Novelties in the VAT Law

In August 2017, the VAT Law and the accompanying Rulebook were amended with the main goal of harmonising the Montenegrin VAT Law with the EU law.

The most important changes are:

• VAT rate increase from 19% to 21% (applicable as of 1 January 2018)
• The general rule for determining place of supply of services was amended. Specifically, if the service is supplied to a taxpayer, the place of supply of services is considered to be at the recipient's seat or residence (or its permanent establishment, if the service is supplied to its permanent establishment), while if the service is supplied to other persons, the place of supply of services is considered to be at the supplier's seat or residence (or its permanent establishment, if the service is supplied by its permanent establishment). In addition, the exceptions to this general rule were regulated in more detail.

The Rulebook introduced additional provisions, which regulate the form, criteria and the procedure of appointing and registering a VAT tax representative for a foreign person.