The Parliament of Montenegro adopted the Law on Amendments to the Law on Personal Income Tax (“Official Gazette of Montenegro”, no. 133/25 of 19.11.2025), introducing important changes in the taxation of capital income. This law was confirmed by the Decree of the President of Montenegro and published in the Official Gazette, thus entering into force immediately
Law on Amendments to the Law on Personal Income Tax
The key change refers to Article 37, in which, after paragraph 4, a new paragraph (5) has been added. This more precisely regulates what is considered, and what is not considered, capital income.
What is considered capital income under the amended Article 37?
According to the applicable legal text, the following are considered capital income:
- interest income;
- shares in profit received by members of management and employees in cash, shares, or stocks;
- income from the use of assets and services by owners and co-owners of capital for private needs;
- income of natural persons arising from the distribution of the remaining assets (liquidation surplus) above the value of invested capital;
- dividends and shares in profit;
- compensation based on shares and equity participation of members of management and employees that are received or purchased under preferential conditions.
The law also prescribes that, when determining taxable capital income, expenses are not recognized, and that the tax base is the gross amount of all listed income.
The most significant novelty – exemption for interest on government securities
The newly added paragraph 5 clearly states:
Capital income shall not include interest income generated by investing in debt securities issued by the state, the Central Bank of Montenegro, or a local self-government unit.
Law on Amendments to the Law on Personal Income Tax.
This amendment represents an incentive for investing in secure financial instruments and potentially strengthens the domestic public debt market.
When does the changed personal income tax law enter into force?
The law enters into force on the day of its publication in the Official Gazette of Montenegro, which is 19 November 2025. This means that the new tax provisions apply immediately, and it is important for taxpayers to align their tax obligations in a timely manner.
The amendments to Article 37 bring clearer definitions of capital income, as well as an important exemption that excludes from taxation the interest earned on investments in state and local government debt securities. This may have a positive effect on investment activity and fiscal stability, while at the same time providing taxpayers with greater security and predictability.
Other categories