Compliance
Montenegro Tightens Rules around Tax Administration & Withholding: What You Need to Know
Montenegro has introduced far-reaching amendments to the Tax Administration Law and tax reporting of gambling winnings. Here's how the changes will directly affect individuals and businesses.
By NomadicTax Research Team • 5-8 min read • August 24, 2026
## Overview of Key Changes in Montenegro
### 1. Taxation of Gambling Winnings
- Montenegro adopted a **single proportional tax rate of 12%** for all winnings from games of chance, replacing the previous progressive scale (0%, 10%, 15%) ([gov.me](https://www.gov.me/en/article/press-release-from-the-120th-cabinet-session?utm_source=openai)).
- Purpose: simplify the tax treatment, reduce opportunities for avoidance via splitting large wins, and enhance fairness ([gov.me](https://www.gov.me/en/article/press-release-from-the-120th-cabinet-session?utm_source=openai)).
### 2. Tax Administration Law Updates
- A new **Draft Law on Amendments to Tax Administration** defines who must register for tax purposes, including **legal entities or organisations** with income, activities, or assets inside or outside the country. Profoundly, **registration must occur within five working days** of entering the relevant register. This applies to both domestic and foreign entities/natural persons ([gov.me](https://www.gov.me/en/article/press-release-from-the-116th-cabinet-session?utm_source=openai)).
- Also introduced: a **Central Liaison Office** to coordinate EU information exchange, upgraded procedures for determining default interest rates ([gov.me](https://www.gov.me/cyr/clanak/novi-poreski-zakoni?utm_source=openai)).
## Implications For Businesses and Individuals
| Stakeholder | Implication | Action Steps |
|------------|-------------|--------------|
| Gamblers & Frequent Winners | Flat 12% rate applies to all winnings, potentially higher tax burden for mid-level wins that used to be taxed at lower bracket | Review past wins or plan bets accordingly; ensure proper documentation to avoid over-or under-reporting |
| Foreign Entities | Must register within 5 days if entering Montenegro’s registers with assets or operations | Seek legal counsel to ensure timely registration, understand obligations under cross-border reporting |
| Employers & Tax Advisors | Default interest rate and tax administrative procedures may shift; stricter enforcement and monitoring expected | Update internal processes and payroll systems; keep abreast of publishing of implementing regulations |
## Practical Example
Sara, a citizen living in Podgorica, wins €1,000 from a lottery previously taxed at 10%. Under the old progressive scale, she'd pay €100 (10%), but under the flat 12%, she'll now owe **€120**—an incremental €20 taxation but transparent and unconditional across all winnings.
Meanwhile, **Tech-Co**, a foreign legal entity that registered last week in Montenegro and holds assets locally, now must file for general tax registration within 5 working days to comply under the updated Tax Administration guidelines.
## What You Should Do Now
- Review contracts, licenses, and registrations: ensure the deadline for full general tax registration isn’t missed.
- If you’re handling payroll, update wage-and-contribution software to incorporate the changes, especially for social contributions (handled in another region, but may have knock-on effects).
- For winners of chance games, consult with a local tax consultant to understand how the single rate interacts with any existing deductions or thresholds.
## Conclusion
Montenegro’s recent legislative changes reflect a trend across **Other Europe** toward simpler tax treatment and tighter administrative enforcement. Although they may increase the tax burden for some, they reduce ambiguity and uneven treatment—especially beneficial for taxpayers seeking clarity and foreign investors calculating risk.