Payroll in Montenegro 2026: contributions, income tax and IOPPD

In Montenegro the employer withholds the employee's 10% pension and 0.5% unemployment contributions and the income tax from each gross salary, and adds a municipal surtax on the tax. The employer's own cost on top of gross pay is low: since October 2024 it pays only the 0.5% unemployment contribution.

Payroll in Montenegro at a glance

Social security contributions

Under the Law on Contributions for Mandatory Social Insurance, as consolidated for 2026, only two contributions are charged on salaries: pension and disability insurance, and unemployment insurance. Health insurance contributions were abolished from 2022, and from 1 October 2024 the employer's pension contribution fell from 5.5% to 0% and the employee's from 15% to 10%.

Base. Contributions are charged on gross salary, which may not be lower than the minimum contribution base: the basic wage set in the General Collective Agreement for the employee's qualification category, expressed gross. Pension contributions also have an annual maximum base set each year by the Ministry of Finance according to average wage growth; contributions paid above it are refunded on request after the end of the year.

Jobs counted with an accelerated insurance period carry an extra pension contribution of 6% to 28%, depending on how many months each 12 months of work are counted as. Contributions are calculated and paid by the employer by the 15th of the month for the previous month.

Other items on the return. The monthly IOPPD form also has lines for other levies, such as the contribution for the employment of persons with disabilities; check with your accountant which of them apply to your business.

Income tax on salaries

Personal income tax on salaries is charged on gross salary (there is no personal allowance) and withheld by the employer at each payment. Since 1 January 2026 the Personal Income Tax Law sets these monthly bands:

Municipal surtax (prirez). On top of the income tax, the municipality where the employee lives charges a surtax set by its own decision: up to 13% of the income tax, and up to 15% in the Capital City (Podgorica) and the Old Royal Capital (Cetinje). Check the current rate of each employee's municipality before you run payroll.

Annual return. An employee paid by two or more employers whose combined monthly gross pay exceeds €700 files an annual return (GPP-FL) by 30 April of the following year.

Passing on cuts. If the income tax rate or the employee's contribution rate is reduced, the Labour Law requires the employer to pay the amount saved to the employee as part of the salary.

Minimum wage, working time and mandatory pay

The Labour Law sets the net minimum wage for full-time work at no less than €600 for jobs up to qualification level V and €800 for jobs at level VI and above, in force since 1 October 2024. The Government sets the amount on the proposal of the Social Council for two years at a time, and part-time employees receive it pro rata. The meal allowance and one twelfth of the annual holiday allowance (regres) form part of the minimum wage.

Salary is paid in money into the employee's bank account at least once a month, on the dates in the collective agreement or employment contract. The General Collective Agreement signed in 2022 sets the 15th of the month for the previous month unless a branch or company agreement says otherwise; it was extended until 30 April 2026, so check which agreement now covers your business.

Premiums. The Labour Law leaves the increases for night work, overtime and public holidays to collective agreements. The General Collective Agreement sets at least 40% for night work, 40% for overtime, 80% for Sunday work and 150% for work on a state or religious holiday, plus a past-service supplement for each year of work. Weekly working time including overtime may not exceed 48 hours, and minimum annual leave is 20 working days. The Labour Law contains no 13th salary.

Monthly payroll calendar and filings

1. 1Register the employee for mandatory social insurance with effect from the first day of work, and submit the single registration (jedinstvena prijava) to the Tax Administration's central register within eight days of the start of work. Give the employee a copy within five days.
2. 2Pay the salary and, at each payment, the withheld income tax and surtax.
3. 3File the IOPPD return electronically by the 15th of the following month, and pay the contributions for the previous month by the same date.
4. 4Give a payslip (obračun zarade) with every payment. If the salary is not paid, the payslip has the force of an enforceable document, and the employer keeps monthly salary records.
5. 5By 31 January, give each employee a statement of the salaries paid and tax withheld in the previous year.

In 2026 the Tax Administration is introducing a new IT system (IRMS), and the Government has reported that some filing deadlines moved during the transition; check the Tax Administration's tax calendar for the current dates.

Worked example: €1,200 a month

An employee earns €1,200 gross a month, is single and has no dependants.

At a 15% surtax the surtax is €8.55. The employer's total also excludes any other levies that apply to your business.

Changes proposed for 2027: the Euro Model

On 18 September 2026 the Government adopted bills for its "Euro Model", to apply from 1 January 2027 once passed by Parliament. They would set the pension and disability and the unemployment contributions to 0%, tax salaries at 0% up to €700 and 9% above, and raise the net minimum wage to €1,000 for qualification levels I and II, €1,250 for levels III and IV and €1,400 for level V and above. Until the laws are adopted, the 2026 rules above apply.

Common mistakes

1. 1Still deducting health contributions or the old 15% and 5.5% pension rates.
2. 2Applying the tax bands to net salary or after contributions. The bands apply to gross salary.
3. 3Forgetting the surtax, or using the wrong municipality's rate.
4. 4Paying less than the net minimum wage for the job's qualification level, remembering that the meal allowance and one twelfth of the holiday allowance are part of it.
5. 5Missing the IOPPD deadline on the 15th, especially while deadlines change during the IRMS transition.

How Clientlly helps

Clientlly does not ship a built-in payroll profile for Montenegro. An administrator enters Montenegro's payroll rates once in the payroll tax settings: the income-tax bands, the personal allowance, the employee and employer contribution rates and the minimum wage. Clientlly then calculates gross to net and the employer contributions and produces payslips. The municipal surtax and any changes from 2027 should be checked when you set up or update the rates.

Alongside payroll, the human resources module handles leave requests and approvals with a leave calendar and keeps HR documents, and attendance and time tracking records working hours and overtime.