Montenegro: Taxes and Costs

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Taxes range from moderate to high in Montenegro

Rental Income

Net rental income earned by nonresidents is taxed at progressive rates. Expenses incurred in earning such income are deductible. The taxpayer can chose to either itemize the documented expenses or to avail of the 50% lump-sum deduction for leasing rooms, apartments, and houses.

Corporate Route

Rental income earned by non-resident companies is taxed at the standard rate of 9%

Property taxes

The Property Tax Law of 2003 authorized the local government to set property tax ranging from 0.08% to 0.80% in proportion to the property’s market value based on the purpose, size, location and quality of the property. The usual tax rate for buildings is 0.2%.

Also, tax for apartments that serve as the taxpayer’s main residence is reduced by 20% for the taxpayer, and 10% for each family member of the household. This reduction should not exceed 50% of the determined tax.Agents from Bona Fides Real Estate Agency report that property tax for residential property is equivalent to 0.25% of the property value.

Capital Gains Tax

Capital gains on the sale of property held for more than two years are not taxable in Montenegro.

Capital gains earned by nonresidents are considered as ordinary income and taxed at progressive rates. The gains are subject to a 15% withholding tax rate. Only 50% of the gain is taxable. The gain is computed as selling price less acquisition costs, which is indexed by the price increase over the property’s holding period.

Corporate Route

Capital gains realized through sale of real estate are deemed to be income and are taxed at the main rate of 9%.

Montenegro - more data and information

• Guide to buying houses and registering property sales in Montenegro

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