The draft fiscal strategy foresees that the full rate of value added tax (VAT) will be calculated on shipments from abroad, that is, the exemption from paying VAT on the value of the shipment up to 75 euros, which is valid now, will be abolished.
Citizens of Montenegro who buy products online and have them delivered to their home address now do not pay VAT if the value of the shipment is less than 75 euros, nor customs if the value is less than 150 euros. According to data from the Postal Services Development Strategy, the number of these shipments reached 800 last year, and 270 citizens used this type of trade.
For example, on a shipment of 75 euros, the amount of tax will now be 15,75 euros, that is, they will pay a total of 90,75 euros. On a shipment worth 10 euros, the tax will amount to 2,1 euros.
"The legal solution, which will be harmonized with Directive 2009/132 EU, implies the abolition of exemption from payment of VAT when importing products, which refers to shipments of insignificant value up to 75 euros. The aforementioned exemption for the import of shipments of insignificant value has been abolished in the EU since July 1, 2021, and all commercial shipments imported into the EU are subject to VAT, regardless of their value. The aim of abolishing the exemption from payment of VAT when importing shipments is to create a fairer and more transparent taxation system and reduce tax evasion. The aforementioned legal provision will apply from January 1, 2025," the draft fiscal strategy stated.
Until 2017, there was a regulation in Montenegro according to which online purchases of up to 150 euros were exempt from VAT. Then the Government of Duško Marković proposed that, due to harmonization with the European Union, the limit of non-taxation should be lowered to 22 euros.
After that proposal, a group of citizens launched a petition stating that the amendment to this law at that time, i.e. the taxation of all packages worth more than 22 euros, "will directly affect the standard and purchasing power of citizens of Montenegro who order various goods through online shopping".
"Using online shopping services, citizens of Montenegro were able to buy a variety of goods on the Internet, which are either not available in Montenegro or are many times more expensive in existing retail stores. In times of financial crisis and otherwise low living standards, this type of trade allowed citizens to get the desired goods at affordable prices. Along with the increase in VAT from 19 to 21 percent, as well as the increase in excise duties on tobacco products, alcohol and fuel, the reduction in the value of shipments on which VAT is not paid represents another blow to the standard of citizens. Therefore, we request the withdrawal of the disputed article of the Draft Law", the petition states.
After that, the Government changed its mind and in the Draft Law the limit up to which shipments are not taxed was increased from 22 to 75 euros, that is to half of the previous amount of 150 euros.
The Director General of the Directorate for Tax and Customs System, Novo Radović, then, when asked why they proposed reducing the limit for non-taxation, said that in 2016 the Post had 319 shipments from online purchases, so they believed that this amount should not pass tax free.
In neighboring Bosnia and Herzegovina, a similar law was changed in the same year, but in the complete opposite direction, when the limit for the value of goods purchased online that is exempt from customs duty and VAT was increased from the previous 50 to 300 convertible marks (from 25 to 150 euros ), in order to strengthen this type of trade.
That legal provision is still valid now, so citizens of BiH can buy products from abroad over the Internet worth up to 150 euros tax-free.
They spent an average of 443 euros per year on online shopping
In the Strategy for the Development of the Postal Service until 2028, it was stated that in 2022, the citizens of Montenegro spent an average of 443 euros per year on online shopping, while the average in the EU is 1.018 euros.
The authors of the strategy expect that the average annual spending on online shopping in 2027 will grow to 675,5 euros, as well as that the number of users will grow to 316 thousand.
"The increase in the use of e-commerce increases user demand for package delivery, which represents an incentive and an opportunity for postal operators to increase income, and which at the same time affects economic growth", it was stated in that Strategy.
It remains to be seen how much the introduction of VAT payment on all shipments will affect the reduction of this type of trade and the drop in the income of the companies that deal with their delivery.
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