Transfer Pricing in Montenegro
Rules, deadlines and costs
Transfer Pricing Regulation
Montenegro has introduced transfer pricing (TP) rules based on the Arm's Length Principle in line with OECD guidelines. Transactions between related parties must be conducted on terms comparable to those in the open market.
Companies are considered related if:
- •One holds 25% or more of the other's share capital
- •They share common management bodies or financial control
- •They are in a relationship of dependence that affects the terms of transactions
Methods for determining arm's length prices
1
CUP (Comparable Uncontrolled Price)
Comparing the transaction price with independent comparable transactions
2
Resale Price Method
Analysing the resale price of goods/services to independent buyers
3
Cost Plus Method
Adding a margin to the cost base
4
Profit Split Method
Applied when business integration is high
5
TNMM (Transactional Net Margin Method)
Comparing profitability levels with independent companies
Preparation and filing deadlines
| Action | Deadline |
|---|---|
| Preparation of documentation (Local File, Master File) | By 30 June of the following year |
| Corporate tax adjustment based on TP results | By 30 June (otherwise interest accrues) |
| Country-by-Country Report CbCR (large international groups) | By 31 December of the following year |
| Provision of documentation upon tax authority request | 45 days from the date of request |
30 June — the critical date
Companies with a corporate tax adjustment must complete it by 30 June. From 1 July, interest accrues for each day of delay.
Penalties and risks
- !Corporate tax reassessment and additional tax charge
- !Fines for missing documentation (up to several thousand euros)
- !Interest on the unpaid tax from 1 July
- !Interest on the reassessed tax for the entire period of delay
- !Criminal liability for intentional tax evasion
Cost of TP analysis
Local consultants
from €1,500
For a basic analysis
Big 4 (PwC, Deloitte, EY, KPMG)
from €4,000
Complex cases — up to €20,000