Yes, there is a double tax treaty between the United Kingdom and Montenegro, although it does not carry Montenegro's name. It is the Convention between the United Kingdom and Yugoslavia signed on 6 November 1981 and in force from 16 September 1982, which HMRC calls the 1982 Convention and regards as having remained in force in respect of Montenegro. For a British person moving to Montenegro, or a UK resident holding assets there, it decides four things that matter most: a private or workplace pension is taxed only where you live; Montenegro may tax rent and gains on Montenegrin real estate; gains on shares, including shares in a Montenegrin company that owns property, are taxed only in the seller's country of residence; and Montenegrin tax on interest paid to a UK resident is capped at 10%. The two countries relieve double taxation differently: the UK gives a credit, while Montenegro exempts most income the UK may tax.
Sources, checked 17 September 2026: the Convention between the United Kingdom and Yugoslavia for the avoidance of double taxation with respect to taxes on income and capital gains, signed 6 November 1981, in force 16 September 1982, in the text HMRC publishes as in force (Articles 2, 4, 6, 7, 10, 11, 12, 13, 15, 18, 21, 22 and 27); HMRC Double Taxation Relief Manual DT13380 (updated 4 August 2026), which states that the Convention "is regarded as having remained in force" in respect of Montenegro; Montenegro's Personal Income Tax Act, consolidated text published by the Ministry of Finance (to "Sl. list CG" 160/2025), Articles 3, 44 and 45. On the Multilateral Instrument: Montenegro's MLI position, in force for Montenegro from 1 September 2026. This is general information, not tax advice.
Is the 1981 Convention really in force for Montenegro?
HMRC publishes it under "Montenegro tax treaties", and its manual DT13380 states: "In respect of Montenegro the 1982 Double Taxation Convention between the United Kingdom and Yugoslavia is regarded as having remained in force." HMRC dates it by entry into force (1982); it was signed in 1981. Under Article 27 it took effect for Yugoslav tax from 1 January 1983, and in the UK from 6 April 1983 for income tax and capital gains tax and from 1 April 1983 for corporation tax.
Two points about its age:
- The taxes it names no longer exist. Article 2(1)(b) lists Yugoslav taxes of 1981, such as the tax on income of "organisations of associated labour". Article 2(2) extends the Convention to any identical or substantially similar taxes imposed later, "in addition to, or in place of" the originals. That is the bridge to Montenegro's current income taxes.
- The Multilateral Instrument may add to it. The MLI entered into force for Montenegro on 1 September 2026. Montenegro reserved the whole of the MLI article on methods for eliminating double taxation, so the relief method below is unchanged. Whether other MLI provisions, such as its anti-abuse test, modify this Convention depends on both states having listed it as a covered agreement. Check that before relying on the Convention for a structured transaction.
Who is resident, if both countries claim you
Montenegro treats you as resident if you have your domicile or centre of business and life interests there, or stay more than 183 days in the tax year (Personal Income Tax Act Article 3). If the UK also treats you as resident under its own law, Article 4(2) of the Convention breaks the tie in this order:
| Step | Test | Resident of |
|---|---|---|
| 1 | Permanent home available | The state where you have one; if both, go to step 2 |
| 2 | Centre of vital interests (closer personal and economic relations) | That state; if it cannot be determined, step 3 |
| 3 | Habitual abode | The state where you habitually live; if both or neither, step 4 |
| 4 | Nationality | The state of which you are a national; if both or neither, step 5 |
| 5 | Mutual agreement | The two tax authorities decide |
The treaty result decides which country gets to tax under the articles below. Domestic filing duties can still arise in both.
Which country taxes what
"May be taxed" means the source country may tax, and the residence country must then give relief. "Only" means exclusively.
| Income | UK resident with Montenegrin income | Montenegrin resident with UK income | Article |
|---|---|---|---|
| Rent from real estate | Montenegro may tax | UK may tax | 6 |
| Gain on selling real estate | Montenegro may tax | UK may tax | 13(1) |
| Gain on selling shares (including shares in a property-owning company) | Only the UK | Only Montenegro | 13(4), 6(2) |
| Dividends | Montenegro may tax, capped at 15% (5% for a company holding at least 25% of the votes) | UK may tax, same caps | 10(1)–(2) |
| Interest | Montenegro may tax, capped at 10% | UK may tax, capped at 10% | 11(1)–(2) |
| Royalties | Montenegro may tax, capped at 10% | UK may tax, capped at 10% | 12(1)–(2) |
| Private or workplace pension, annuity | Only the UK | Only Montenegro | 18(1) |
| Pension paid by a state or local authority out of its budget or special funds | Only the paying state, unless you are a national and resident of the other state | Same | 18(2) |
| Employment income | Where the work is done may tax; the 183-day rule can keep it in the residence state | Same | 15 |
| Business profits | Only where you are resident, unless there is a permanent establishment in the other state | Same | 7 |
| Income not covered elsewhere | Only the residence state | Only the residence state | 21 |
Three rows need explaining.
