Corporate income tax amendments add anti-avoidance rules
TLDR
- Adopted 9 July 2026, published in Official Gazette 104/26 of 17 July 2026.
- New Chapter Xa: interest deduction limited to 30% of EBITDA or €3 million, plus controlled foreign company (CFC) rules.
- Withholding tax on loans to individuals now applies above €5,000 per year (including loan-term extensions).
- Withholding tax also extended to non-residents' income from entertainment, artistic or sporting performances in Montenegro.
- The law enters into force on publication but applies from 1 January 2027; EU-linked chapters (interest limitation, CFC, hybrid mismatches, advance pricing agreements) only apply once Montenegro joins the EU.
On 9 July 2026 the Parliament of Montenegro adopted the Law on Amendments to the Law on Corporate Income Tax. It was signed on 15 July and published in Official Gazette No. 104/26 of 17 July 2026.
The main change is a new Chapter Xa, 'Rules against profit shifting', transposing the EU's ATAD directive. It caps deductible net borrowing costs at 30% of EBITDA or €3,000,000 (whichever is higher), with a three-year carry-forward for unused capacity. It also introduces controlled foreign company (CFC) taxation, a general anti-abuse rule (GAAR), and the option of an advance pricing agreement (APA) with the Tax Administration.
For businesses operating purely domestically, the more immediately relevant changes are to withholding tax: withholding now applies to loans or advances to individuals above €5,000 per year, including cases where the repayment term is extended, and the tax-free threshold no longer applies to related parties. Withholding tax on non-resident companies' income was also extended to cover entertainment, artistic and sporting performances in Montenegro, with a filing obligation via a tax proxy within 30 days of earning the income.
The law formally enters into force on publication but applies from 1 January 2027 — except the EU-accession-linked chapters (interest limitation, CFC rules, hybrid-mismatch and residency rules, advance pricing agreements, and the anti-abuse rule under Arts. 38m and 40a), which will only apply once Montenegro joins the EU. Existing rates (9%, 12%, 15%) and the filing procedure remain unchanged.
Practically: nothing changes for most businesses before 1 January 2027. Companies with significant borrowing or that make sizeable loans to individuals should track implementation of the interest-limitation and withholding rules ahead of year-end 2026.