The Parliament of Montenegro adopted the Law on Amendments to the Personal Income Tax Law (“Official Gazette of Montenegro”, No. 160/25 of 30 December 2025), which will apply from 1 January 2026. The amendments are extensive and cover several segments of taxation – from the expansion of non-taxable income, through new categories of self-employment, to changes in tax rates, depreciation, and the taxation of games of chance.
Below we highlight the most important novelties.
Expansion of non-taxable income and exemptions
The Law expands the list of income that is not considered personal income, thereby further reducing the personal income tax burden for certain categories of individuals. As a novelty, an exemption has been introduced for:
- income of religious officials, earned in accordance with the law governing the status of religious communities.
In addition, non-taxable amounts for certain types of income have been increased:
- solidarity assistance in the event of the death of an employee or a close family member – up to €2,000 (previously €1,500),
- compensation for a newborn child of an employee – up to €1,000, if paid by the employer, with a clear distinction from benefits from the social and child protection system.
New category: supplementary entrepreneurial activity
One of the key amendments is the introduction of supplementary entrepreneurial activity as a special type of self-employment. This formally recognizes income earned by an individual who performs an additional activity alongside primary employment.
The Law now clearly distinguishes between:
- primary self-employment,
- supplementary entrepreneurial activity,
- occasional self-employment.
This classification has a direct impact on the method of personal income taxation, the obligation to submit tax returns, and the payment of advance tax instalments.
Changes in tax rates and thresholds
The progressive tax system is retained, but significant novelties are introduced, particularly in relation to self-employment:
- 0% tax on taxable income from primary self-employment up to €8,400 per year,
- more clearly defined rates for winnings from games of chance:
- 0% up to €50,
- 10% from €50.01 to €1,500,
- 15% over €1,500.
In this way, the Personal Income Tax Law makes a clear distinction between types of income and introduces a more precise taxation system.
Depreciation and tax-deductible expenses
Depreciation rates for fixed assets have been amended and, in most groups, reduced, while retaining five depreciation groups. Additionally, the following are now explicitly recognized as tax-deductible expenses:
- depreciation of the right of use of assets under operating leases,
- depreciation of intangible assets, in accordance with accounting regulations.
These amendments are of particular importance for entrepreneurs and self-employed persons who keep business records.
Taxation of other income and games of chance
The Law clarifies what is considered other income, introducing as a novelty:
- pensions earned on the basis of the law governing the salaries of state and public officials.
With regard to games of chance, the concept of winnings and the method of taxation are further elaborated, with an obligation for organizers to calculate and pay tax on a monthly basis.
Returns, advance payments, and penalty provisions
An obligation is introduced to submit an informative return within 15 days of registration for taxpayers who begin performing primary or supplementary entrepreneurial activity. Failure to submit this return is now also subject to misdemeanor sanctions.
Additional clarifications are provided regarding obligations related to:
- payment of monthly advance tax instalments,
- submission of the annual tax return,
- obligations of income payers in relation to withholding tax.
The amendments to the Personal Income Tax Law introduce significant changes affecting a large number of taxpayers – especially entrepreneurs, individuals earning additional income, and winners of games of chance. Timely familiarization with the new rules and adjustment of business operations will be crucial to avoid tax risks from 2026 onward.
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