The Government of Montenegro presented the first package of economic measures on 9 April 2020, and subsequently, introduced the so-called Economy and Employee Support Program (“Program”) on 24 April 2020, as the second package of economic measures in order to curb the negative impact of the coronavirus outbreak on the economy and overcome the crisis.
This Program covers six types of subsidies and targets over 100,000 employees in Montenegro, several thousand entrepreneurs, and micro, small and medium-sized companies (“entities”). State subsidies represent a stabilization program the purpose of which is to preserve the jobs before the outbreak of the epidemic and can be considered as one of the steps towards comprehensive economic measures.
Following subsidies are covered under the Program:
- Subsidies for closed industries (up to 100% of gross minimum salary (hereinafter under term “salary” appertains “compensation of salary);
- Subsidies for the tourism sector (up to 100% of gross minimum salary);
- Subsidies for endangered industries (up to 50% of gross minimum salary);
- Subsidies for new employment (up to 70% of gross minimum salary);
- Subsidies for salaries of employees on paid leave (up to 70% of gross minimum salary);
- Subsidies for salaries of employees in quarantine or isolation (up to 70% of gross minimum salary).
Conditions for Exercising Subsidies Under the Program
The subsidies are intended for companies and entrepreneurs which:
- are registered in Montenegro in accordance with the Company Law before 15 March 2020;
- settled tax liabilities and taxes on salary for 2019;
- submitted the IOPPD form[1] to the Tax Administration by the end of the month for which a subsidy application is submitted (for the companies);
- submitted the GPPFL form[2] for 2018 or 2019, or the ZPO form[3] for 2020 (for the entrepreneurs);
- settled down payments in 2019;
- at the time of applying for a subsidy, regularly settle their rescheduled tax liabilities, in accordance with the Law on Rescheduling of Tax Claims and the Decree on Conditions for Delaying Collection of Tax and Non-Tax Claims; and to
- companies that did not reduce the number of employees during the period of the measure, compared to the number of employees registered in the month of February 2020 through the IOPPD form, not counting the employees who voluntarily terminated their employment contract.
Deadlines for Submitting a Grant Application
- To receive the subsidy for the month of April, the deadline for submission of applications is 15 May 2020;
- To receive the subsidy for the month of May, the deadline for submission of applications is 15 June 2020.
Business entities that have subsequently settled their 2019 tax and social contribution obligations are eligible to apply after the deadline set for submission of claims, but no later than 31 May (for the April salary subsidy) or 30 June (for the May salary subsidy).
Subsidies for New Employment (70% of gross minimum salary)
Subsidies are given to businesses that:
- have not reduced their headcount since February 2020,
- registered new employees for a period of six months starting from 1 April 2020 (which were not recorded as Employee of that same business entity in January and February 2020) and who were, at the time, registered as unemployed at the Employment Agency of Montenegro (Zavod za zapošljavanje Crne Gore) in the previous month in relation to the month on which the application was submitted.
The maximum number of employees eligible for this subsidy is equal to the difference between the number of employees in the month for which the application is submitted and the number of employees registered in February 2020.
The amount of the subsidy is determined in relation to the value of the minimum salary, by determining the amount of taxes and contributions in proportion to the earned income, in the amount of 70% of the amount of taxes and contributions to the minimum salary and 70% of the net minimum salary. The amount of the difference up to the full gross salary of the employee is provided by the employer.
The subsidy for new employees shall be acquired for a period of 6 months, provided that the employees remain under employment relationship for at least 12 months as of the initiation of the employment relationship.
An enterprise operating in a closed, endangered, or tourism activity may receive a subsidy for the salary of an employee whose employment began in March for the months of April and May.
The measure does not apply to companies operating in the following areas: financial and insurance activities, electricity and gas supply, telecommunications, water supply, wastewater management, waste management control, government institutions, local government and majority-owned state or local government.
If the employer terminates employment with one or more employees for whom the employer received a subsidy through this measure, the number of employees in the company may not be less than the number of employees in the previous month. Otherwise, the subsidy for the total reduced number of employees will cease to be effective and the employer shall be obliged to make a refund of the salary subsidy for the reduced number of employees for the subject month.
Subsidies for Salaries of Employees on Paid Leave due to the Care of Child not Older than 11 years (70% of gross minimum salary)
An entrepreneur and a company whose employee uses the right to paid leave of absence from work in order to take care of a child under the age of 11, may, on request, receive a subsidy on gross salary for these employees.
The amount of the subsidy is determined in relation to the value of the minimum salary, by determining the amount of taxes and contributions in proportion to the earned income, in the amount of 70% of the amount of taxes and contributions to the minimum salary and 70% of the net minimum salary. The amount of the difference up to the full gross salary of the employee is provided by the employer.
The subsidy does not apply to state institutions, local governments, majority-owned state, or local government.
In addition, the subject subsidy can be obtained for the period in which the employee exercised this right, at the request of the employer.
Subsidies for Salaries of Employees in Quarantine or Isolation (70% of gross minimum salary)
An entrepreneur or a company whose employees have been quarantined or isolated will receive a subsidy on gross salary for these employees.
The amount of the subsidy is determined in relation to the value of the minimum salary, by determining the amount of taxes and contributions in proportion to the earned income, in the amount of 70% of the amount of taxes and contributions to the minimum salary and 70% of the net minimum salary. The amount of the difference up to the full gross salary of the employee is provided by the employer.
The subsidy does not apply to state institutions and local governments.
The right to a subsidy on this basis is opened for a maximum of one month, namely: the month of April (in case the employee was quarantined or isolated mainly in March or April), or for the month of May (in the event that the quarantine or isolation worker resided predominantly in May).
The Course of Proceedings
The Program applications will be open for April salary subsidies from 1 May to 15 May 2020. Requests will be processed in the order of their arrival. The expected time of payment of salary to the employee’s account, in case of submission of a complete request that meets all the criteria prescribed by the program, is two to four days.
The application will be accessible on the portal e-Prijava which is regularly used by business entities for filing electronic tax documents.
[1] IOPPD form – report on accrued and paid taxes and contributions
[2] GPPFL form – annual income tax of natural persons
[3] ZPO form – request for flat-rate taxation of self-employed income
