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Montenegro Welcomes the New Year with Transfer Pricing Legislation

3rd February 2022

In the past, transfer pricing hardly seemed like much of a priority for Montenegro. The European country had never defined its transfer pricing documentation requirements, yet it was clear that only three methods would be accepted as part of an economic analysis (the CUP, resale minus, or the cost-plus method). Now at the start of 2022, transfer pricing seems to be climbing the ranks of importance—albeit slowly. A new set of laws, including transfer pricing rules, were published in a December 31, 2021, Official Gazette of Montenegro and they took effect on January 1, 2022.  


What are the new transfer pricing rules? For starters, large taxpayers will be required to submit documentation, while smaller companies (those with a materiality threshold of EUR 75,000) must prepare it and be able to produce within 45 days upon request from the tax authority. As to the contents of that documentation? Well, for now, that’s anyone’s guess—but we do know that small companies will be able to produce the transfer pricing documentation in “short form.” The obligation to submit/prepare transfer pricing documentation begins in 2022, with a deadline of June 30 for the first five years. After 2027, however, the paperwork must be submitted with the tax return. And while the tax authority hasn’t released specific details in terms of the documentation package, Montenegro will be accepting all five OECD-approved transfer pricing methods—and maybe even some others that weren’t explicitly mentioned.