The same pre-contract keeps arriving: a coastal plot with a building permit already issued, signed early in the year, closing months later, price "net of all taxes and duties, payable by the buyer". Between signature and closing the tax on such a plot changed its name, its rate and the person who accounts for it, and none of those contracts had priced it.
From 1 April 2026 the sale of building land with a building permit is treated as a VATable supply in Montenegro, while land without a permit stays outside VAT and in the transfer-tax regime. What decides the outcome is the seller's VAT status rather than the seller's legal form, because a person making even an occasional transfer of permitted land can fall inside the taxable-person definition.
The rule itself fits in one sentence: from 1 April 2026, a sale of construction land that carries a building permit is treated as a VAT supply in Montenegro. The bulletins from the big audit firms stop there. What they do not do is sit on the buyer's side of the table and ask the developer's questions: buy before or after the permit, who is the seller, what happens to the transfer tax, when does my d.o.o. register for VAT, and what do I do with a plot I already have under option. Those are the questions this page works through. Rates and dates are from the statutes and bulletins as I read them between 26 August and 2 September 2026; where I could not read a text, I say so.
What actually changed on 1 April 2026, and what I could and could not verify
Two amendments moved together, and I treat them differently because I could verify only one of them from a primary text.
The one I have read is the transfer-tax side. The Zakon o izmjeni Zakona o porezu na promet nepokretnosti, published in Official Gazette of Montenegro 33/26 on 10 March 2026 (adopted by Parliament on 27 February 2026, promulgated 2 March 2026), applies from 1 April 2026 and adds the words "i građevinskog zemljišta" ("and construction land") after "newly built structures" in Article 6. The effect: an acquisition of construction land on which VAT is paid is not a taxable transfer for transfer-tax purposes at all. That is an exclusion from scope, not an exemption you apply for. Article 11, the rate scale, was left untouched (checked 26 August 2026).
The one I have not read is the VAT side. According to KPMG Montenegro's tax bulletin of March 2026, the VAT Act was amended in Official Gazette 12/26 (applied from 6 February 2026) so that "supply of goods" now covers construction land for which a building permit has been issued under the construction legislation; such sales are subject to VAT from 1 April 2026, whether the land is sold alone or as part of the first sale of a new building; land without a permit stays outside VAT; advances paid before 1 April 2026 are not caught; and a person who only occasionally transfers such land is treated as a taxable person. The consolidated VAT text I can read ends at Official Gazette 94/24, so I am giving you the bulletin's reading, with its date, and no article number. If your accountant quotes you an article, ask to see the gazette page.
The standard VAT rate is 21% under Article 24 of the Zakon o porezu na dodatu vrijednost (consolidated to Official Gazette 94/24, checked 26 August 2026). On a €1,000,000 plot that is €210,000 of tax on the invoice, against a transfer-tax bill of €52,000 on the same price under the progressive scale. Whether the €210,000 is a cost or a cash-flow item is the whole subject of this page.
The four questions that decide which tax you pay
I run every plot through the same four questions before I say a number.
Does the plot carry a building permit? Not "is it zoned", not "does it have urbanističko-tehnički uslovi (UTU, the urban-technical conditions pulled from the Geoportal under Article 8(5) of the Zakon o izgradnji objekata, Official Gazette 19/25, 92/25, 160/25 and 114/2026)". A građevinska dozvola, issued and in force. On the KPMG reading, that is the trigger. UTU alone, a concept design with the chief architect's consent, a permit application lodged but not decided: none of those is a permit, and on the bulletin's wording the sale stays outside VAT.
Who is the seller, and are they a VAT payer? A developer company selling a permitted plot is the easy case. The hard case is the private owner who obtained a permit to make the plot saleable and is now selling it once. The bulletin says the occasional transferor of such land is a taxable person; I have not seen how the tax administration is applying that to a first-time private seller in practice, and I would want the seller's VAT position in writing before I told a client which tax to budget.
Is the buyer a VAT-registered d.o.o. or a person who cannot recover input tax? For a registered developer company, VAT on the plot is input tax against the VAT it will charge on the first sale of the apartments. For a private buyer building a villa to keep, the 21% is simply the price of the land going up by a fifth, with no transfer tax to offset it.
