Effective Tax Rate on Rental Income
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Global Property Guide
Nonresidents are taxed only on their income derived from sources in Montenegro. Married couples are taxed separately.
Income tax is levied on the following: (1) employment income, (2) business and professional income, (3) investment income (dividends, interest, and royalties), and (4) income from immovable property. All forms of income, unless taxed at source, are generally aggregated and taxed at a flat rate of 9%.
Income from leasing out real estate property is included in aggregated taxable income and taxed at a flat rate of 9%. Costs incurred to generate income are deductible from the gross rent. A lump-sum deduction of 40% of the gross rent in lieu of actual itemized costs is also allowed.
Capital gains realized from sale of real property in Montenegro are taxed at a flat rate of 9%. Taxable capital gains are calculated by deducting the following from the selling price: acquisition costs and related expenses, and improvement costs.
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 at rates ranging from 0.25% to 1%. In some cases, property tax may be levied up to 5.5%.
Income and capital gains earned by companies are taxed at a flat rate of 9%. Income-generating expenses and operating expenses are deductible when computing for the taxable income.