Higher Tax Rates on Real Estate Transactions Valued Above €150,000.00

In the realm of Real Estate Transfer Tax legislation, a recent amendment has introduced progressive tax rates for real estate transactions, effective January 1st, 2024:

  • For transactions up to €150,000.00: a rate of 3%;
  • For amounts over €150,000.01: a fixed amount of €4,500.00, plus 5% on the excess beyond €150,000.01;
  • For amounts over €500,000.01: a fixed amount of €22,000.00, plus 6% on the excess beyond €500,000.01.

These changes are part of a comprehensive set of amendments to five financial and tax laws, meticulously presented by the Government to the Assembly, calling for expedited voting. The urgency stems from the need to combat tax evasion, secure state finances, and strengthen the budgets of local self-governments, as a share of these taxes directly contributes to their funds.

It’s underscored that these changes seamlessly align with the directives and practices observed in European Union countries, demonstrating a commitment to harmonizing Montenegro’s tax legislation with international standards.

The Ministry of Finance in Montenegro highlights a notable increase in real estate transactions and prices in the Montenegrin market, driven by heightened demand from foreign individuals with tax capacities well above the Montenegrin average. This rationale justifies the introduction of higher property tax rates. In established practice, when a market, such as real estate, experiences expansion due to increased demand, legislators often adjust tax rates to ensure alignment with the heightened economic activity.

This strategic update in taxation policy not only addresses economic realities but also adheres to global best practices, positioning Montenegro in line with contemporary European fiscal standards.

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