When does the price become payable? Advances paid before 1 April 2026 are outside the new rule on the bulletin's reading. Anything paid after it, on a permitted plot, is inside.
| Scenario | Seller | Buyer | Tax on the plot (from 1 April 2026) | Who bears it economically |
|---|---|---|---|---|
| Plot without permit | Anyone | Anyone | Transfer tax, progressive scale, buyer files within 15 days (Art. 7(1), Art. 16(1) ZPPN) | Buyer, as a cost |
| Plot with permit | VAT-registered company | VAT-registered d.o.o. | 21% VAT on the invoice; no transfer tax (Art. 6 ZPPN as amended by 33/26) | Buyer pre-finances, recovers as input tax |
| Plot with permit | VAT-registered company | Private individual or unregistered entity | 21% VAT; no transfer tax | Buyer, as a cost |
| Plot with permit | Private owner selling once | Any | On the KPMG March 2026 reading, VAT as occasional taxable person; practice not verified by me | Depends on seller's registration; get it in writing |
| Permitted plot, advance paid before 1 April 2026 | Any | Any | Advance outside VAT on the bulletin's reading; balance after 1 April on a permitted plot inside | Split by payment date |
| First sale of finished units | Developer d.o.o. | End buyer | VAT on the unit; no transfer tax (Art. 6 ZPPN) | End buyer, in the price |
The transfer-tax scale I refer to has run since 1 January 2024 under the amendment in Official Gazette 28/23 of 10 March 2023: 3% up to €150,000; €4,500 plus 5% above €150,000.01; €22,000 plus 6% above €500,000.01 (Article 11). I confirmed those bands from two independent secondary sources and the arithmetic; I could not retrieve the gazette PDF itself, which is why the bands come with that note. The end-buyer view of the scale is in the transfer tax and VAT guide for buyers; this page stays on the land side.
Buy before the permit or after it: the decision as I model it
Here is the choice as it now presents itself to a developer.
Buy the plot without a permit, pay transfer tax at 3% to 6% as a sunk cost, then obtain the permit yourself. The permit chain runs through the UTU, the concept design with the chief state or city architect's consent (Article 25(1), decision within 30 days), the reviewed main project, and the građevinska dozvola. You carry the planning risk. If the permit comes out with fewer square metres than the seller promised, you own that outcome.
Or buy the plot with the permit in hand, pay 21% VAT, recover it as input tax, and pay no transfer tax. The seller has taken the planning risk and priced it in. Your cost is the financing of the VAT until it comes back.
The second route is now cheaper in tax for a registered developer than it was before April, because the transfer tax that used to be a sunk 3% to 6% on a permitted plot has been replaced by a recoverable 21%. It is dearer in cash at closing, by roughly the difference between 21% and the old scale, until the refund or offset arrives. I could not verify the refund period from the current VAT text, so I do not write a number of days; what I do write into every deal is a financing line for the VAT sized for the slower case.
Two clocks change the calculus in the other direction. Under Article 35 of the Construction Act, construction must begin within two years of the permit date or the right to build under that permit ceases; under Article 43 it must be completed within five years, with an annual fee for each started year of overrun. A permitted plot that has been on the market for eighteen months has six months of fuse left. Whether an issued permit passes to you as the new investor, or must be re-issued in your name, is a question I answer file by file from the permit's own wording and the current text; I will not state a general rule here.
And one clock that stopped: the 0.3% to 5% annual property-tax band for undeveloped building land was deleted by the amendment in Official Gazette 118/25 (16 October 2025, in force 24 October 2025), so vacant land now sits in the general 0.25% to 1.00% band of Article 9 of the Zakon o porezu na nepokretnosti (checked 29 August 2026). Holding a plot while you obtain the permit yourself is no longer taxed five times as heavily as holding a building.
The d.o.o., VAT registration and the input-tax question
Most of the developers who write to me are buying through a Montenegrin d.o.o., and the timing of that company's VAT registration is the item I see mishandled most often.
The registration threshold is €30,000 of turnover; I could not pin that figure to an article in the text I can read, so treat it as the figure the tax administration applies, not as my citation. A newly formed development company has no turnover in year one. If it buys a permitted plot in month two and only registers for VAT when the first apartments sell in year three, the 21% on the land was invoiced to a non-registered buyer. Whether VAT invoiced before registration can later be recovered is exactly the rule I want to read in the current statute before I rely on it, and I have not been able to this month. So my working rule is conservative: the d.o.o. registers for VAT before the plot invoice is issued, on the basis that it intends to make taxable supplies, and the registration certificate is a closing condition in the sale contract.
Three practical consequences follow.
The purchase price clause has to say what it means. "Net of VAT" and "inclusive of all taxes" produce different numbers on a permitted plot, and a contract drafted in January on the assumption that the buyer pays transfer tax now has a 21% invoice nobody drafted for. I go through the price mechanics of Montenegrin VAT and bookkeeping in the tax and accounting guide.
The input tax on the land sits in the company's VAT account until output VAT arrives on unit sales. If the project is a hotel you will operate rather than sell, the output side is the 15% accommodation rate under Article 24a(2)(2) rather than 21% on sales, and the recovery profile is slower; model it, do not assume it.
