Most English-language material on this subject compares two tax rates and stops there. That is the wrong frame. A long-term residential lease and nightly letting to tourists are not two tax treatments of the same activity — they are two different legal regimes, and the short-term one carries a registration requirement, a statutory ceiling on capacity, and a list of continuing duties that has nothing to do with tax at all.
This page sets out the regime that applies to each, with the article numbers from the Zakon o turizmu i ugostiteljstvu, and is deliberate about which tax figures it does and does not state.
The two regimes side by side
| Long-term lease | Short-term letting to tourists | |
|---|---|---|
| Governed by | Contract law and the tax rules on income from property | Zakon o turizmu i ugostiteljstvu, plus the tax rules on income from property |
| Registration before you start | Not required by the tourism law | Required — a decision entering the property in the Central Tourist Register (član 100 stav 6, čl. 77 and 78) |
| Statutory capacity ceiling | None | Ten rooms or 20 beds for the household regime; above that only a registered caterer may operate (član 100 stav 1 and 4) |
| Continuing operational duties | Essentially none beyond the lease | Guest book, complaints book, receipts, price and tourist tax display, monthly capacity reporting, guest accident insurance (član 101) |
| Who collects the tourist tax | Not applicable | The person letting the property, who must display it and show it on the receipt (član 101 stav 1) |
| Effective income tax on gross | 15% applied after the deduction that applies to long-term letting | 7.5% after the 50% deduction, or 4.5% via a licensed travel agency |
| Practical demand pattern | Year-round, lower gross yield | Seasonal, higher gross rate, higher operating cost |
The tax layer, stated carefully
Rental income earned by an individual is taxed as income from property under the Zakon o porezu na dohodak fizičkih lica. The rate applicable to income from property, capital and capital gains is 15%, as set by the amending Act published in Sl. list CG 152/22 of 30 December 2022.
The Act also provides for a standardised expense deduction against gross rental income, so the taxable base is not the gross rent. For short-term tourism rentals the standard deduction is 50%, which produces an effective rate of 7.5% on the gross. Where the letting is mediated by a licensed travel agency the deduction is 70%, producing an effective rate of 4.5%.
| Arrangement | Standard deduction | Effective rate on gross |
|---|---|---|
| Short-term tourism rental (direct or via a booking platform) | 50% | 7.5% |
| Short-term rental mediated by a licensed travel agency | 70% | 4.5% |
Treat those percentages as the position to confirm rather than as a settled figure: deduction rates are set by the income tax Act and are amended from time to time, and English-language summaries of them are frequently out of date. Confirm the percentage that applies to your arrangement for the fiscal year you are filing before you underwrite a purchase on a net yield.
Where the property is held through a company rather than personally, this is not the applicable regime at all: the company is taxed on profit under the progressive corporate scale set out in our note on what Montenegro's 9% corporate tax really means, and extracting the rent as personal income is a second, separate charge.
Two further points sit outside the income tax Act. VAT has its own registration threshold and its own rate for accommodation, and neither is what most guides say — the threshold is €30,000 and accommodation carries the 15% reduced rate rather than 7%; both are covered in the corporate tax note above. And the annual property tax (porez na nepokretnosti) is a municipal charge assessed on the property itself, independent of whether it is let.
Short-term letting: registration is the gate
The tourism Act does not treat nightly letting as an unregulated private arrangement. Član 100 stav 6 provides that household hospitality services may be provided on the basis of a decision entering the provider in the Central Tourist Register under čl. 77 and 78. That is a precondition, not a formality to catch up on later.
The mechanics are specific. Under član 77 stav 1 the application goes to the competent local administration body eight days before the activity begins. Član 77 stav 2 lists what the application must contain, including the CRPS registration decision and activity code, the address of the property, and the type of service, requested category and structure of accommodation capacity with the total number of beds. Član 77 stav 3 lists the attachments: proof of ownership, lease or right of use; a photocopy of the identity card or travel document where the applicant is a natural person, including a foreigner; and a statement that the minimum technical conditions as to premises and equipment are met.
Under član 78 stav 1 the local administration body issues the decision within eight days of the application, and član 78 stav 3 makes the register entry on the basis of that decision. Član 78 stav 4 adds a duty most owners miss: if any registered particular changes, the operator must notify the authority in writing within eight days of the change.
Član 100 stav 2 answers the question foreign owners ask most often here. The provider — the izdavalac — may be a business company, another legal person, an entrepreneur, or a natural person, domestic or foreign, who owns or co-owns the accommodation capacity. Foreign ownership is not itself an obstacle to registration.
The ceiling that decides your structure
Član 100 stav 1 defines household hospitality services as accommodation in rooms, tourist apartments, apartments and houses let to tourists, up to a maximum of ten rooms or 20 beds — and, for camping on one's own land, at most 15 units.
Član 100 stav 4 states the consequence: accommodation in facilities above ten rooms and/or above 20 beds — or a camp above 15 units and/or 30 people at once — may only be provided by ugostitelji, that is, operators registered for the hospitality business proper.
