Summary: On 17 September 2026, the Government of Montenegro adopted a set of draft laws introducing a new salary calculation framework known as the Euro Model. Implementation is envisaged from 1 January 2027, subject to change before adoption by the Parliament of Montenegro. The proposal raises the minimum net salary to between EUR 1,000 and EUR 1,400 depending on qualification level, reduces salary contributions to 0% (including the remaining employee pension contribution), simplifies personal income tax, and changes corporate income tax.
Their content may still be amended before adoption by the Parliament of Montenegro. Our law firm will continue to monitor the legislative process and any relevant changes.
The proposed reforms include a significant increase in minimum salaries, a further reduction of the tax and social security burden on employment income, as well as amendments to the personal income tax, corporate income tax, and pension and disability insurance regimes. The new minimum salary rules would also apply to foreign nationals employed by employers in Montenegro.
1. Increase in Minimum Salaries
Under the proposed amendments to the Labour Law, the minimum net salary would be increased to:
| Qualification level | Minimum net salary from 2027 |
| Level I or II (primary education) | EUR 1,000 |
| Level III or IV (secondary education) | EUR 1,250 |
| Level V or higher (higher or university education) | EUR 1,400 |
The proposal also introduces a specific safeguard for private-sector employees. During 2027, an employer would not be permitted to assign a lower qualification level, change the job title, or amend the job description of an employee who was employed by that employer on 31 August 2026 for the purpose of applying a lower minimum salary, provided that the employee continues to perform the same or predominantly the same duties.
In such cases, the qualification level relevant for determining the minimum salary would be the level established by the employer’s internal organisation and job classification act or by the employment agreement applicable on 31 August 2026. The same rule would apply where an employee’s employment is terminated and subsequently re-established with the same employer for the same or predominantly the same duties.
2. Reduction of Salary Contributions to 0%
The proposed amendments to the Law on Contributions for Compulsory Social Insurance would reduce the following contribution rates to 0%:
- pension and disability insurance contributions;
- additional contributions for periods of insurance calculated at an accelerated rate; and
- unemployment insurance contributions.
The employer’s pension and disability insurance contribution was already abolished under amendments applicable from October 2024, while the employee contribution currently amounts to 10%. Under the proposed amendments, this remaining employee contribution would also be abolished.
The Labour Law currently provides that employer is obliged to pay the amount of the contribution that is abolished or reduced to the employee as a part of employee’s salary.
| Are your employment contracts and job classification acts ready for the Euro Model? For employees employed by you on 31 August 2026, the proposal ties the minimum salary during 2027 to the qualification level specified in the employer’s internal organisation and job classification act or the employment agreement in force on 31 August 2026. Our employment law team reviews employment contracts and job classification acts and advises on preparations should the proposed changes be adopted. Schedule an online consultation → |
3. Personal Income Tax
The proposed amendments to the Personal Income Tax Law envisage a simplified taxation regime for employment income.
| Taxable income | Tax rate from 2027 |
| Up to EUR 700 | 0% |
| Above EUR 700 | 9% |
The existing 15% tax rate applicable to the portion of taxable income exceeding EUR 1,000 would therefore be abolished.
4. Corporate Income Tax
Changes to the corporate income tax regime have also been proposed.
| Taxable profit | Tax from 2027 |
| Up to EUR 100,000 | 9% |
| Above EUR 100,000 | EUR 9,000 plus 15% on the portion above EUR 100,000 |
This would abolish the existing intermediate 12% tax bracket. Under the current regime, taxable profit between EUR 100,000.01 and EUR 1,500,000 is subject to tax of EUR 9,000 plus 12% on the portion of taxable profit exceeding EUR 100,000.
Frequently Asked Questions about the Euro Model
What is the Euro Model?
The Euro Model is the name given to a set of draft laws adopted by the Government of Montenegro on 17 September 2026, which change how salaries, contributions, and personal and corporate income tax are calculated. The proposals are in the legislative procedure and may still be amended before adoption by Parliament.
When does the Euro Model take effect?
Implementation is envisaged from 1 January 2027, provided Parliament adopts the proposals in their current or an amended form.
What will the minimum salary be from 2027?
Minimum EUR 1,000 for positions requiring Level I or II qualifications, minimum EUR 1,250 for Level III or IV, minimum EUR 1,400 for Level V or higher.
Does the Euro Model apply to foreign nationals working in Montenegro?
Yes, the new minimum salary rules would also apply to foreign nationals employed by employers in Montenegro.
How does personal income tax change?
Under the proposal, a 0% rate would apply to taxable income up to EUR 700, and a 9% rate above EUR 700, which would abolish the current 15% rate.
Does corporate income tax change?
Yes, under the proposal, corporate income tax would be 9% on taxable profit up to EUR 100,000, and EUR 9,000 plus 15% on the portion above EUR 100,000, which would abolish the existing intermediate 12% bracket.
For further information on the potential impact of the Euro Model on your business operations in Montenegro, please contact:
Jelena Brajković, jelena.brajkovic@bdlegal.me
Radmila Đurišić, radmila.djurisic@bdlegal.me