The company's own VAT history becomes part of the plot's history. When a later buyer, or a bank, asks how the land was acquired and what tax was paid, the invoice and the registration date answer the question. Missing either invites the transfer-tax authority to ask why Article 6 should apply.
Plots already under option or pre-contract: how the change re-prices them
The January pre-contract I opened with is not unusual. Most coastal land deals I see are structured as a predugovor with an advance, closing on a condition, often the permit itself. The April change lands in the middle of those deals in three ways.
First, payment date. On the KPMG reading, an advance paid before 1 April 2026 is outside the new rule and a balance paid after it on a permitted plot is inside. A deal that paid 10% in January and 90% in May is, for tax purposes, two events. The contract's allocation of the balance between land and any other components (design documents, the permit itself, an easement) becomes a tax question, not just a drafting one.
Second, the tax clause. Contracts written before the change usually say the buyer bears transfer tax. Read literally, that clause says nothing about VAT, which the seller, as the taxable person, must charge and account for. Whether the seller can add 21% on top of the agreed price or must absorb it inside the price is a contract-interpretation question under the Zakon o obligacionim odnosima that turns on the exact wording, and I do not give a general answer; I have seen both positions argued in the same week. What I do say is that a seller who has not yet registered for VAT and a buyer who has not yet registered are about to have an expensive conversation that a two-line amendment could have avoided.
Third, the condition. Where closing is conditional on the permit being issued, the parties have, without meaning to, made the permit the switch between transfer tax and VAT. If the permit issues before closing, the sale is a VAT supply; if the parties close on UTU and a lodged application instead, it is not. Moving the closing date by a few weeks in either direction can change the tax regime, and on a private seller it can change whether the seller is a taxable person at all. That is a lever, and it should be pulled deliberately.
For the landowner's side of the same deal, the alternative that avoids the sale altogether, a joint venture where the owner contributes land and takes finished units, raises its own VAT questions on the exchange that I have not modelled here.
Foreign developers: three things the April change does not touch
The VAT rule is nationality-neutral. Three other rules are not, and they sit on the same critical path.
Who may own the plot at all. Under Article 415(1) of the Zakon o svojinsko-pravnim odnosima (Official Gazette 19/09 and 29/25, checked 20 August 2026), a foreign person cannot hold ownership of agricultural land, forest, the 1 km land-border belt, islands and a few further categories. A plot that is građevinsko zemljište in the plan can still sit in the cadastre as agricultural land, and no VAT analysis matters if the buyer cannot be registered as owner. The land purchase guide covers the categories and the company route.
Apostille. Montenegro applies the Hague Convention of 5 October 1961, with effect from 1 March 2007 as reported by apostille service providers; I could not open the Hague Conference status table from this session, so verify the date there. A power of attorney, a shareholder resolution or a bank letter from another Convention state needs one apostille and a certified translation before a notary here will act on it. I have watched a closing slip past a VAT-relevant date because a power of attorney arrived without one.
Entry. By a decree the Government adopted on 23 July 2026 (Official Gazette 108/2026), from 1 November 2026 citizens of Türkiye, Russia, China, Saudi Arabia and Belarus need a visa to enter Montenegro, with applications through VFS Global centres. The decree changes entry, not company formation or the tax rules, and I have not read its transition provisions; if your signatory holds one of those passports, the visa lead time now belongs in the closing timetable next to the VAT registration.
A social-security agreement and a double-tax treaty depend on which country you come from; this page is written for developers from any of them, so I make no claim on either here.
Where the VAT line sits in the whole plot budget
The land is one line; the plot budget has about a dozen. Komunalije, the naknada za građenje under Article 70 of the Zakon o uređenju prostora (Official Gazette 19/25), are set by each municipality by zone and are not affected by the VAT change; a five-star hotel is exempt under Article 70(2), a four-star one is not. Design, review, supervision and the use permit are each separately invoiced, and the contractor's works carry their own 21%. I set the full stack out, with what I could and could not verify this month, in the construction cost per m² guide.
What the April change did is move the land line from a sunk cost of 3% to 6% to a financed cost of 21% for a registered developer, and to a sunk 21% for anyone who is not. That is a structural shift in favour of buying through a registered d.o.o. and against buying a permitted plot personally. It is also a shift in favour of sellers who obtain the permit before selling, since their buyer pool now prices the plot on recoverable tax.
If you are buying land to build in Montenegro, or you hold a plot under option that the April change has re-priced, send me the list nepokretnosti, the UTU or the issued permit, the pre-contract and the seller's company details, and RoNa Legal DOO will return a written tax and timing road map for that parcel through our construction and project advisory in Montenegro. You can contact the office here; representation before the tax administration or a court is handled with advocates registered in the Advokatska komora directory, and we do not tell you which tax applies until we have read the permit.