New amendments to the VAT Law have an impact on the application of reduced and zero VAT rate, issuing of invoices in e-form, just like on the manner of submission of VAT returns electronically.

VAT Law amendments

Law on Amendments to the Value Added Tax Law has been published in the “Official Gazette of Montenegro” no. 80/2020. It entered to force on August 4, 2020.

The main changes:

  • Until August 31, 2021, reduced 7% VAT rate will apply on services associated with the preparation and serving of food, drinks and beverages with the exception of alcoholic and mineral beverages (with added sugar and coffee), provided at the facilities for hospitality services. Starting from September 01, 2021, the services related to preparation and serving of food, bottled drinking water and soft drinks in the restaurant and catering facilities will be taxed at the same reduced VAT rate.

    The application of a reduced VAT rate in this area associated with the specific hotel category and its regional location was abolished, while the accommodation services at tourist apartments are added to the scope of supplies subject to lower VAT rate.

  • The application of a zero VAT rate is envisaged on deliveries and imports of goods and services on the basis of a concluded Donation agreements with the state bodies and public legal entities as well as on donations of medical devices and protective equipment to these entities, in order to suppress the consequences associated with the epidemic disease. The amendments do not define the term "public legal entities".
     
  • Further, the Amendments prescribe the possibility of issuance of invoices in electronic form, but with the obligatory prior consent of the recipient of the invoice. The obligation to obtain a permit from the Tax authority for both, the issuance and receipt of invoices issued in electronic form for the purpose of exercising the right to recover input VAT, has been abolished.

Starting from November 4, 2020, VAT returns are submitted exclusively in e-way.