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

The purchase, sale and transfer of real estate in Montenegro are subject to real estate transfer tax. This tax is calculated based on the assessed value of the property, determined by the Tax Administration. The tax revenues go to the local government budget (80%) and the Equalization Fund (20%).

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

WHAT IS SUBJECT TO TAXATION?

Real estate transfer tax is payable in cases of:

• Purchase and sale of real estate
• Inheritance or gifting
• Other forms of property ownership transfer

The acquisition of newly constructed buildings is not considered a real estate transfer and is instead subject to VAT.

WHO PAYS THE TAX?

The taxpayer is the person acquiring the property, i.e., the individual who becomes the owner based on a sales contract, inheritance, gift, or another legal basis.

TAX RATES

The law prescribes progressive tax rates:

• Up to 150,000€ – 3%
• From 150,000€ to 500,000€ – 4,500€ + 5%
• Over 500,000€ – 22,000€ + 6%
  

WHO IS EXEMPT FROM PAYING TAX?

The following entities are exempt from real estate transfer tax:

• Government bodies and diplomatic missions
• Organizations with humanitarian purposes
• Non-governmental organizations
• Buyers of their first residential property up to 20m² per household member
• Banks in cases of debt write-off involving real estate
• Individuals who contribute real estate to a company as founding capital or to increase the company’s capital

Additionally, properties acquired through inheritance, gifting, or without compensation may be exempt from tax under certain conditions.

DEADLINES AND TAXPAYER OBLIGATIONS

• The tax obligation arises on the date of signing the contract or other legal transaction transferring the property.
• The taxpayer must notify the Tax Administration of the contract within 15 days of signing.
• The Tax Administration issues a decision on the tax amount.
  

If you need assistance with document preparation, tax calculation, or tax advisory services, Perfectum is here to simplify the entire process for you.