An overview of the most frequently asked questions from our clients.
Should I set up an LLC (d.o.o.) in Montenegro or open a branch (subsidiary) of my parent company?
Sometimes the way of registering in Montenegro depends on the conditions of the project, so this must be considered first. It is also important to know from which country the founder of that company comes, because for some countries — in accordance with the International Agreement on the Avoidance of Double Taxation — you receive tax benefits (for example, with Serbia, a branch opened by a Serbian company does not pay profit tax here, as the tax is paid only in Serbia). The advantages and disadvantages are also reflected in the unhindered flow of money between the parent company and its branch, which is simpler when it comes to a branch. Liquidation or simple closure is also much easier in the case of a branch. The liability of a branch is in fact the liability of the parent company, whereas an LLC (d.o.o.) is liable only with its property — and most often that is just EUR 1.
Can an already employed natural person be engaged under a service (work-for-hire) contract?
A service contract (ugovor o djelu) presupposes some "work result" produced by that natural person. Since it concerns actual WORK — covering the employer's workplace — and the natural person in question is already employed, that person may only be engaged through supplementary work.
Is withholding tax due on the purchase of software from abroad?
If the software constitutes copyright and other intellectual property rights, then you are obliged to calculate and pay a 9% withholding tax, unless otherwise regulated by an international agreement on the avoidance of double taxation. If this transaction has the treatment of a supply of goods or a service from the field of information technologies — and does not, by its nature, constitute a copyright fee (for example, installation of computer programs and support provided by a foreign partner to the user of the program) — then no withholding tax is payable.
What VAT obligations exist on the reverse-charge of inputs?
Provided that the taxpayer fulfils the right to deduct input VAT prescribed by Article 37 of the VAT Act, the only obligation is to "charge VAT" — i.e. to apply the reverse-charge mechanism — and to report it in column 18 of the VAT return, form "PR PDV-2", as both output and input VAT.
Where are legal services on real estate taxed when the client lives abroad?
When a lawyer from Montenegro provides legal advice regarding real estate located in Montenegro to a natural person with residence abroad, in that case these services are taxed abroad, in accordance with Article 17, paragraph 4, point 6, subpoint d) of the Value Added Tax Act (Opinion of the Tax Administration No.: 03/2-3453/2-20, Podgorica, 20 February 2020).