Montenegro Rental Income Guide 2026

Overview — Rental Income Tax in Montenegro

Rental income from letting of immovable property (residential, commercial, and tourism) is chargeable to income tax in Montenegro. The tax treatment depends on the type of property and the duration of letting. For individuals, net rental income (gross rent minus allowable expenses) is added to other income and taxed at the progressive IIT rates of 9/13%. For companies receiving rental income, it is included in taxable profit and taxed at the CIT rate of 15% (or 9% for small businesses). Short-term holiday rentals (tourism accommodation) have specific rules that may be more favourable. All rental income should be declared to the Tax Administration in the annual tax return.

Residential & Commercial Rental — IIT Rates

Rental income from long-term residential and commercial leases is taxed as follows:

• Net rental income is added to the individual's total annual income
• The progressive IIT rates apply: 9% on monthly equivalent income up to EUR 1,000, 13% above
• Allowable deductions reduce the taxable rental income
• Rental income must be declared in the annual tax return (filed by 31 March)
• Withholding tax applies when the tenant is a business (withholding at source)

For individuals, rental income is not subject to social contributions. For companies, rental income is part of business income subject to CIT with the same deduction rules.

Allowable Deductions for Landlords

Landlords can deduct the following expenses from gross rental income:

• Maintenance and repairs — routine repairs and maintenance, not capital improvements
• Property management fees — fees paid to licensed property managers or agencies
• Insurance premiums — property and liability insurance
• Depreciation — depreciation of the building (not land) at standard rates
• Municipal taxes — annual property tax paid to the municipality
• Utilities — if paid by the landlord and not reimbursed by the tenant
• Interest — mortgage interest on loans used to acquire or improve the property
• Agency and legal fees — for tenant acquisition and lease agreements

Tourism & Short-Term Rentals

Montenegro's tourism sector is a major part of the economy, and short-term holiday rentals (Airbnb, Booking.com, VRBO) are widespread. Registered tourist accommodation providers may opt for a presumptive (lump-sum) tax regime based on the number of beds, location, and category of accommodation, rather than actual income. This can simplify compliance significantly. The presumptive tax varies by municipality and accommodation type. Hosts must register with the Tourist Organisation and obtain a classification certificate. Income from short-term rentals is generally treated as business income. Unregistered short-term letting is illegal and subject to penalties. The Tax Administration actively monitors platforms like Airbnb for compliance.

Withholding Tax on Rent

When a business (legal entity) pays rent to an individual landlord, the business must withhold 9% IIT at source and remit it to the Tax Administration. The withheld tax is an advance payment against the landlord's annual IIT liability. The landlord receives a withholding tax certificate and includes the gross rental income in their annual return, claiming credit for the tax already withheld. When the tenant is also an individual (e.g., residential lease between individuals), the landlord must self-declare and pay the tax. Payments to non-resident landlords (individuals) are subject to 15% WHT on gross rent.

FAQs

Do I pay tax if I rent my apartment short-term through Airbnb?

Yes, income from short-term tourism rentals is taxable. You should register your accommodation with the Tourist Organisation and declare the income. The presumptive tax regime may simplify compliance for registered providers.

Can I deduct mortgage interest on my rental property?

Yes, mortgage interest on loans used to acquire, build, or improve the rental property is a deductible expense. The loan should be properly documented and the property must be genuinely available for rent.

What if I rent my property to a company?

The company is required to withhold 9% IIT on the gross rent and remit it to the Tax Administration. You report the gross rent in your annual return and claim credit for the tax withheld.

Disclaimer

This guide provides general information about Montenegrin rental income tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Montenegrin tax advisor or the Tax Administration of Montenegro for advice specific to your situation. InvestmentKit does not provide tax advice.