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Montenegro: Living There - Tax Issues

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Living There

INDIVIDUAL TAXATION

Residents are taxed on their worldwide income. An individual is considered resident in Montenegro if he has a place of residence there, a habitual abode, a centre of vital interests, or he stays in the country for more than 183 days in a year. Married couples are taxed separately.

INCOME TAX

Income in Montenegro is taxed at a flat rate of 15%. All forms of income, excluding those taxed at source, are aggregated and taxed together at this rate. Expenses incurred in the generation of income are deductible. A personal allowance of €840 is available to all taxpayers.

The applicable income tax rate will be 12% in 2009 and will go down further to 9% in 2010.

RENTAL INCOME
Income from leasing out real estate property is included in aggregated taxable income and taxed at a flat rate of 15%. Costs incurred to generate income are deductible from the taxable amount. A lump-sum deduction of 40% in lieu of actual costs is also allowed.

CAPITAL GAINS
Capital gains realized from sales of real properties are not taxed in Montenegro.

PROPERTY TAX

Real Estate Tax

A property tax is levied on real estate property in Montenegro. The owner of the property, or the individual with rights to use the property, is liable to pay this tax. The tax is levied on the market value of the property, with rates ranging from 0.08% to 0.8%, set by the municipal authorities.

Real estate property whose value does not exceed €5,000 is exempt from taxation. Taxpayers who are using the property are entitled to a credit in the amount of 20% of the tax due, with an additional 10% for each household member. The credit is limited to 50% of the total tax liability.

Montenegro - more data and information

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