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 shares or voting rights
- •One is entitled to 25% or more of the other's profits
- •They share common management bodies or are under common control
- •They are family members of a person holding 25% or more of the shares or profits (for individuals)
When documentation is mandatory and in what scope
Not every company with related-party transactions has to prepare a full documentation package. The scope depends on the size of the transactions:
- •If the total value of transactions with a related party does not exceed €75,000 per year, simplified documentation is sufficient.
- •If the transactions exceed €75,000, full transfer pricing documentation is required.
Separate rules apply to large taxpayers: they must file full transfer pricing documentation together with the annual tax return, rather than waiting for a request from the tax authority.
For all other categories the general principle applies: the documentation must be ready by the time the tax return is filed and provided to the tax authority within 45 days of a request.
Methods for determining arm's length prices
The preferred method under Montenegrin rules is CUP (Comparable Uncontrolled Price). Other methods come into play when comparable independent transactions simply do not exist.
Preparation and filing deadlines
| Action | Deadline |
|---|---|
| Preparation of transfer pricing documentation | By 30 June of the following year (transitional rule until 2027) |
| Corporate tax adjustment based on TP results | By 30 June (otherwise interest accrues) |
| Country-by-Country Report CbCR (groups with consolidated revenue above €750 million) | 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.
From 2027, the documentation deadline is expected to be aligned with the tax return filing deadline — earlier than 30 June. The Master File / Local File structure is not explicitly prescribed by Montenegrin legislation; companies may prepare documentation in the OECD format, but the obligation is to have correct transfer pricing documentation, not to follow that format strictly.
Related parties from jurisdictions with a preferential tax regime
Beyond the 25% ownership test, there is a separate category of related parties that is often overlooked. The Government of Montenegro approves a list of jurisdictions with a preferential tax regime — territories without full tax information exchange with Montenegro or with a minimal tax rate.
If your counterparty is located in one of these jurisdictions, it is automatically treated as a related party for transfer pricing purposes — regardless of actual ownership and control. In addition, withholding tax on payments to these jurisdictions is increased to 30% instead of the standard 15%.
Expand the full list of jurisdictions
- • Anguilla
- • Antigua and Barbuda
- • Aruba
- • Bahamas
- • Bahrain
- • Barbados
- • Belize
- • Bermuda
- • British Virgin Islands
- • Cayman Islands
- • Christmas Island
- • Cook Islands
- • Dominican Republic
- • Falkland Islands
- • Fiji
- • Gibraltar
- • Grenada
- • Guam
- • Guernsey
- • Guyana
- • Isle of Man
- • Jersey
- • Liberia
- • Macao
- • Maldives
- • Marshall Islands
- • Mauritius
- • Montserrat
- • Nauru
- • Netherlands Antilles
- • Niue
- • Normand Isles
- • Palau
- • Panama
- • Saint Kitts and Nevis
- • Saint Lucia
- • Saint Vincent and the Grenadines
- • Samoa
- • Seychelles
- • Solomon Islands
- • Tonga
- • Trinidad and Tobago
- • Turks and Caicos Islands
- • Tuvalu
- • US Virgin Islands
- • Vanuatu
The list is updated periodically. The current version is available on the website of the Government of Montenegro.
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
For a basic analysis
Scales with the number of related-party transactions, group structure and complexity of the analysis
Prices are based on our own experience of going through the TP process. The actual cost in your case depends on the scope of documentation and the consultant you choose.
Sources
- Corporate Income Tax Law of Montenegro (Zakon o porezu na dobit pravnih lica), Articles 38 et seq. — transfer pricing rules and the definition of related parties
- Lista teritorija sa poreskim suverenitetom — the official list of preferential jurisdictions (Vlada Crne Gore)
- Montenegro Tax Summaries — Group Taxation (PwC) — an overview of the transfer pricing rules