the tax authorities.
• Electronic Filing: All tax and contribution returns must be filed electronically via the Tax Administration's web portal.

Self-Employed Individuals

• Deductions for Expenses: Self-employed individuals can deduct up to 3% of their income for legitimate business expenses.
• Lump-Sum Taxation: A lump-sum taxation option is available for self-employed individuals with income up to a certain threshold, which is currently 30,000 EUR.

Additional Information: Please be aware that tax laws and regulations can change periodically. It's recommended to consult with a tax advisor or refer to the latest official publications from the Montenegrin Tax Administration for the most up-to-date and detailed information. This information is current as of February 5, 2025, and may be subject to change.