Complete guide to property taxes in Montenegro. Transfer tax, annual tax, rental income, and capital gains explained.
Understanding property taxes in Montenegro is essential for buyers and investors. Here's everything you need to know.
When you buy property in Montenegro, you pay a one-time transfer tax.
Rate: 3% of the purchase price (or cadastral value if higher)
Who pays: Traditionally the buyer, though this can be negotiated
When due: Upon registration with the Real Estate Cadaster
Example: - Property price: €200,000 - Transfer tax: €6,000
Exemption: No transfer tax on new-build properties (VAT applies instead at 21%)
Property owners pay an annual municipal tax based on the property's cadastral value.
Rates: 0.1% to 0.25% depending on municipality
Who pays: Property owner
When due: Annually, usually by April
| Property Value | Tax Rate | Annual Tax |
|---|---|---|
| €100,000 | 0.1% | €100 |
| €200,000 | 0.1% | €200 |
| €500,000 | 0.15% | €750 |
Note: Cadastral values are typically lower than market values, so actual taxes may be lower than these examples.
For new-build properties, you pay VAT instead of transfer tax.
Rate: 21%
When it applies: First sale of newly constructed properties
Who pays: Included in purchase price from developer
Why this matters: When buying from a developer, the price usually includes VAT, making the effective rate 21% rather than 3% transfer tax. However, subsequent sales will only have 3% transfer tax.
If you rent out your property, you'll pay income tax on the rental revenue.
Rate: 9% flat rate on rental income
Deductions: You can deduct 40% as a standard allowance for expenses
Effective rate: 5.4% on gross rental income (after the 40% deduction)
| Annual Rent | Less 40% | Taxable | Tax (9%) |
|---|---|---|---|
| €10,000 | €4,000 | €6,000 | €540 |
| €20,000 | €8,000 | €12,000 | €1,080 |
Payment: Quarterly or annually to the Tax Administration
When you sell property for a profit, you may owe capital gains tax.
Rate: 9%
Calculation: Sale price minus purchase price (adjusted for inflation), minus documented improvements
Exemptions: - Properties owned for more than 3 years: No capital gains tax - Primary residence sold to buy another primary residence
| Item | Amount |
|---|---|
| Sale price | €250,000 |
| Purchase price | €200,000 |
| Improvements | €10,000 |
| Gain | €40,000 |
| Tax (9%) | €3,600 |
Some investors use a Montenegrin company (d.o.o.) to hold property.
Corporate tax rate: 9%
Advantages: - Same tax rate as personal - Easier to add/remove properties - May simplify inheritance - Professional appearance for rentals
Disadvantages: - Annual accounting costs (€500-1,500) - More administration - Minimum share capital (€1) - Closing costs if dissolving
Recommendation: For single properties, personal ownership is usually simpler. Consider a company for multiple properties or commercial operations.
Your tax obligations depend on residency status.
Tax resident (183+ days in Montenegro): - Taxed on worldwide income - Full access to tax deductions - Must file annual tax return
Non-resident: - Only taxed on Montenegrin-source income (rental, capital gains) - No annual return if only property income - Pay taxes on rental/sale as they occur
| Country | Transfer Tax | Annual Tax | Rental Income | Capital Gains |
|---|---|---|---|---|
| Montenegro | 3% | 0.1-0.25% | 9% | 9% (exempt >3yr) |
| Croatia | 3% | 0.1-0.3% | 10-30% | 10-30% |
| Portugal | 6-8% | 0.3-0.8% | 28% | 28% |
| Spain | 6-10% | 0.4-1.1% | 19-24% | 19-23% |
| UK | 2-12% | Council tax varies | 20-45% | 18-28% |
Montenegro advantage: Among the lowest property taxes in Europe.
Yes, you'll need a PIB (tax identification number) to buy property and pay taxes. Your lawyer can help obtain this.
Most countries have provisions to avoid double taxation. Check your home country's rules or consult an international tax advisor.
Interest accrues on late payments, and the tax authority can place a lien on the property.
No, Montenegro does not have a wealth tax on property holdings.
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