Understanding Montenegro's tax system, rates, and obligations for foreign residents.
Montenegro offers one of Europe's most favourable tax environments with relatively low rates. Here's what you need to know about your tax obligations.
You become tax resident if: - You spend 183+ days per year in Montenegro - Your centre of vital interests is in Montenegro - You register as a resident
Tax residents pay tax on worldwide income. Non-residents pay tax only on Montenegro-sourced income.
Since the 2022 reform, Montenegro has a progressive income tax system:
| Annual Income | Tax Rate |
|---|---|
| Up to €8,400 | 0% |
| €8,400 - €12,000 | 9% |
| Above €12,000 | 15% |
This applies to employment income, freelance income, and business profits.
Note: The previous flat 9% rate no longer applies to most income.
Rental Income Tax: 15% of net rental income (after deductible expenses)
Capital Gains Tax: 15% of the gain on property sales - Calculated as sale price minus purchase price and documented improvements - No exemption for length of ownership
Low and competitive rates:
| Type | Rate |
|---|---|
| Standard corporate tax | 9% |
| Small business | 9% |
| Dividends | 15% |
Montenegro's corporate tax remains one of Europe's lowest.
Annual Property Tax - Rate: 0.1% to 1% of assessed value - Set by municipalities - Coastal properties typically higher rates - Due annually
Property Transfer Tax (Progressive since January 2024)
| Property Value | Tax Rate |
|---|---|
| Up to €150,000 | 3% |
| €150,000 - €500,000 | 5% |
| Above €500,000 | 6% |
Example: Property purchased for €400,000: - First €150,000 × 3% = €4,500 - Remaining €250,000 × 5% = €12,500 - Total transfer tax: €17,000 (4.25% effective rate)
VAT on New Builds - 21% VAT applies to new properties from developers - If VAT paid, no transfer tax applies
Important: Either transfer tax OR VAT applies, not both. Most resale properties pay transfer tax only.
| When | What |
|---|---|
| March 31 | Annual tax return deadline |
| Monthly | Payroll taxes (if employer) |
| Quarterly | VAT returns (if registered) |
| Varies | Property tax (municipal) |
If you're tax resident but working remotely for a foreign employer:
Option 1: Employee - Employer registers in Montenegro - Standard progressive income tax (0%/9%/15%) + social contributions - Most compliant but complex
Option 2: Freelancer (Preduzetnik) - Register as sole trader - Pay progressive income tax on profits - Simple setup, minimal bureaucracy
Option 3: Stay Under 183 Days - Not tax resident if under 183 days - May still need to declare income in home country - Some may owe taxes nowhere (consult an advisor)
Montenegro has treaties with 40+ countries including:
These prevent being taxed twice on the same income.
Getting a PIB (Tax Number) - Apply at local tax office - Bring passport and proof of address - Takes 1-3 days - Required for property purchase
Filing Returns - March 31 deadline for previous year - Tax advisors available in English - Online filing increasingly available
Pensioners - Pension from abroad may be taxed at source - Check double tax treaty - May be exempt from Montenegro tax if taxed elsewhere
Property Investors - Rental income taxed at 15% - Expenses deductible (maintenance, agent fees) - Annual property tax applies - Capital gains at 15% on sale
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