Are you renting an apartment to another individual for a period longer than 60 days? It is important to be informed about your tax obligations in order to avoid penalties and remain compliant with the law.
What taxes do you pay?
According to the Personal Income Tax Act (Article 34), an individual who rents out an apartment for a period longer than 60 days is required to pay:
- Income tax of 15%
- Tax base: the difference between income and expenses
- If you do not have documented expenses — standard expenses of 30% are recognised
Good news: no VAT!
According to the VAT Act (Article 27, item 3), renting residential property for a period longer than 60 days is exempt from VAT.
Who is the taxpayer?
Resident
An individual who:
- Has permanent residence or centre of business and personal interests in Montenegro
- Resides in Montenegro for more than 183 days in the tax year
- Is sent abroad to perform work for a Montenegrin resident or an international organisation
Non-resident
An individual who earns income on the territory of Montenegro — through a permanent place of business or from specific income (royalties, interest, rent on real estate).
Subject of taxation
| Status | Taxable income |
|---|---|
| Resident | Income in Montenegro and abroad |
| Non-resident | Income through a permanent place in MNE or specific income (royalties, interest, rent) |
Your key obligations as a lessor
1. Annual tax return (GPPFL)
Report rental income in the annual tax return (GPPFL) by the end of April of each year.
2. Tax payment
Tax is paid immediately upon filing the return.
3. Fiscal receipt
In accordance with the Fiscalisation Act (Article 4), you issue a fiscal receipt to the tenant.
Example calculation
If you have documented expenses
| Item | Amount |
|---|---|
| Total rental income | EUR 10,000 |
| Documented expenses | EUR 8,000 |
| Net income | EUR 2,000 |
| Tax (15%) | EUR 300 |
If you do not have documented expenses
| Item | Amount |
|---|---|
| Total rental income | EUR 10,000 |
| Standard expenses (30%) | EUR 3,000 |
| Net income | EUR 7,000 |
| Tax (15%) | EUR 1,050 |
Who is exempt from income tax
Income tax is not paid by:
- Members of foreign diplomatic missions and their households — if they are not citizens of Montenegro
- Members of consular representations and their households — if they are not citizens of Montenegro
- Officials and experts of UN technical assistance programmes and their specialised agencies
- Honorary consuls of foreign states for income received from the state that appointed them
- Officials, experts and administrative staff of international organisations — if they are not citizens of MNE or do not have permanent residence in MNE
Relevant laws
- Personal Income Tax Act — Articles 34, 35
- VAT Act — Article 27, item 3
- Fiscalisation Act — Article 4
Would you like to ensure your rental income is properly reported? Contact Finance Plus — we will help you with the GPPFL filing and tax calculation.
