Karanovic & Partners in cooperation with local lawyers
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Yes. Foreigners can own and occupy real estate, including shares in property owning companies, without restrictions. As a rule, Montenegrin laws prohibit acquisition of certain type of immovable property by foreign individuals or entities, such as acquisition of land designated as forest, agricultural tenure etc. EU citizens will be allowed to acquire restricted real estate under same conditions as Montenegrin citizens as of the Montenegro’s accession to the EU.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
No. There are no restrictions on lending for the purchase of real estate by foreign companies.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
Sale and Purchase Agreement of Real Estate is subject to notarization and notary fees are usually paid by the buyer. The purchase of real estate property in Montenegro is also subject to property transfer tax. The tax is levied at the purchase price of the property (agreed/paid between the seller and the buyer or its market value). Tax rates are progressive and are as follows:
- up to EUR 150,000.00: 3%;
- over EUR 150,000.01: EUR 4,500.00 + 5% on the amount over EUR 150,000.01;
- over EUR 500,000.01: EUR 22,000.00 + 6% on the amount over EUR 500,000.01.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
Owners of the real property located in Montenegro are required to pay property tax to the municipality in which territory the real property is located. Applicable tax rates vary from 0.25% to 5% depending on the municipality where the property is located, as well as on the type of property. The tax base for corporate taxpayers is the market value of the real property. The amount of the property tax is established by the resolution of the local tax authority and is payable in two annual instalments.
The tax is paid annually (for calendar year). The amount of tax due must be established in a resolution of the competent unit of the Tax Administration, on the basis of tax return filed by the owner of the property. The amount of tax assessed by the Tax Administration should be paid in two instalments (first – by 30 June, and second - by 31 October).
The person liable for payment of tax is the owner of the property. The cost of tax may be shifted for example, to the tenant (under the agreement), but, legally, the owner remains liable to the Tax Administration for the payment of tax.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
There are no tax breaks for foreigners to buy real estate in Montenegro. Regarding the incentives, the foreigners who are the owners of the real estate in Montenegro can obtain temporary residence.
How is the ownership of Real Estate evidenced in your jurisdiction?
Ownership of Real Estate is evidenced by registration in Montenegrin Real Estate Cadastre. This is a public register which can be researched online via: link
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
No. Information that will be publicly available and visible includes the first and last name if the owner is a natural person, or the business name if the owner is a legal entity.