Europe Now („Evropa sad")
Montenegro has unusually high net pay for the region — and the reason is the „Evropa sad" fiscal reform. It introduced a tax-free band, abolished the employee health contribution and cut PIO contribution rates. This page explains the reform and why the same gross salary now pays out as a larger net than before.
Montenegro has unusually high net pay for the region — and the reason is not one rate, but a whole package of fiscal reform called „Evropa sad" (Europe Now). This page explains what the reform changed and why the same gross salary now pays out as a larger net than before.
What the reform changed
| Element | After the reform |
|---|---|
| Tax-free band | The first 700 € of pay is not taxed (0% rate). |
| Employee health contribution | Abolished — financed from the budget, not among the deductions. |
| Employee PIO | Cut — now 10%. |
| Employer PIO | Reduced to zero — a smaller gross → employer-cost gap. |
| Minimum net wage | Raised to 600 € (up to level V) / 800 € (level VI+). |
Two phases of the reform
„Evropa sad" was not a single move but two phases. The first phase, „Evropa sad 1" (from January 2022), introduced the progressive income tax with a tax-free band up to 700 € and abolished the employee health contribution, which has since been financed from the budget. The second phase, „Evropa sad 2" (in force since 1 October 2024), cut the employee PIO contribution (now 10%), reduced the employer PIO to zero, and raised the minimum net wage. These changes carry unchanged into 2026.
- Evropa sad 1 (2022) — the progressive income tax with a tax-free band introduced; the employee health contribution abolished.
- Evropa sad 2 (1 Oct 2024) — a lower employee PIO, the employer PIO to zero, and a higher minimum net.
Why net pay rose
Three moves push net upward at the same time: a tax-free band means tax only starts above a threshold; abolishing the health contribution removed an entire deduction from pay; and a lower PIO contribution means a smaller share of gross goes to contributions. The result is that the same gross salary now leaves a noticeably larger net than before the reform.
The municipal surtax is not part of this net story — it stays employer-side and does not reduce your net (see contributions).
What it means for you
If you compare an offer in Montenegro with neighbouring countries, "gross" doesn’t mean the same thing — because of the reform, the same gross carries a larger net here. To see the exact amount for your gross, use the calculator; for the rate detail, see income tax and contributions.
Sources and status
The progressive tax scale comes from the earlier „Evropa sad" reform (2021/2022), which also introduced the tax-free band and abolished the employee health contribution (since January 2022); the lower contributions and higher minimum net were introduced by the „Evropa sad 2" amendments (in force since 1 Oct 2024). The exact Official Gazette issue that introduced the scale is not pinned down. No value shown has been through this site’s own review and sign-off — this is an explainer, not official advice.
The full content for this page is still in preparation.