The Montenegrin Ministry of Finance adopted the Rulebook on the Amendments to the Rulebook on Application of the VAT Law (Official Gazette of Montenegro no 53/2017; hereinafter: the Rulebook).

Changes are effective as of 22 August 2017.

The most significant changes introduced by the Rulebook concern the application of reverse charge VAT and the manner and procedure for appointing a VAT proxy in Montenegro of a foreign entity for VAT purposes.

• Application of reverse charge VAT

In accordance with amendments prescribed by the Rulebook, the taxpayer, who has an obligation to self-account for VAT under the reverse charge mechanism, can deduct self-accounted VAT as its input tax in the same VAT period.

The Rulebook on Application of the VAT Law is now clear that reverse charged VAT assessment is cash-flow neutral for taxpayers with the right to recover input VAT.

We believe that amendments introduced by the Rulebook resolve differences in interpretation of reverse charge VAT assessment on services related to real-estate caused by previous rules.

• VAT proxy

The Rulebook provides that VAT proxy of a foreign entity can be an individual or a company:

– which was registered for VAT for at least 12 months before submission of the request for VAT proxy appointment;
– which has no outstanding tax liabilities assessed by Tax Authorities as at the day of submission of the request; and
– which has not been convicted of a criminal tax offense.

Request for appointing a VAT proxy (hereinafter: the Request) should be filed with the Tax Authorities – Affiliate Podgorica on ZIPZ PDV form - Request for appointing a VAT proxy for VAT purposes.

The Rulebook prescribes the content of the Request as well as documentation which must be filed along with the request. The Request must be filed at least 15 days before a foreign entity starts to conduct business in Montenegro.

Please feel free to contact us for any questions you might have in relation to the Rulebook.

KPMG Tax & Legal Department

KPMG d.o.o. Podgorica
Svetlane Kane Radević 3
81000 Podgorica
Montenegro

Office: +382-20-201-480

tax@kpmg.rs