VAT Refunds to Taxpayers Who Are Not Based in Montenegro

Fahrudin Sutkovic

The Law on Value Added Tax in Montenegro prescribes the VAT rate of 21%. VAT is calculated and paid at the general rate of 21% of all trade in products, services, and imports of products, except for trade in products, services, and imports of products for which VAT is prescribed to be paid at a reduced rate, as well as trade in products, services, and imports of products for which a zero (0) VAT rate is prescribed.

The zero VAT rate is, among others, prescribed for the supply of services to a foreign legal entity in accordance with Article 17 of the Law on VAT. This law regulates and determines the place of turnover of the service, in a way that the place of turnover of services provided to the taxpayer is considered to be the place where the recipient of services has its registered office or permanent establishment. Exceptions to this rule exist, for example if services provided to a foreign legal entity are directly related to the real estate located in Montenegro. In such cases, the domestic legal entity will invoice and calculate VAT at a general rate of 21% to the foreign legal entity. 

A taxpayer who does not have a registered office in Montenegro has the right to a refund of input VAT charged to him on the basis of sales of products or services by taxpayers in Montenegro or charged to him when importing products into Montenegro, under the conditions and in the manner determined by the law on VAT. The taxpayer is entitled to a refund of input VAT in the accounting period on the basis that a request is submitted to the competent authority. 

The law stipulates that a request for a VAT refund may be submitted by a legal representative on behalf of the taxpayer via a power of attorney. The taxpayer’s representative must be a domestic taxpayer who will act before the competent authority by submitting the necessary documentation within the stipulated deadline whilst also communicating with the Tax Administrative bodies throughout the process. 

The VAT refunds procedure contains regulations in terms of the conditions that must be met in order for VAT refund applications to be successful. Our team of experienced professionals at Eurofast Montenegro has extensive experience in this area and are ready to provide you with support and expertise. More importantly, Eurofast can act as the legal representative throughout the VAT refund process.


XLNC MAGAZINE | No. 07 | Spring 2021

 

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