GSL / Foreign Companies Audit / Audit Montenegro

Audit of a Montenegro company, financial statements, accounting, consulting in Montenegro

Montenegro is a state in Southeastern Europe, in the west of the Balkan Peninsula. Montenegro is the smallest of the Slavic countries, with an area of 13 812 square kilometers. The population as of 2021 is no more than 620 000 people. The local currency is the euro (EUR), and the country is not part of the Eurozone.

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Service packages Legislation Tax System Audit Services
Preparation and submission of accounts, audit

(depending on the type of work and qualifications of the employed specialist)

100 – 350 EUR per hour
Apostille of financial statements (if necessary)
from 350 EUR
Preparation and submission of a tax return

(depending on the type of work and qualifications of the employed specialist)

100 – 350 EUR per hour
Obtaining an EORI number for a company
from 730 EUR
Registration of a company for VAT
from 1 200 EUR
Registration for the OSS (Union One-Stop Shop) – for intra-EU distance sales of goods and services
from 595 EUR
Preparation and submission of VAT returns
100 – 350 EUR per hour
Consulting services and support during tax audits
100 – 350 EUR per hour

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General requirements

All legal entities incorporated in Montenegro must file annual financial statements. In addition, the government obliges large companies to file financial statements not only for the year but also for the quarter. The filing of financial statements is regulated by the Law on Accounting No. 052 of 17 August 2016, and financial statements are made in accordance with the International Financial Reporting Standards (IAS / IFRS).

National legislation of Montenegro obliges all legal entities to keep business books that include a transaction ledger, general ledger and subsidiary records. All business transactions must be recorded on the accrual basis.

Business books must be kept in two forms: on paper and electronically. Financial statements are made and books of accounts are kept by a person appointed by a general regulatory document adopted by the company. A person with a criminal record may not be appointed responsible person.

The balance sheet and profit and loss statement shall be published on the website of the tax authority.

Time frame for keeping of accounting records, and preparation and submission of financial statements

Financial statements, books of accounts and their respective transaction ledgers must be kept for at least 10 years, whereas subsidiary records, quarterly financial statements and accounting documents that were used as the basis for the making of accounting records must be kept for at least 5 years.

Financial statements shall be made as of 31 December of the reporting year and provided by legal entities to the state authorities on paper and in electronic form by 31 March of the year following the reporting year.

Audit of accounts

In accordance with the Law on Auditing No. 001 of 9 January 2017, audit of financial statements is compulsory for:

  • public joint-stock companies,
  • insurance companies,
  • banks and financial institutions, and
  • medium-sized and large companies.

Medium-sized companies include legal entities that meet at least two of the following three criteria:

  1. average headcount of employees in the reporting year is more than 50, but less than 250;
  2. annual proceeds are from 8 000 000 EUR to 40 000 000 EUR;
  3. amount of assets is more than 4 000 000 EUR, but less than 20 000 000 EUR.

Large companies include legal entities that meet at least two of the following three criteria:

  1. average headcount of employees in the reporting year is more than 250;
  2. annual proceeds are over 40 000 000 EUR;
  3. amount of assets is over 20 000 000 EUR.

Companies that meet the above criteria must provide the tax authority with financial statements along with an auditor’s opinion on paper and in electronic form by 30 June of the year following the reporting year.

Companies that do not meet at least two of the above (three) criteria are classified as micro or small legal entities and are not required to audit their financial statements.

Audit shall be carried out by an authorized auditor, who may draw other persons as assistants, provided that those persons will carry out auditing activities under supervision of the authorized auditor.

An authorized auditor may not:

  1. be a shareholder, founder or member of the legal entity that is being audited;
  2. provide accounting or consulting services to the legal entity that is being audited.

There are other limitations set for auditors in the national code of ethics.

Tax accounts

A company is considered a tax resident of Montenegro if it is incorporated in Montenegro or it is managed and controlled in Montenegro.

All companies that are tax residents of Montenegro must pay profit tax imposed on their worldwide income, whereas non-resident companies pay tax on profits accrued or received from business activity of their permanent establishment in Montenegro and income received from sources in Montenegro. The tax rate for all companies is 9%.

There are no special conditions making it possible to apply a lower tax rate in Montenegro, however there is an eight-year tax holiday for companies engaged in production in underdeveloped areas. Nonetheless, the exemption may not exceed 200 000 EUR during the eight-year period. This benefit does not apply in the following industries: fishery, metallurgy, agriculture and transport.

The tax return for the previous year may be filed in electronic form not later than on 31 March of the current year. There is no tax consolidation in Montenegro: every company must file a separate tax return.

A penalty of 0,03% per day accrues on the amount of unpaid tax obligations.

Liability for failure to comply with legal requirements

A penalty of 500 EUR to 16 500 EUR may be imposed on a legal entity if it:

  1. does not prepare financial statements in accordance with international standards;
  2. does not make financial statements as of 31 December of the reporting year;
  3. does not meet the deadline for filing financial statements with state authorities (in electronic form and on paper);
  4. does not provide state authorities with annual and quarterly accounts;
  5. does not keep accounting records according to the double-entry method;
  6. does not store financial statements, books of accounts and their respective transaction ledgers, and other accounting records during the required period of time;
  7. does not audit its business (when audit is required);
  8. does not meet the deadline for filing audited accounts.

A penalty of 50 EUR to 2 000 EUR may be imposed on the officer of the company responsible for any of the above breaches.

Consolidated financial statements

Legal entities that have control over one or several legal entities must make and file consolidated financial statements in accordance with the International Financial Reporting Standards (IAS/IFRS).

Control implies that the parent company:

  1. has a majority of the voting rights in another legal entity (directly or indirectly);
  2. has the right to appoint a majority of the members of the administrative or supervisory board or executive body;
  3. has the casting vote or veto power at a general meeting of shareholders.

Consolidated accounts shall be prepared as of 31 December of the reporting year.

A legal entity must provide consolidated financial statements by 30 September of the year following the reporting year.

As an exception, a company is not obliged to prepare consolidated financial statements if its parent company from a member state of the European Union prepares consolidated financial statements.

A parent company is also exempt from preparation of consolidated accounts if the group of companies meets the small group criteria.

Small groups are groups of legal entities that on the date of making the balance sheet of the parent company on a consolidated basis meet two of the following three criteria:

  • average headcount of employees in the reporting year does not exceed 50;
  • annual proceeds are under 8 000 000 EUR;
  • total assets are under 4 000 000 EUR.

Small groups of companies, however, are not exempt from making consolidated accounts if they include public joint-stock companies, banks, financial institutions or insurance companies.

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Banks of Montenegro

Bank
The cost of opening an account, $
Global rating
Countrywide rating
GSL rating
3 500
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