Payroll Services in Montenegro

Hiring employees in a company in Montenegro implies carrying out specific activities, among which payroll. The term covers most of the operations associated with personnel administration in a business. Considering it can be quite complex, most enterprises use dedicated payroll services in Montenegro.

Below, our lawyers in Montenegro explain what payroll entails in this country and the services you can obtain for this purpose.

Standard payroll services in Montenegro

If you start a business in Montenegro, you may need to hire employees. In this case, you must take into account the requirements of the Employment Law and the Tax Code. This is why payroll administration usually implies the following services:

1. drafting and managing employees’ files and labor agreements (which is often referred to as HR solutions);
2. data gathering and payroll computation which implies verifying salaries, calculating the taxes to pay, the social contributions to make, withholding them, and making the payments with the appropriate authorities;
3. employee deductions, bonuses, benefits calculation and reporting;
4. payslip generation and preparation of accounts, and depositing the net salary in all employees’ accounts;
5. ensuring that medical leaves, vacation time, maternity leave are granted in accordance with the law (when applicable);
6. reporting and filing relevant information with the state authorities, among which the Tax and Labor Offices, social and health insurance companies, etc;
7. completing specific payroll procedures for foreign employees.

As you can see, payroll is quite a complex process, which is why many local companies decide to outsource this department with external payroll services providers in Montenegro. At the same time, when it comes to labor matters, you can rely on our law firm in Montenegro for assistance.

The main social contributions paid by employers and employees in Montenegro

The wage of an employee is made up of several elements. This is why its computation can be quite complicated, as apart from the personal income tax to be withheld, the Montenegro payroll service supplier must also calculate and retain several social contributions. Moreover, they must also be paid by employers.

Here is the structure of the social security system in Montenegro:

• the pension and disability insurance must be paid by the employee at 10% only (the employer's 5.5% share was abolished in October 2024);
• the unemployment insurance implies a levy of 0,50% per employee and another 0,50%;
• the employer must also participate to the Labor Fund Contributions with 0,20% per employee;
• the employer will also pay 0,27% per employee as a Chamber of Commerce contribution.

However, Montenegro does not levy a health insurance contribution.

The contributions are calculated per each gross salary.  Our payroll specialists in Montenegro can offer more information about them.

The personal income tax in Montenegro

Employees are also subject to an income tax levied progressively. Specifically:

• monthly gross salaries of EUR 700 are exempt from the income tax;
• a 9% rate applies to monthly gross wages between EUR 701 and EUR 1,000;
• salaries above EUR 1,001 are subject to a 15% tax rate.

Similar taxes are applied to foreign employees. So, if you are interested in immigration to Montenegro, it is good to know such aspects. On the same note, our lawyers can help you file for residency or citizenship in Montenegro, depending on your current status.

Feel free and contact us for details on the payroll services you can benefit from in Montenegro.