Taxes in Montenegro: What Expats Need to Know

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.

Tax Residency

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.

Personal Income Tax

Since the 2022 reform, Montenegro has a progressive income tax system:

This applies to employment income, freelance income, and business profits.

Note: The previous flat 9% rate no longer applies to most income.

Rental and Capital Gains

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

Corporate Tax

Low and competitive rates:

Montenegro's corporate tax remains one of Europe's lowest.

Property Taxes

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)

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.

Tax Calendar

Digital Nomads & Remote Workers

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)

Double Tax Treaties

Montenegro has treaties with 40+ countries including:

• UK
• Germany
• France
• Austria
• Serbia
• Croatia

These prevent being taxed twice on the same income.

Practical Tips

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

Special Situations

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

Common Mistakes to Avoid

• Not registering as tax resident when required
• Assuming the old 9% flat rate still applies
• Not declaring foreign income as tax resident
• Missing property transfer tax progressive brackets