Real estate transfer tax in Montenegro - an update since January 2024
The real estate transfer tax in Montenegro is an important aspect when buying real estate. Anyone intending to purchase a property in this beautiful country should find out about land transfer tax. In this article, we provide an overview of the most important details and use three calculation examples to show how the land transfer tax is calculated.
What is the real estate transfer tax in Montenegro?
Real estate transfer tax in Montenegro is a tax that, unlike property tax, is incurred once when purchasing real estate. It is levied on the purchase price of the property and is payable by the buyer. The amount of land transfer tax varies depending on the value of the property.
Amount of real estate transfer tax (GES)
In Montenegro, real estate transfer tax will be staggered according to a progressive system from January 2024. The tax rates depend on the value of the property, whereby the following scales apply:
- For properties with a value of up to 150,000 euros, the GES is 3% of the purchase price.
- If the value of the property is between EUR 150,000 and EUR 500,000, a GES of EUR 4,500 is levied on the first EUR 150,000, plus 5% on the amount in excess of EUR 150,000.
- For properties with a value of over 500,000 euros, the GES amounts to 22,000 euros (4,500 euros on the first 150,000 euros + 7,500 euros on the further 350,000 euros) plus 6% on the amount exceeding 500,000 euros.
These tax rates apply to purchases from a private seller. If you buy directly from a property developer, there is no land transfer tax. The tax value of the property is determined by the tax authorities on the basis of the market value and not the price stated in the purchase contract.
Sample calculations for real estate transfer tax in Montenegro
To illustrate the calculation of real estate transfer tax in Montenegro, we present three calculation examples.
Example 1: Purchase of a condominium
Let’s say you want to buy a condominium in Podgorica for 100,000 euros. The real estate transfer tax is calculated as follows:
- Purchase price of the apartment: 100,000 euros
- Real estate transfer tax: 3% of 100,000 euros = 3,000 euros
The real estate transfer tax in Montenegro for this apartment is therefore 3,000 euros.
Example 2: Purchase of a detached house
You are planning to buy a detached house in Kotor for 300,000 euros. Real estate transfer tax is calculated as follows:
- Purchase price of the house: 300,000 euros
- Real estate transfer tax: 4,500 euros (for the first 150,000 euros) + 5% of 150,000 euros (the amount exceeding 150,000 euros) = 4,500 euros + 7,500 euros = 12,000 euros
This detached house is subject to real estate transfer tax in Montenegro in the amount of 12,000 euros.
Example 3: Purchase of a luxury villa
Imagine you want to buy a luxury villa in Budva for 800,000 euros. The calculation of the land transfer tax is as follows:
- Purchase price of the villa: 800,000 euros
- Real estate transfer tax: 22,000 euros (for the first 500,000 euros) + 6% of 300,000 euros (the amount exceeding 500,000 euros) = 22,000 euros + 18,000 euros = 40,000 euros
The property transfer tax in Montenegro for this luxury villa therefore amounts to 40,000 euros.
When, how and where is real estate transfer tax paid in Montenegro?
There are basically two ways to pay the GES.
First of all, there is the option of paying the land transfer tax directly to the notary together with the purchase price. This is then usually included in the contract. The notary then takes care of the payment.
The second option would be to pay the GES directly to the Land Registry within approx. 3 months of registering the property. To do this, you have to go there in person and you will be issued with an invoice, which you then have to pay at the post office or at any bank. You then have to go back to the land registry office with the payment slip and receive a stamp stating that the GES has been paid. A somewhat more complicated, but feasible way. We are happy to accompany our customers on this journey. Please do not hesitate to contact us.
Conclusion
The real estate transfer tax in Montenegro is progressive and depends on the value of the property. Whether you are buying an apartment, a house or a luxury villa, this tax must be taken into account. The calculation examples above should help you to better estimate the costs. Make sure you are well informed and plan for the additional costs to avoid unpleasant surprises.
Real estate transfer tax in Montenegro may appear to be a small item at first glance, but it can amount to a significant sum for higher property values. Careful planning and calculation is therefore essential for anyone wishing to purchase a property in Montenegro.
If you have any further questions on the subject, we will be happy to help you at any time and advise you free of charge on all topics.
