Taxation of Freelancers Who Immigrated to Montenegro
Since freelancers make up about half of the immigrants living in Montenegro, I decided to write a short article about their activity. The thing is, I’m constantly being asked: «How much tax will I pay if I receive payment to my Montenegrin company account?» Let’s talk about that.
Working «Under the Radar» – The Usual Way for Freelancers
Let me start by saying that almost all freelancers receive payment “under the radar” — for example, through WebMoney or similar services. I haven’t met a single freelancer who regularly receives payments through their company’s bank account.
However, if for some reason you do need to use a company account, that’s also possible. But in that case, you’ll have to pay taxes. Also, the company changes its status from “inactive” to “active,” which means more work for the accountant — and a higher accounting fee. Let’s go step by step.
Let’s assume your company is inactive. By “inactive,” I mean no money comes into the company’s bank account. So, you’re basically a tax evader receiving money via WebMoney or something similar. In this case, your monthly expenses would be:
- Salary taxes for the company director: from €35 per month (if employed at 25% rate)
- Accountant’s fee: €50 per month
What If the Company Is Active?
Now let’s look at what happens if the company is active. For an active company, the director may sometimes need to be officially employed at 50% or even 100%, which means higher salary taxes. However, this depends on the type of business. So, what does it look like?
- Salary taxes for the director: from €35 to €120 per month, depending on how you’re registered
- Accountant’s fee: from €50 per month
- Profit tax: 9% — expenses can be deducted from the taxable base, though freelancers usually don’t have many
- If your annual revenue exceeds €18,000, you must pay 21% VAT — but VAT is not paid for services to foreign clients
As you can see, the taxes are among the lowest in Europe. Still, certain costs are unavoidable. Also, once money arrives in the company’s account, the question arises: how do you withdraw it?
You can’t just take money out of the company account freely. You can withdraw it either as salary or as dividends. If you take it as salary — you’ll have to pay payroll taxes, which are high in Montenegro (like in most countries). If you take it as dividends — the tax is much lower, only 15%, but you can only receive dividends once per year, after submitting your annual financial report.