This is the provision that should drive the structure, and it is the one the yield-focused guides leave out. An investor assembling several apartments in one building, or buying a small aparthotel, can cross that threshold without noticing, at which point the household regime is no longer available and a different registration, with a different compliance load, applies. The threshold is capacity, not revenue. Where the plan is a hotel or resort from the outset, the applicable framework is set out in our note on hotel investment structures.
Član 100 stav 3 contains a small, precise rule worth knowing: a household provider may also serve breakfast to guests it accommodates, between 07:00 and 10:00.
The continuing duties
Član 101 stav 1 sets out what the izdavalac must do on an ongoing basis. These are the obligations inspections are conducted against.
| Duty | Article |
|---|---|
| Display the mark of type and category at the entrance to the property, visibly | Član 101 stav 1 tačka 1 |
| Display prices for the services offered and the amount of the tourist tax, and charge in accordance with the displayed prices | Član 101 stav 1 tačka 2 |
| Issue the guest a receipt for every service, stating type, quantity and price, and the amount of tourist tax and insurance collected | Član 101 stav 1 tačka 3 |
| Keep a guest book daily, accurately and up to date in the prescribed manner, and keep the complaints book visible in the property | Član 101 stav 1 tačka 4 |
| Report available accommodation capacity, tourist numbers and overnight stays to the local administration body, the local tourist organisation and the statistics authority — by the tenth of the current month for the previous month | Član 101 stav 1 tačka 5 |
| Insure the guest against the consequences of an accident | Član 101 stav 1 tačka 6 |
| Keep the Central Tourist Register decision at the property | Član 101 stav 1 tačka 7 |
| Use the property's registered type and category mark in all advertising and promotional material | Član 101 stav 2 |
Two of these deserve emphasis because they are routinely missed by owners operating through a booking platform. The reporting duty in tačka 5 runs monthly to three separate recipients and is not discharged by the platform. The insurance duty in tačka 6 is a substantive obligation, not a recommendation.
On the tourist tax itself: the tourism Act requires the person letting the property to display the amount and to show it on the receipt. The amount is fixed at municipal level rather than by this Act. Across the coastal municipalities — Budva, Kotor, Tivat, Herceg Novi, Bar and Ulcinj — the prevailing rate is €1.00 per adult per night, with children under 12 exempt and ages 12 to 18 at half rate. Because it is a municipal decision, confirm the current figure with the municipality where the property sits rather than assuming a national one.
Categorization: less universal than it is usually described
It is commonly asserted that every property let nightly must be inspected and awarded a star rating. That is not what the Act says.
Član 84 stav 1 lists the facilities subject to categorization and expressly excludes a number of them — among them the stan za iznajmljivanje turistima, the apartment let to tourists. Član 84 stav 4 and stav 5 provide that categorization is carried out by awarding stars, up to a maximum of five.
Against that, član 100 stav 5 requires household accommodation facilities — room, tourist apartment, house, apartment let to tourists, and camps up to 15 units — to meet the minimum technical conditions and the conditions for categorization under čl. 79 and 84.
Read together, the safe reading is that meeting the technical and categorization standards is required, while the award of stars does not attach to every category of property. This is a point to settle with the competent local administration body for the specific property type before submitting, rather than to assume in either direction. What is not in doubt is the registration duty: it applies regardless.
The prohibition on touting
Član 102 stav 1 prohibits the provider, or anyone else, from offering or selling accommodation services outside the property — directly or through persons not registered to intermediate in the sale of accommodation services — and from soliciting travellers or tourists, except in the place and on the conditions set by the local self-government authority.
Član 102 stav 2 defines that solicitation broadly: waiting for and intercepting travellers, taking and carrying luggage without consent, offering accommodation by means of signboards, panels and informational material, pressing one's own or another's accommodation services, and quoting prices and terms.
The practical reading for a foreign owner is about intermediaries. Engaging someone to find guests who is not registered to intermediate in the sale of accommodation services is the conduct this article addresses.
What this means for a foreign owner
The decision between long-term and short-term letting is not primarily a tax comparison. Short-term letting is an activity with an entry requirement, a capacity ceiling and a standing compliance load; long-term leasing is a contract. Model both on that basis, and price the operating obligations of the short-term route into the yield rather than comparing gross figures.
Three questions settle most cases. Does the property, or the portfolio, stay under ten rooms and 20 beds? Is there someone on the ground who can actually discharge the član 101 duties month after month? And has the tax position — in particular which standard deduction applies to the way the property is actually let — been confirmed against the current text rather than a summary?
We do not name or recommend property management companies, and we do not describe any route that guarantees a yield. What can be done is to establish which regime the property falls into, prepare and file the registration, and set out the continuing obligations in a form the owner or their manager can actually follow.
Article numbers on this page are from the Zakon o turizmu i ugostiteljstvu as consolidated to Sl. list CG 084/24, checked on 26 August 2026. The income tax position, including the standard deduction percentages, is stated as at the same date and should be confirmed against the current text of the income tax Act for your own fiscal year before you rely on it.
If you want the regime and the registration position established for a specific property, our team can review it with you.
