The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
On 26 July 2017 the Parliament of Montenegro adopted the Law on Amendments to the VAT Law (hereinafter: the Law) published in the Official Gazette of Montenegro no. 50/2017 dated 31 July 2017.
An overview of the most significant changes is provided below.
Rate increase – applicable as of 1 January 2018
From 1 January 2018 the general VAT rate is increased from 19% to 21%.
Other amendments – applicable as of 8 August 2017
1. The rules on the place of supply of services are changing
Instead of the old rule based on which services were taxable in the place of service provider, irrespective of whether the service recipient is a VAT payer or not, the amendments of the Law introduce special rules for supplies to VAT payers in the sense of the VAT Law (so-called B2B – business to business supplies) and to entities that are not VAT payers (so-called B2C – business to consumer supplies):
- If the supply of services is made to an entity that is a taxpayer (B2B), the place of supply of services is considered to be the place where the recipient of services has its headquarters/permanent establishment, or the place of permanent or temporary residence;
- If the supply of services is made to an entity that is not a taxpayer (B2C), the place of supply of services is considered to be the place where the provider of services has its headquarters/permanent establishment, or the place of permanent or temporary residence.
A number of exceptions to the above said general rule is prescribed.
Therefore, when issuing invoices for supply of services during the tax period August 2017, it is necessary to divide supply of services performed from 1 to 7 August 2017 and supply of services performed from 8 August 2017 onwards, as applicable rules on the place of supply of services differ.
2. Parcels with insignificant value
Amendment to the VAT Law prescribes the value limit for importation of parcels that are exempt from import VAT in the amount of EUR 75.
Please feel free to contact us for any questions you might have on the adopted amendments of the VAT Law.
Tax Alerts
Our regular newsletter provides you with updates on the latest changes of tax and accounting regulations as soon as a new rule is being approved.
