Most of what circulates about Montenegro's tourism incentives is quoted from law that has since been replaced. That is not a criticism of the people quoting it — the Government's own investor page still states a hospitality VAT rate the VAT Act no longer contains, and still cites a planning statute whose relevant provisions were repealed in March 2025.
This page sets out what we could verify in the statutes as they stand on 26 August 2026, with article numbers, and says plainly where a widely advertised incentive could not be verified at all. Where a figure could not be traced to a current provision, it is not stated here.
The hospitality VAT rate is 15%, not 7%
This is the correction that changes financial models, and it is the one most often got wrong.
Under Article 24 of the Zakon o porezu na dodatu vrijednost, the general VAT rate is 21%. Article 24a(1) sets the 7% reduced rate, and its twelve items are staple foods, medicines, orthotic and prosthetic devices, textbooks and teaching aids, drinking water, press, public passenger transport, public hygiene, funeral services, animal feed and plant products, menstrual products and baby nappies. Accommodation is not among them.
Accommodation sits in Article 24a(2), the 15% reduced rate, introduced by the amending act published in Službeni list Crne Gore no. 094/24 of 30 September 2024. The relevant items:
| Supply | Rate | Provision |
|---|---|---|
| General rate, everything not otherwise specified | 21% | Art. 24 |
| Accommodation in hospitality accommodation facilities as defined by the tourism and hospitality law | 15% | Art. 24a(2)(2) |
| Preparing and serving food, drinks and beverages in hospitality facilities | 15% | Art. 24a(2)(3) |
| Alcoholic drinks, sugared carbonated and non-carbonated drinks, coffee | 21% | Art. 24a(2)(3), exclusion |
| Servicing services provided in marinas | 15% | Art. 24a(2)(8) |
| Tickets to museums, concerts, theatres, amusement parks, zoos and similar | 15% | Art. 24a(2)(6) |
| Use of sports facilities for non-profit purposes | 15% | Art. 24a(2)(7) |
Two details matter for a hotel P&L. First, Article 24a(2)(2) defines accommodation by reference to the facilities "defined by the law governing tourism and hospitality" — so the classification that decides your VAT rate is the same one that decides whether you may sell units at all, examined in our guide to the two statutory hotel models. Second, the food-and-beverage line is split: the 15% rate expressly excludes alcoholic drinks, sugared carbonated and non-carbonated drinks, and coffee. A hotel bar does not run on one rate.
The utility-fee waiver is five stars only — and condo sales claw it back
The waiver every developer has heard of is real, but three of its features are routinely misstated.
It now lives in Article 70 of the Zakon o uređenju prostora, Službeni list Crne Gore no. 019/25 of 4 March 2025, in force 5 March 2025, with corrections at 028/25 and 049/25. Article 70(1) requires the investor to pay a naknada za građenje — a building fee — for basic utility equipping of the building land.
Article 70(2) then lists what the fee is not paid for: objects of general interest; hotels with five stars; access ramps, lifts and similar facilities for persons with reduced mobility; reconstruction or demolition and rebuilding within the existing footprint where no additional equipping is needed; and objects where the investor is the local self-government unit.
Read that list against what is usually advertised.
| Claim in circulation | What Article 70 says |
|---|---|
| Hotels of four stars and above are exempt | Only hotels with five stars are listed in Art. 70(2)(2) |
| The exemption is automatic and complete | Art. 70(4) requires the fee for condo and mixed model units sold individually |
| The municipality still equips the site | Art. 70(3) removes that obligation where the exemption applies |
| The reduction list includes hotels | Art. 70(6) lists business zones, state and municipal projects, social housing, renewables, family houses, religious objects — not hotels |
Article 70(4) is the provision to read twice. If a five-star hotel operates under the condo or mixed business model, the investor must pay the building fee for the accommodation units that are the subject of individual sale — calculated on the net area of the units with their associated parking. That is the same formula the Tourism and Hospitality Act uses to define what a unit buyer actually owns. In other words, the waiver survives for the hotel you operate and disappears for the hotel you sell.
Article 70(5) adds a registration gate on top of the ones in the tourism statute: to register those units in the cadastre you need, besides the documents required by cadastre law, a document evidencing that the building-fee relationship has been settled.
And Article 70(3) is the part nobody prices. Where the exemption applies, the local self-government unit is not obliged to provide utility equipping of the location. A waived fee and an unserviced site is a different proposition from a waived fee and a serviced one.
Article 70(6) allows the municipality to reduce the fee — up to 100% in a business zone or for state and municipal projects, up to 60% for social housing and renewable energy, up to 50% for family houses, up to 40% for reconstruction of protected cultural assets, up to 20% for religious objects, and up to 20% for one-off payment. Article 70(7) provides that where several grounds apply, the one most favourable to the investor is used.
