In a significant move aimed at enhancing tax transparency and compliance, Montenegro has
implemented new regulations mandating the submission and/or preparation of Transfer Pricing Studies
(TPS) for certain entities. This requirement represents a substantial step towards aligning Montenegro’s
transfer pricing practices with international standards, thereby fostering fair taxation and mitigating tax
evasion and profit shifting.
Effective for fiscal years commencing on or after 01-01-2022, these regulations apply to both domestic
and multinational enterprises operating in Montenegro. The obligation to submit a Transfer Pricing
Study pertains primarily to large taxpayers 1 meeting specific criteria, particularly those engaged in
transactions with related parties, including cross-border transactions.
The deadline for submission coincides with that of profit tax returns, typically March 31 of the
subsequent year. However, an extension until 2027 has been granted, with the submission deadline set
for June 30 of the following year.
While other companies may not be obligated to submit, they are required to prepare relevant
documentation. Competent tax authorities retain the discretion to request TP documentation, with a
standard deadline of 45 days for submission upon request. Non-compliance or the provision of
inadequate documentation may result in penalties or additional tax assessments.
The introduction of mandatory Transfer Pricing documentation necessitates affected entities to conduct
comprehensive analyses of their related-party transactions. These studies entail detailed documentation
of the company’s transfer pricing policies, methodologies used for pricing transactions, financial
analysis, and benchmarking studies to demonstrate compliance with arm’s length pricing.
In conclusion, Montenegro’s adoption of mandatory Transfer Pricing Study submission requirements
represents a substantial stride towards enhancing tax compliance, transparency, and fairness within the
country’s tax system. By aligning its transfer pricing practices with international standards, Montenegro
seeks to bolster its attractiveness as an investment destination while safeguarding tax revenues and
promoting economic development.
For further guidance on navigating these regulations, taxpayers are encouraged to consult with our
experts at the Transfer Pricing Department at Privel Partners.
Please contact our Head of TP Department at Privel Partners, at manastasiou@privelpartners.gr or at tp@privelpartners.gr
