§ Legislation

• Law on Tax on Turnover of Immovable Property ("Official Gazette of Montenegro", No. 036/13 dated 26.07.2013)

Subject of taxation, taxble person

Immovable property transactions is subjected to taxation.

Immovable property transactions shall be deemed any acquisition of ownership right over immovable property in Montenegro.

Acquisition of ownership right over immovable property shall be deemed: purchase and sale, exchange, inheritance, gift, inclusion and exclusion of immovable property in/from a business organization, acquisition of immovable property under the liquidation or bankruptcy proceeding, acquisition of immovable property based on a decision of a court or other competent authority, as well as other manner of acquisition of immovable property.

The immovable property shall be deemed to imply land (agricultural, buildable and other land) and building structures (buildings and parts of building, irrespective of their purpose). Building structures referred shall not be deemed to be ancillary buildings and temporary buildings of pre-assembled nature (stands, storerooms and similar).

Immovable property transactions shall not be deemed to imply the acquisition of newly built building structures that are subject to payment of the value added tax in accordance with the law governing the value added tax.

The taxpayer of the tax on immovable property transactions shall be the acquirer of the immovable property.

The taxpayer of the tax on immovable property transactions in case of exchange of immovable property shall be each participant in the exchange.

The taxpayer of the tax on immovable property transactions, in case of acquisition of co-ownership right over an immovable property, shall be each acquirer of the immovable property in proportion to its share.

Tax base

The tax base of the tax on immovable property transactions shall be the market value of immovable property at the moment of its acquisition.

The market value of immovable property shall be the price of the immovable property achieved or is achievable on the market at the moment of its acquisition.

The market value of the immovable property shall be determined based on the documents on acquisition of the immovable property.

In case of acquisition of immovable property with compensation, the tax base for the tax on immovable property transactions shall be the total amount of the compensation paid or provided for the transfer of ownership right over the immovable property.

The total amount of the compensation shall be deemed to be payment in money, in things, in services, debts taken over from the previous owner, ceding of other immovable property, things or rights and other, or payment made by the acquirer or another person on behalf of the acquirer for acquisition of the immovable property.

In case of exchange of immovable property, the tax base shall be determined for each participant in the exchange according to the market value of the immovable property that is subject to exchange.

If co-owners acquire co-ownership parts of the immovable property, the tax base shall be determined separately for each co-owner according to the market value of the part of the immovable property being acquired.

If the price referred to in the document on acquisition of immovable property is lower than the market one or is not stated in the document on acquisition of immovable property, the state administration authority competent for tax affairs (hereinafter referred to as the competent tax authority) shall determine the market value of the immovable property by appraisal method using market prices at the time of occurrence of the tax liability.

The appraisal of the market value of immovable property shall be carried out by an authorised officer of the competent tax authority based on comparative data on market value trends of similar immovable properties from the same area and at the same time.

If comparative data are not accessible, the appraisal of the market value of immovable property shall be determined by an expert with an authorise appraiser license, as determined by the competent tax authority.

If the immovable property is acquired through a public auction sale process or in an bankruptcy proceeding, the total amount of compensation shall be deemed to be all payments or payouts made by the acquirer of the immovable property in order to acquire the immovable property.

Tax rate

The rate of the tax on immovable property transactions shall be flat and shall amount to 3% of the tax base.

Tax exemptions for Inclusion of immovable property in a business organization

Tax on immovable property transactions shall not be paid when the immovable property is included in a business organization as an initial investment or for increasing core capital in accordance with the Law on Business Organizations.

Tax on immovable property transactions shall not be paid in the case when the immovable property is acquired in the procedure of merger by acquisition, merger by creation and by division of business organizations that are performed in accordance with the Law on Business Organisation.

Occurrence of tax liability, tax assessment

Tax liability shall occur on the day of conclusion of the contract, or other legal transaction, which implies acquisition of the immovable property.

The taxpayer shall be obliged to calculate the tax on immovable property transactions in a tax return that is submitted to the competent tax authority within 15 days from the day of the tax liability occurrence.

The taxpayer shall pay the liability along with the submission of the tax return.