The 0% construction VAT we could not verify
The Government's page on incentives for tourism investors describes a zero VAT rate on the supply of products and services for the construction and equipping of hospitality facilities of five or more stars where the investment exceeds €500,000.
We could not find that provision in the consolidated VAT Act current to gazette 094/24 of 30 September 2024. Article 25, the zero-rate article, runs from item 1 to item 12d — exports, related transport services, supplies to free zones and customs warehouses, diplomatic and international-organisation supplies, listed medicines and medical devices, offshore drilling exploration, donation and international-loan supplies, and bread, flour and sunflower oil. There is no item for hotel construction, no star threshold and no €500,000 figure anywhere in the article.
The same Government page also states the 7% rate for accommodation, which Article 24a(2)(2) contradicts. We therefore do not rely on that page, and a financial model should not either. If the measure exists in an instrument we have not read, it is not in the VAT Act, and the burden of producing it sits with whoever is relying on it.
Property tax may be reduced — at the municipality's discretion
This one is real, and more modest than it sounds.
Article 12 of the Zakon o porezu na nepokretnosti, Službeni list Crne Gore nos. 025/19 of 30 April 2019 and 049/22 of 6 May 2022, provides that for a hospitality facility the tax rate may be reduced relative to the rate determined under Article 9 of that law: for a facility of category three stars up to 15%, four stars up to 30%, and above four stars up to 70%.
Note the verb and the object. The statute says the rate may be reduced, not that it is; and it reduces the rate, by up to those percentages, rather than granting a discount of the tax bill. Property tax rates within the Article 9 band are a municipal decision, so this is an incentive you apply for locally and model conservatively.
The permit path a four or five-star project actually faces
The Zakon o izgradnji objekata, Službeni list Crne Gore nos. 019/25 of 4 March 2025 and 092/25 of 7 August 2025, treats high-category tourism projects differently from ordinary buildings, and the differences cut both ways.
Article 32(2)(3): the building permit for hotels and tourist settlements of four or five stars and for tourist resorts is issued by the Ministry, not by the local authority. Your permit is a state-level process from the start.
Article 34(6): the permitting authority obtains ex officio the consent of the state administration body responsible for tourism on the revised main project for four and five-star hotels, four and five-star tourist settlements and tourist resorts. Article 34(7) gives that body 15 days, and Article 34(8) provides that if it does not deliver the consent within the period, it is deemed to have consented. A silent deadline that runs in the investor's favour is unusual enough to be worth knowing about.
Article 33(4) closes a loop with the condo regime: where the application concerns reconstruction, extension or addition to a building in which, under tourism regulations, the sale of parts of the building is permitted, the Article 34(1)(4) proof is obtained from the legal person managing the building — the upravljač. The wider permitting sequence is set out in our building permit process guide.
The coast is a separate regime, not an incentive
A beach in front of a hotel is not part of the incentive package and is not acquired with the land. The maritime domain is managed separately and reached through the state's own procedures rather than through purchase; the mechanics, including what a concession does and does not give you, are set out in our morsko dobro guide. Treat it as a separate workstream with its own timetable, because it is one.
What we did not verify, and why it is not on this page
Three deliberate omissions.
Corporate income tax rates are not stated here. The copies of the Zakon o porezu na dobit pravnih lica we could reach — including the one hosted on a Government domain — are consolidations that still show the old flat rate, and we were not willing to publish a headline tax rate from a source we could see was out of date. Ask for the current rate against the gazette text before it goes into a model.
Tourism sector share of GDP is not stated here. The figure circulates in several versions and we did not trace it to a statistical release.
Customs duty relief on imported equipment is not stated here. General import-duty relief regimes exist under customs rules, but we found nothing tying a relief to hotel star category, and we will not describe a general regime as a tourism incentive.
What is on this page was read in the consolidated statutes named above and checked on 26 August 2026. A new Law on Tourism and Hospitality is before Parliament and, if adopted, may move some of these definitions; nothing here anticipates it.
Before you build an incentive into your model
The practical test is short. Is the hotel five stars, or four? The building-fee waiver turns on that single word, and Article 70(2)(2) says five. Is any part of the hotel going to be sold as condo or mixed-model units? If so, Article 70(4) puts the fee back for those units, on net area plus parking, and Article 70(5) makes settling it a condition of registering them. And is your model still carrying a 7% accommodation VAT line? If it is, it is understating output tax by eight points.
Send us the project's category decision, the municipal fee calculation and the draft sale documentation, and we will tell you which reliefs the current statutes actually support and which line items to remove. This work sits in our hotel investment practice, alongside construction advisory and company formation.
