The Montenegrin authorities have taken a step towards "whitewashing" the short-term rental housing market. The new draft Law on Value Added Tax (VAT), fully harmonized with the directives of the European Union, will oblige international platforms like Booking and Airbnb to share transaction data with the local Tax Service. The document submitted by the Ministry of Finance for public discussion, which will last until June 2, 2026, marks a tightening of fiscal controls in the tourism sector.
According to the new rules, the location of the real estate rental service (sale, lease) is determined by the country of the actual location of the object, and not by the location of the tenant or the headquarters of the Internet platform. Thus, both local and foreign intermediary platforms will be required to keep detailed records of all rental transactions and provide this information to the tax authorities to verify the correctness of VAT calculations and control the income of landlords.
At the same time, the draft law retains a threshold for small landlords. Persons whose annual income from renting does not exceed 30 thousand euros will still not be recognized as VAT payers. However, the tax will be levied on the part of the price that the platforms withhold as a commission for their intermediary services. This means that even if the landlord has not crossed the threshold of 30 thousand euros, the platform will still have to report to the Montenegrin authorities on its commission.
The explanatory note to the law emphasizes that the key goal of the innovations is to combat the vast "gray zone" in the tourism industry. According to the Government, the rental housing sector has been suffering from a huge number of unregistered properties for many years. The owners actively advertise their apartments and houses through international platforms, but do not report income to the competent authorities, do not register tourists in the Central Tourist Registry and do not pay a tourist fee.This practice causes multimillion-dollar damage to the state and local budgets. The government's Program to combat the informal economy for 2024-2026 explicitly states that tens of millions of euros are lost annually due to income tax evasion and tourist tax.
Another important innovation is the automatic exchange of information after Montenegro's accession to the EU. The country's tax service will receive an information system integrated with similar systems in other member states of the Union. This will ensure more efficient tracking of cross-border transactions, faster data exchange and verification of tax obligations. It is noteworthy that information about rental income received from the platforms will be able to be used not only to control VAT, but also to verify the correctness of income tax payments by individuals.
The draft law establishes strict rules for data storage. Intermediary platforms are required to keep electronic records of all rental and passenger transportation transactions in Montenegro for ten years, starting from the year following the year of the transaction. These records should be detailed enough so that the tax authorities can verify the correctness of the tax calculation at any time.
The landlords themselves are still cautiously assessing the upcoming changes. The Association of Landlords of Housing (Udruženje izdavaoca smještaja) stated that most of its members will not exceed the threshold of 30 thousand euros and will not enter the VAT system. Nevertheless, the association is closely monitoring the development of the situation and conducting internal consultations in order to formulate a unified position and comments on the draft law. The final comment will be given after agreeing on opinions within the professional community.
It is noteworthy that the public discussion takes place in a truncated format. The Ministry of Finance has not provided for holding public hearings in the form of "round tables" or open stands. Comments and suggestions are accepted only by mail or e-mail. In addition, the standard Regulatory Impact Analysis (RIA) was not published for the draft law, which raised questions. The published justification indicates only the possible cost of adapting the information systems of the Montenegrin tax authorities to EU standards up to 1.3 million euros.
VAT rates in Montenegro will remain the same (from 0 to 21%). But the very logic of controlling tourist rentals is changing dramatically. If the law is adopted as proposed, Montenegro will not only come closer to the standards of the European Union, but will also receive a powerful tool for "whitewashing" one of the most profitable, but at the same time the most "shadow" sectors of its economy.
A source: Investitor
