Koprivica: State defrauded of millions, criminal complaint to be filed against NET MONTENEGRO

After months of investigating tax evasion and abuse, we have uncovered a major tax fraud scheme that has cost Montenegrin citizens over €10 million, announced Deputy Prime Minister Momo Koprivica.

Koprivica emphasized that this fraud persisted due to the silence and inaction of governments prior to 30 August 2020, allowing certain individuals to amass wealth at the expense of public finances.

The key player in this financial fraud is the company NET MONTENEGRO DOO (LLC) and its partners, stated Koprivica.

He clarified that under Montenegro's Value-Added Tax (VAT) law, gambling services are exempt from VAT. However, this exemption does not extend to management and consulting services provided to gambling operators by third-party companies.

DŽEK POT is a company that holds two concession agreements with the state, granting it the right to operate two casinos. After securing these concessions, DŽEK POT entered into three business and technical cooperation agreements with NET MONTENEGRO, which is registered as a provider of consulting and management services. From 8 September 2016 to 26 March 2024, NET MONTENEGRO received approximately €52 million from DŽEK POT, without paying the VAT it was obligated to calculate and remit to the state, Koprivica explained.

He further elaborated that NET MONTENEGRO falsely categorized its consulting and management services under gambling services, which are VAT-exempt, thereby avoiding payment of taxes and causing over €10 million in losses to the state during the specified period.

This abuse lies in unlawfully misclassifying consulting and management services as gambling services, which are VAT-exempt, even though such exemptions apply solely to direct gambling services provided to players by licensed concessionaires, Koprivica stated.

From a tax law perspective, he clarified that while DŽEK POT is the concessionaire authorized to provide gambling services exempt from VAT, NET MONTENEGRO does not have concessionaire status and is thus required to pay VAT on its taxable services.

Activities such as arranging player transportation, providing catering, staff training, or leasing personnel cannot be classified as gambling services, as gambling services are directly provided to players, not concessionaires, Koprivica asserted.

Moreover, he emphasized that Montenegro’s laws and concession agreements explicitly state that concessions are non-transferable. NET MONTENEGRO could not legally assume the role of a gambling service provider exempt from VAT.

If such a misrepresentation were allowed, even painters hired to paint a casino could claim to be gambling service providers and evade VAT on their fees, Koprivica remarked.

In light of these findings, Koprivica announced that he will file a criminal complaint with the competent prosecution office, notify the crime prevention sector, and inform the Tax Administration.

By exposing this fraudulent scheme, we are putting an end to yet another scam, preventing further illegal siphoning of public funds, and paving the way for the recovery of €10 million for the state. Someone blocked the construction of a school or hospital to fund private yachts and villas. The time for accountability has come. It is time to repay what was taken and face justice, concluded Koprivica.