Law on Real Estate Transfer Tax in Montenegro: Everything You Need to Know

Purchase, Sale, and Transfer of Real Estate in Montenegro are subject to the Real Estate Transfer Tax. This tax is assessed by the Tax Administration based on the appraised value of the property. The revenues from this tax are distributed so that 80% goes to the municipal budget and 20% to the Equalization Fund.

Domestic and foreign legal entities and individuals are treated equally when it comes to paying this tax.

WHAT IS SUBJECT TO TAXATION?

The Real Estate Transfer Tax is paid in the following cases:

• purchase and sale of real estate,
• inheritance or gift,
• other forms of transfer of ownership rights.

Important: If you purchase a newly constructed property from a developer and pay VAT, you do not pay the Real Estate Transfer Tax.

WHO PAYS THE TAX?

The taxpayer is the acquirer of the real estate – the person who becomes the owner on the basis of:

• purchase and sale,
• gift agreement,
• inheritance,
• or another legal ground.

TAX RATES

The law provides for progressive tax rates:

• up to 150,000€ – 3%,
• from 150,000€ to 500,000€ – 4,500€ + 5% on the amount exceeding 150,000€,
• over 500,000€ –22,000€ + 6% on the amount exceeding 500,000€.

WHO IS EXEMPT FROM PAYING THE TAX?

Exempt from the Real Estate Transfer Tax are:

• state authorities and diplomatic missions,
• organizations with humanitarian purposes,
• non-governmental organizations,
• buyers of their first residential property up to 20 m² per household member,
• banks when writing off real estate,
• persons contributing real estate to a company as founding capital or for capital increase.

Also, properties acquired through inheritance, gift, or free of charge may be exempt from tax, subject to certain conditions.

DEADLINES AND OBLIGATIONS OF TAXPAYERS

• Date of liability: The obligation to pay the tax arises on the day the contract or other legal transaction transferring ownership of the property is concluded.
• Reporting to the Tax Administration: The taxpayer must report the conclusion of the contract within 15 days.
• Tax decision: The Tax Administration issues a decision on the amount of the tax liability based on the appraised value of the property.