Buying

BUYING FEES AND TAXES


Standard Notarial Fees

Property value

Notary fee

0.00 – 5,000 Euro 70.00
5,001 – 20,000 Euro 120.00
20,001 – 40,000 Euro 170.00
40,001 – 60,000 Euro 250.00
60,001 – 80,000 Euro 300.00
80,001 – 120,000 Euro 350.00


For properties valued in access of Euro 120,000 a fee of Euro 10.00 on every Euro 15,000 increase is charged. The maximum Notary fee chargeable is Euro 5000.00.


Translation of the Power of Attorney & Contract

Translation of these documents is done by a certified court or certified translator. The average price per page is approximately €20, depending on the number of characters per page. A standard contract is usually written on five (5) pages. Any additional changes to the contract requested by the buyer are also chargeable. Usually translation costs in total amount to approximately Euro 100.00 – Euro 200.00


Cadastre taxes and Fees

Cadastre taxes are Euro 15.00 on average.


Estate Agents Fees

Estate agents fees are 5% of the property selling price and are payable by the Vendor.


Real Estate Transfer Tax (RETT)

When purchasing a resale property directly from an owner, the Real Estate Transfer Tax is set at 3% of the value of the property and this is payable by the buyer.
The value of the property is determined by the Local Municipality Tax Authority and is usually equivalent to the price stipulated in the sales contract.

Once the Final Purchase and Sales Contract is signed, the buyer is obliged to make a payment of the RETT in the amount of 3% of the purchase price within 15 days from the signing of the contract. The Tax Authority then establishes if the purchase price is in accordance with the market value of the property. If the Tax Authority estimates the market value of the property to be higher than the one stated in the Purchase Contract, the buyer will receive an invoice from the Tax Authority for the difference in the amount of RETT.

When the client is purchasing a Property which is purchased on plan or has not been sold before from a Developer who is a VAT paying legal entity, the buyer will be exempt from RETT on the full sales price and RETT is only calculated on the portion of the land which the client is purchasing. Your lawyer will ensure that this is stated in your contract.
The Tax on rental of registered rental property is 7%.


INDIVIDUAL TAXATION

Residents are taxed on their worldwide income where asNonresidents are taxed only on their income derived from sources in Montenegro. Married couples are taxed separately.


INCOME TAX

Taxable income comprises income from: (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%.


RENTAL INCOME

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.


Tax Example: Rent

Non-resident couple´s rental income1

Monthly Rental Income2

1,500

6,000

12,000

Annual Rental Income

18,000

72,000

144,000

Less: Expenses3

40%

7,200

28,800

57,600

= Income Taxable

10,800

43,200

86,400

Income Tax 4

Flat rate

9%

972

3,888

7,776

Annual Income Tax Due

972

3,888

7,776

Tax Due as % of Gross Income

5.40%

5.40%

5.40%


CAPITAL GAINS

Capital gains are taxable at a rate of 9%.
Taxable capital gains are calculated by deducting the following from the selling price: (a). Acquisition costs(b). Related expenses, (c). Improvement costs.


PROPERTY TAX (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%.


CORPORATE TAXATION (INCOME TAX)

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.

Tax Summary:

Type of Tax

Personal Income tax: 9%
Corporate Income Tax: 9%
The standard VAT rate in Montenegro is 21%. There are reduced rates of 7% and 0%.
Withholding tax  9% on dividends/profit distribution, capital gain, royalties, intellectual property rights, rental income, consulting, marketing and audit services.


SOCIAL SECURITY CONTRIBUTIONS

Social security contributions due by an employee are charged at a rate of 24%, which is apportioned to Pensions (15%), Health (8.5%) and Unemployment (0.5%). The employer is obliged to make a contribution (9.8%). The maximum contribution in a calendar year is Euro 50,000.

Any benefits provided to employees in addition to the basic salary are exempt from Social Security Contributions.


STAMP DUTY

No Stamp duty is payable.


INHERITANCE / ESTATE TAX

A 3% Tax is charged on the inheritance of Real Estate. Exemptions are available for the transfer of property as a donation or inheritance to Children, Parents and / or Spouse.


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