Ministry of Finance (“MF”) has adopted the Rulebook on the interest rate calculated on financial instruments between related parties for the year 2026 (“the Rulebook”). The Rulebook was published in the Official Gazette of Montenegro No. 145 dated 11 December 2025, entered into force on the eighth day from the day of publication in the Official Gazette, and is effective as of 1 January 2026.
Impact of the Rulebook to transfer pricing documentation
According to the provisions of Art. 38b of the Corporate Income Tax Law (the "Law"), there is a possibility of applying "arm's length" interest rates prescribed by the Ministry of Finance or OECD general rules on determining the price of a transaction based on the "arm's length" principle (using one of the prescribed methods).
Arm’s length interest rate for 2026 as prescribed by the MF amounts to 4.97%
What impact may this have on your business?
It is necessary to review if new interest rate for 2026 is aligned with interest rates applied/ planned to be applied in your related party 2026 financial instruments.
In addition, companies exposed to significant / long-term related party financing should consider applying general OECD based methods for assessment of arm’s length interest as prescribed by the CIT Law, as such approach may be more beneficial and provide increased level of certainty in relation to future tax treatment.
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.
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