Montenegro is one of the most affordable countries in Europe in terms of property prices and one of the easiest to legally complete a purchase for foreigners. In recent years, it has become particularly popular among citizens of CIS and EU countries due to its mild climate, sea, prospects for price growth and loyal tax policy. Nevertheless, when buying a flat or a house, it is important to understand what taxes and fees you will have to face.
The main taxes when buying property in Montenegro
- transfer tax (Porez na promet nepokretnosti)
- is the main tax paid by the buyer of property on the secondary market.
Rate: 3% of the market value of the object, determined by the tax office (not always the same as the price in the contract).
The tax is paid in a lump sum, within 15 days after the conclusion of the agreement and submission of documents to the tax office.
- VAT (PDV, porez na dodatu vrijednost) – when buying from a property developer
- If you buy a new building from a property developer, VAT applies:
Rate: 21%, already included in the contract price.
In such a case, no property transfer tax (3%) will be charged.
Property ownership tax
- annual property tax (Porez na nepokretnosti)
- This tax is paid by the owner of the property, regardless of citizenship and place of residence.
The rate is set by municipalities and usually ranges from 0.1% to 1% of the cadastral value (depends on the location, type and condition of the property).
For example:
A flat in Budva or Kotor – about 0.25-0.5%
Properties on the coast and in tourist areas are taxed at a higher rate
The tax is paid once a year, usually by the end of March.
Important: penalties are charged for late payment.
Additional costs
- notary
- The cost of notary services is approximately 0.5-1% of the transaction amount, but can be negotiated separately.
- cadastre and registration services
- State fees for cadastre registration and transfer of rights range from €20 to €100, depending on the municipality.
- legal support
- lawyer’s services (not obligatory, but recommended) – from €500 to €1,500 depending on the complexity of the transaction.
Renting a property: taxes for the owner
If the property is rented out, the owner is obliged to:
Obtain a short-term rental permit from the municipality.
Keep records of guests and pay tax:
A flat tax on rental income – 9%.
Plus a tourist tax per guest – about €1 per night.
From 2024, compliance with these requirements is actively checked (introduction of electronic record-keeping systems).
Example
A flat in Budva for €150,000 bought from a private individual:
Property transfer tax: 3% = €4 500
Annual property tax (0.4%): €600
Notary + registration fees: ~€1,000
In case of renting: income tax – 9% of profit
Montenegro offers a relatively simple and predictable property tax system. One-off tax on purchase – 3% or 21% (in new buildings), annual tax is low. Renting is moderately taxed, but requires formalities.