Tax-Exempt Incomes Under the Law
According to the Law on Personal Income Taxation, the following types of income are not subject to taxation:
Business Travel Per Diem within Montenegro
Per diem payments for business trips within Montenegro are tax-exempt up to 20% of the coefficient value. This coefficient may vary, affecting the total amount, but in most cases, the daily rate is €18.
International Business Travel Per Diem
Per diem payments for international travel are also partially tax-exempt. The tax-free amounts are listed in a separate rulebook. Accounting clients may request this document directly. The tax-exempt amount depends on the destination country.
Use of Personal Vehicle During Business Trips
If you use your personal car for business travel, you are entitled to compensation equal to 25% of the fuel cost per kilometer.
For example:
If you drive 200 km and fuel costs €1.5 per liter at the time of the trip:
200 × 1.5 × 0.25 = €75
This compensation is not taxable.
Other Types of Non-Taxable Personal Income
Retirement Severance Pay
Upon retirement, a one-time payment equal to at least three minimum wages is required by law. A payment up to €1500 is tax-exempt.
Long-Term Service Awards
Non-taxable service awards include:
- €150 for 10 years of service
- €250 for 20 years
- €350 for 30 years
- €450 for 40 years
Solidarity Assistance
- In case of serious illness or for medicine costs (for employees or their family): up to €1000 is not taxed
- In case of death of an employee or their family member: a payment up to €1500 is tax-exempt (minimum of 2 monthly wages required by labor law)
Other Tax-Exempt Income Types
- Scholarships – up to €200
- Gifts to employees’ children under 15 – up to €50 per year
- Childbirth grants and family benefits
- Compensation for damaged property due to natural disasters or other reasons
- Medical insurance payouts
- Inheritance and gifts
- Pensions
- Lottery and gambling winnings
- Life and property insurance payouts
For assistance in opening a business in Montenegro, obtaining residence permits, or accounting services, feel free to contact the author of this article.
