Compensation for work in the past month represents the individual's Earnings or salary.
Tax:
- on gross earnings up to 700 euros, it is 0% of the base,
- on gross earnings between 701 and 1000 euros is 9% of the base,
- on gross earnings over 1000 euros is 15% of the base.
The minimum net salary for full-time work in Montenegro is 450 euros.
An employee can be insured for 2, 4, 6 or 8 hours a day.
We know the net earnings or salary, ie. that part that is paid to the employee's bank account and Gross earnings, which is a broader term than net earnings and includes:
- Net earnings,
- Contributions for mandatory social insurance
- Personal income tax
Earnings for full-time work of 174 hours per month are calculated according to the formula:
(Starting part of salary + Coefficient of complexity increased for past work x Calculated value of the coefficient)
The elements for calculating the gross salary are:
- the starting part of the salary
- calculation value of the coefficient of complexity
- complexity coefficient increased for past work
The starting part of the salary in the gross amount, which consists of a hot meal and 1/12 of the holiday allowance, amounts to at least 70% of the calculation value of the coefficient (€63.0).
The calculated value of the complexity coefficient is determined in the monthly gross amount of at least €90. The calculated value of the coefficient, which serves as the basis for calculating the starting part of the salary, cannot be less than this amount.
The coefficient of complexity is determined by the employment contract, that is, by the General or branch collective agreement for a certain expertise and scope of work. Below are the coefficients for different degrees of expertise and complexity determined by the General Collective Agreement.
Past work - the employee's salary is increased for each completed year of service.
An example of gross salary calculation (we will assume that the minimum starting part of the salary, the minimum calculation coefficient, that the worker has 10 years of work experience (past work 5%) and the complexity coefficient 4.4 (higher vocational education) are taken for calculation.
Starting part of salary (63) + Coefficient of complexity increased for past work (4.4*1.05=4.62) x Calculated value of the coefficient (90) = 478.80€ + 53.74 (positive correction*)= 532.54 euros.
The minimum gross salary established by law is €532.54, which is the basis for paying taxes and contributions from and on earnings. In this sense, when the employee's total salary for standard work performance and full-time work or time equivalent to full-time work is less than the minimum wage, the employee is paid the minimum wage.
Taxes and contributions payable by the employee:
In order to arrive at the net salary, i.e. the amount that the worker receives, it is necessary to subtract from the gross salary: personal income tax, which is 0% up to a gross income of €700, 9% for gross income from €700.01 to €1000 and 15 % for gross income over €1000.01 and contributions for mandatory social insurance (Fund pio 15% and unemployment insurance 0.5%)
Example of salary calculation up to €700 gross (calculation based on minimum salary of €532.54 gross/450 net)
The amount of gross salary is reduced by:
- Personal income tax (0%), 532.54 x 0% = €0
- Fod pio (15%), 532.54 x 15% = €79.88
- Unemployment insurance (0.5) 532.54 x 0.5% = €2.66
Total (tax and contributions at the expense of the employee) = 82.54 euros.
Net earnings/salary: 532.54 (Gross earnings) - 82.54 (taxes and contributions) = 450€ euros.
Shortcut - If you multiply the amount of your net earnings by the coefficient 1.183432, you will get the amount of your gross earnings. Also, divide the gross earnings by the same coefficient of 1.183432 and you will get the amount of net earnings.
Example of calculation of gross salary from €700.01 to €1000 (calculation on earnings of €800 gross/668 net)
The amount of gross salary is reduced by:
- Personal income tax for the amount of gross salary up to €700 (0%), €700 x 0% = €0
- Personal income tax for the amount of salary from €700.01 to €800 (9%), €99.99 x 9% = €9
- Fod pio (15%), €800 x 15% = €120
- Unemployment insurance (0.5) €800 x 0.5% = €4
Total (tax and contributions at the expense of the employee) = 133 euros.
Net earnings/salary: €800 (Gross earnings) - 133 (taxes and contributions) = €667 euros.
Shortcut - If you multiply the amount of your net salary by the coefficient 1.183432 (up to €700) or 1.3245033 (for the part of gross salary from €700.01 to €1000), you will get the amount of your gross salary. Also, divide the gross salary by the same coefficients, taking care to apply the coefficient to the appropriate salary category, and you will get the amount of net salary.
Example of calculation of gross salary of €1,000.01 (calculation based on minimum salary of €1,200 gross/€957 net)
The amount of gross salary is reduced by:
- Personal income tax for the amount of gross salary up to €700 (0%), €700 x 0% = €0
- Personal income tax for the amount of salary from €700.01 to €1000 (9%), €299.99 x 9% = €27
Personal income tax with a salary amount greater than €1000.01 (15%), 199.99 x 15% = €30
- Fod pio (15%), 1200 x 15% = €180
- Unemployment insurance (0.5) 1200 x 0.5% = €6
Total (tax and contributions at the expense of the employee) = 243 euros.
Net earnings/salary: 1200 (Gross earnings) - 243 (taxes and contributions) = €957.
Shortcut - If the amount of your net earnings, multiply by the coefficient 1.183432 (up to 700) or 1.3245033 (for part of gross earnings from €700.01 to €1000) and 1.4388489 (for part of net earnings over €1000.01), you will receive the amount of your gross earnings. Also, divide the gross salary by the same coefficients, taking care to apply the coefficient to the appropriate salary category, and you will get the amount of net salary.
- Tax surcharge (10% of the tax amount), 0 x 10% = €0
The tax surcharge rate in Podgorica and Cetinje is 15.00%, in Budva 10.00%, while in other municipalities in Montenegro it is 13.00%.
Total (tax and employer contributions for gross salary less than €700) = 35.51 euros.
The amount that the employee costs the employer according to the previous calculation is: Net salary (€450) + Taxes and contributions at the expense of the employee (82.54) + Taxes and contributions at the expense of the employer (€35.51) = €568.05.
Contributions for the disabled - An employer who has less than 20 and more than 10 employees, and does not employ disabled persons, is obliged to pay a special contribution of 5% of the average monthly salary every month, when paying employees' wages and benefits. in Montenegro realized in the year preceding the payment of contributions. An employer with 20 to 50 employees is obliged to pay a special contribution every month, when paying employees' wages and benefits, amounting to 20% of the average monthly salary in Montenegro earned in the year preceding the payment of the contribution
Example of calculation of contributions for the disabled (average salary for 2023 is €987)
- 1-10 persons: none;
- 11-19 persons: 987*5%=€49.35;
- 20-50 persons: 987*20%=197.4 €.
OFFICE ADDRESS: SLOVACKA ULICA, BROJ 21
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