Shares in a property-owning company. Article 13(1) lets the situs state tax gains on "immovable property referred to in paragraph (2) of Article 6", and Article 6(2) gives that term the meaning it has under the law of the state where the property is. The Convention has no separate rule for shares in a company whose value comes mainly from real estate. Selling a Montenegrin d.o.o. that owns a villa is therefore a sale of shares under Article 13(4), taxable only in the seller's country of residence. Selling the villa itself is taxable in Montenegro under Article 13(1).
Dividends. Montenegro already taxes dividends to individuals at 15%, so the 15% cap changes nothing for a private shareholder. The 5% cap matters only for a company shareholder with at least 25% of the voting power. Article 10(3) contains a special rule tied to the UK dividend tax credit; it applies only "as long as" UK individuals are entitled to that credit, which is a question of UK law.
Interest. Montenegro's domestic income tax rate on interest is 15% of the gross amount; how Montenegro taxes investment income of its own residents is set out in Montenegro capital gains and dividend tax for residents. For a UK resident who is the beneficial owner, Article 11(2) caps Montenegro's tax at 10%. The Convention does not say how the cap is applied at source; that is a matter of Montenegrin procedure.
How each side gives relief
The two countries use different methods, and the difference matters to anyone who moves to Montenegro.
| United Kingdom (Article 22(1)) | Montenegro (Article 22(2)) | |
|---|---|---|
| Method | Credit: Montenegrin tax is credited against UK tax on the same income or gain | Exemption: income the UK may tax is exempt in Montenegro |
| Limits | Subject to UK law on foreign tax credits | Montenegro may apply the rate that would have applied without the exemption |
| Dividends, interest, royalties | Credit | Credit, capped at the Montenegrin tax on that income (Article 22(2)(b)) |
| Underlying profits of a dividend | Not credited | — |
Under Montenegrin domestic law, a resident gets only a credit for foreign tax, capped at the Montenegrin tax (Personal Income Tax Act Article 44). The Convention takes precedence over that Act (Article 45). For income the UK may tax under the Convention other than dividends, interest and royalties, such as rent from a UK flat or a UK government pension, Montenegro exempts the income instead of crediting the tax.
Four common situations
| Situation | Result under the Convention |
|---|---|
| You move to Budva, become Montenegrin resident, and let your London flat | The UK may tax the rent (Art. 6). Montenegro exempts it (Art. 22(2)(a)). |
| You move to Budva and draw a UK workplace pension | Only Montenegro may tax it (Art. 18(1)). |
| You stay UK resident and sell your apartment in Kotor | Montenegro may tax the gain (Art. 13(1)); the UK credits Montenegrin tax subject to UK law (Art. 22(1)). |
| You stay UK resident and sell your shares in a Montenegrin d.o.o. that owns a villa | Only the UK may tax the gain (Art. 13(4)). |
If you let Montenegrin property while living in the UK, see which state hears about Montenegrin rental income. For Montenegro's other treaties, see Montenegro's double tax treaty network. For the buying process itself, see Montenegro conveyancing for UK buyers.
What the Convention does not cover
- Inheritance and gift taxes, VAT and annual property tax. Article 2 covers taxes on income and capital gains only.
- UK domestic rules. How the UK taxes its residents, and what it charges non-residents on UK assets, is decided by UK law. This page does not state UK rules.
What this page does not settle
- The UK State Pension. Article 18(1) covers pensions for past employment and annuities; Article 18(2) covers pensions a state pays "out of the budget or special funds". Which paragraph HMRC applies to the UK State Pension for a Montenegrin resident is not stated in the Convention text, and we have not confirmed HMRC's position.
- Whether the MLI's anti-abuse test applies to this Convention (see above).
- Montenegro's procedure for the 10% interest cap at source. The Convention sets the cap; the documentation the payer needs is set by Montenegrin practice.
Whose side we are on
We advise the individual or family moving or investing between the two countries. We take no commission from estate agents, developers, banks or pension providers, and our fee does not depend on where you end up living or what you sell. We read the Convention and the Montenegrin side of the law for your facts, and we say where UK advice is needed.
Before you move or sell
If you are moving from the UK to Montenegro, or selling Montenegrin property or shares while living in the UK, send us where you live and for how many days a year, where you have a home, and a list of your income and assets by type and country. We will tell you in writing how the Convention allocates each item, what Montenegro may tax, which relief applies on the Montenegrin side, and which questions to put to a UK adviser.
