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When buying property in Montenegro, it’s important to consider the tax obligations. The main provisions of the real estate purchase tax are regulated by the Law on Real Estate Turnover Tax, with amendments effective from January 2024.
1. Obligation and Calculation Methods of the Tax
The real estate turnover tax is payable upon each acquisition of ownership rights to real estate in Montenegro, except for real estate from a developer – a legal entity.
Any transfer of ownership rights to real estate is subject to taxation, including purchase and sale, exchange, inheritance, gift, and other types of transactions. The taxpayer is the purchaser of the property, regardless of the method of acquisition.
2. Determining the Tax Base and Tax Rates
The tax base is determined as the market value of the property at the time of its acquisition. If the price in the property documents is below market value or not specified, the local government tax authority determines the market value based on appraisal.
According to the latest amendments in the law, the tax rates on real estate are as follows:
- Up to 150,000.00 euros – 3%;
- Over 150,000.01 euros – 4,500.00 euros + 5% on the amount over 150,000.01 euros;
- Over 500,000.01 euros – 22,000.00 euros + 6% on the amount over 500,000.01 euros.
3. Tax Exemption
The law provides several cases of tax exemption. Here are some of them:
- Government bodies, local self-government bodies, and certain public organizations.
- Citizens of Montenegro and its residents who are purchasing residential property for the first time to meet housing needs, provided they do not own other property in Montenegro.
- Heirs and gift recipients within the first line of inheritance.
- Non-profit organizations, provided the property is used for statutory purposes.
It is important to note that some of these cases apply only to Montenegrin citizens.
Additionally, as noted above, when purchasing real estate from a development company, the tax is also not payable.
4. Arising of Tax Liability and Payment Deadlines
The tax liability arises from the moment of concluding the contract or other legal act that formalizes the acquisition of real estate. In the case of acquisition through the court or another authorized body, the tax is payable from the moment the decision becomes final.
The tax must be paid within 15 days from the moment the tax liability arises. In case of late payment of the tax, a penalty of 0.03% of the tax amount is charged for each day of delay.
Conclusion
Understanding the taxation involved in purchasing real estate in Montenegro helps avoid unpleasant surprises and facilitates proper budget planning. If you have any questions or need assistance with the transaction, our agency’s specialists are always ready to provide qualified consultation and support at every stage of the purchase.
For more detailed information, we recommend familiarizing yourself with the full text of the law or consulting with real estate professionals.