INDIVIDUAL TAXATION

Non-residents are taxed only for their income from sources in Montenegro. Married couples are taxed separately.

INCOME TAX

All forms of income, unless taxed at source, are generally aggregated and taxed at a flat rate of 15%. Expenses incurred in the generation of income are deductible. The applicable income tax rate will be 12% in 2009 and will go down further to 9% in 2010.

RENTAL INCOME
Income from leasing out real estate property is included in aggregated taxable income and taxed at a flat rate of 15%. Costs incurred to generate income are deductible from the taxable amount. A lump-sum deduction of 40% in lieu of actual costs is also allowed.

CAPITAL GAINS
Capital gains realized from sales of real properties are not taxed in Montenegro.

PROPERTY TAX

Real Estate Tax

A property tax is levied on real estate property in Montenegro. The owner of the property, or the individual with rights to use the property, is liable to pay this tax. The tax is levied on the market value of the property, with rates ranging from 0.08% to 0.8%, set by the municipal authorities.

CORPORATE TAXATION

INCOME TAX

Corporate income is taxed at a flat rate of 9%. Income-generating expenses and operating expenses are deductible when computing for the taxable income.

CAPITAL GAINS
Corporate capital gains are taxed as ordinary income at 9%. Taxable capital gains are computed as selling price less acquisition cost.