When registering a real estate purchase and sale transaction, in the case of its acquisition on the secondary market, a one-time tax on the purchase of real estate is provided. The amount of tax directly depends on the estimated market value of this category of objects.
Real Estate Purchase Tax
Montenegro has changed the taxation system for real estate transactions. Since 2024, the tax on the purchase of real estate in Montenegro has become progressive. The rate depends on the cadastral value of the object.
– Up to €150,000 – 3% (previously, this tax was applied to all properties on the secondary market)
– From €150,000 to €500,000 – a fixed amount of €4,500 + 5% of the cost
– From €500,000 – a fixed amount of €22,000 + 6% of the cost
When registering a real estate purchase and sale agreement with a notary, information about the transaction with one copy of the agreement attached is sent to the local tax office. Tax authorities act independently of the Cadastre. A tax service expert verifies the established price of the property and makes a decision on a one-time tax on the purchase of real estate.
The deadline for paying this tax is set within 15 days from the date of the tax authority's decision to pay the tax. In case of late payment, a penalty of 0.03% is charged for each day over the specified period. Therefore, if you have not received a receipt for payment of the tax by mail, we recommend that you promptly clarify this issue with the tax office.
In case of purchasing real estate directly from a developer who pays VAT, the buyer of a new building is exempt from paying the tax.
Annual property tax
Taxes on real estate (construction objects, buildings) are established by the relevant Laws of Montenegro. In accordance with the provisions of Article 13 of the Law on Real Estate Taxes, approved by the Parliament of Montenegro, it is determined that tax rates and payment procedures are established by decisions of local governments for real estate objects located on their territory, not later than 30th of April of the current year.The tax is paid by the taxpayer in two periods in two equal parts: the first is not later than 30th of June, the second is not later than 31st of October of the current year in accordance with the calculations of the local government body.
In accordance with the provisions of Article 7 of the Tax Law, real estate tax liabilities start on January 1st of the current year, to which taxes are established and in which they are paid.
Tax rates, in accordance with the provisions of Article 9 of the Act, are set in direct proportion to the established market value of taxable real estate and can range from 0.25% to 1.0% of its value depending on the type and class of the property, as well as the destination of the territory and other factors. At the same time, the provisions of Article 9a of the Law provide that local governments have the right for certain buildings or objects to lower or raise tax rates in some special cases compared to those specified in Article 9.
If it is necessary to verify the correctness of calculating the amount of real estate tax, one should rely simultaneously on the provisions of the Law on Real Estate Taxes and the Provisions on rates and methods of tax calculation approved by the local government body. The local government sends the tax payment notification to the taxpayers by mail, however, sometimes it is better to personally consult the department of the payment authority personally in due time, since violation of the payment deadline entails additional penalties.
It should be added that for residential premises and business facilities located in special purpose areas in tourist areas, there is a tourist tax on real estate in accordance with the provisions of Article 42z of the Law on Tourist Organizations (attention: not to be confused with the tourist tax!). It is usually included in the notice of payment of taxes.