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Property tax law

MINISTRY OF FINANCE, MONTENEGRO

LAW ON IMMOVABLE PROPERTY TAX

( consolidate text)

Podgorica, March 2015
Law on immovable property tax
(consolidate text)

General Provisions
Article 1
(1) This law governs the basic elements of the immovable property tax.
(2) The local self-government unit shall introduce the immovable property tax by means of its regulation.

Article 2
Revenues from the immovable property tax belong to the local self-government unit in which territory the immovable property is located.

Object of Taxation

Article 3
(1) The immovable property located in the territory of Montenegro shall be subject to the immovable property tax, unless exempted by this Law.
(2) The immovable property referred to in paragraph 1 of this Article shall be deemed to be:

- Land (buildable, forest, agricultural and other);
- Building structures (business, residential, residential-business and other structures);
- Separate parts of residential building (apartments, business premises, basements, garages or garage parking spots and other).
-
(3) Buildings and other building structures owned separately from land, as well as dwelling and business units of buildings, may be taxed separately.
Taxpayer

Article 4

(1) The taxpayer of the immovable property tax shall be the owner of the immovable property registered in the immovable property cadastre or another immovable property records on 1st of January of the year for which the tax is assessed.

(2) If several persons have co-ownership over the same immovable property, the taxpayer of the immovable property tax shall be each of such persons in proportion to its share.

(3) If several persons have joint ownership over the same immovable property, each of such persons shall be the taxpayer of the immovable property tax in equal shares.

(4) Notwithstanding paragraph 1 of this Article, if the owner of immovable property is unknown, has not been determined, or has ceased to exist, the user of such immovable property shall be the taxpayer of the imovable property tax.

(5) The taxpayer of the tax on immovable property that was acquired based on a contract on fiduciary transfer of ownership rights or a contract on financial leasing shall be the fiduciary transferor of the ownership right or lessee.
(6) Notwithstanding paragraph 1 of this Article, the taxpayer of the immovable property tax shall also be the user of immovable property in state ownership registered in the immovable property cadastre as the holder of right to use and permanent right to use the immovable property, except for the right to use the immovable property based on the long-term lease.

Tax base

Article 5
(1) The base of the immovable property tax shall be the market value of immovable property.

(2) The market value of immovable property shall be the value of the immovable property on the 1st January of the year the tax is assessed for.

Criteria for Determining Immovable Property Market Value

Article 6

(1) The basic criteria for determining the immovable property market value shall be:
(1) indented use of immovable property;
(2) size of immovable property;
(3) location of immovable property;
(4) quality of immovable property; and
(5) other elements that may have influence on immovable property market value.
(2) The Government of Montenegro (hereinafter referred to as the Government) shall stipulate more detailed criteria and methodology for determining the immovable property market value, upon a proposal of the state administration authority in charge of financial affairs (hereinafter referred to as the Ministry).
(3) The methodology referred to in paragraph 2 of this Article shall be adjusted to market conditions no less than once in three years.

Tax Liability Occurrence
Article 7
(1) The immovable property tax liability shall occur on 1st January of the year the tax is assessed for..
(2) The local self-government authority in charge of activities of assessing, collecting and controlling local public revenues (hereinafter referred to as the competent local government authority) shall determine the immovable property market value referred to in paragraph 1 of this Article.

(3) For the purpose of determining the tax liability occurrence, notaries, courts and other government authorities shall be obliged to provide documents (contracts, decision and other) to the local self-government unit where the immovable property is located, based on which the ownership on immovable property is acquired or changed, within 10 days as of the day the contract or another legal transaction is concluded, or within 10 days as of the day the decision becomes final and non-appealable.

Article 8

In the case when force majeure (drought, flood, fire, earthquake...) affects the damage of immovable property, the competent local government authority may re-evaluate, independently or at a taxpayer’s request, the market value of the immovable property referred to in Article 7 of this Law..
Tax Rates
Article 9
The immovable property tax rate shall be flat and may range from 0.25% to 1.00% of the immovable property market value..

Article 9a

(1) A local self-government unit may determine a higher tax rate than the rate determined in accordance with Article 9 of this Law, and so for:

(1) Not cultivated agricultural land;
(2) Secondary residential building or apartment;
(3) Building constructed contrary to a law;
(4) Hospitality industry facility located within the priority tourism locations zones, based on a regulation of the Government on determining a priority tourism location;
(5) hospitality industry facility use contrary to intended purpose set by a planning documentation;
(6) Buildable land not fitted to fitful purpose in accordance with a planning documentation.

(2) Notwithstanding paragraph 1 of this Article, the local self-government unit may exempt a person registered in the registry of agricultural produces with the competent authority, a legal person and an entrepreneur engaged in production, upgrade, packaging or processing of agricultural products produce in Montenegro, from payment of the tax on immovable property used for pursuit of this activity.

Article 9b

(1) The tax rate for not cultivated agricultural land, the area of which exceeds 150,000m2 the tax rate shall be determined in the range between 3% and 5% of the market value of the immovable property.

(2) The state administration authority in charge of agriculture shall adopt a more detailed regulation defining what land is considered cultivated agricultural land.

Article 9c


(1) The tax rate for secondary residential building or apartment referred may be increased up to 150% in relation to the tax rate determined in accordance with Article 9 of this Law.

(2) Secondary residential building within the meaning of this Law shall be deemed to be a residential building or apartment not being a habitual residence or permanent residence of the taxpayer.

(3) Secondary residential building within the meaning of this Law shall also be deemed to be a residential building or apartment owned by a legal person.

(4) Secondary residential building within the meaning of this Law shall not be deemed to be a residential building or apartment of the taxpayer which is the only residential building or apartment on the territory of Montenegro.

Article 9d


(1) An increased tax rate may be set for building constructed contrary to a law in relation to the tax rate determined in accordance with Article 9 of this Law for a building:
 used to resolve a housing issue – up to 50%;
 not used to resolve a housing issue – up to 100%.

(2) The building constructed contrary to law, within the meaning of this Law, shall be deemed to be a building:
 constructed without a building permit on the area for which exists a planning document;
 or separate part of a building not constructed in accordance with a building permit;
 not used in accordance with intended purpose envisaged by planning documentation;
 constructed on someone else’s land.

Article 9e


(1) Local self-government authority may stipulate the tax rate for hospitality industry facility located within the priority tourism locations zones based on a regulation of the Government higher than the tax rate determined in accordance with Article 9 of this Law for the hospitality industry facility:
 3*** category - from 2 to 2.5% of the immovable property market value;
 2** category - from 3 to 3.5% of the immovable property market value;
 1* category - from 4 to 4.5% of the immovable property market value;
 not being assigned with a category - from 5 to 5.5% of the immovable property market value.

(2) The tax rate may be reduced compared to the tax rate determined in accordance with Article 9 of this Law for the hospitality industry facility referred to in paragraph 1 of this Article which is not in function for 12 months in a year, for the hospitality industry facility
 4**** category – up to 30%;
 more than 4**** category – up to 70%.

(3) Hospitality industry facility referred to in paragraph 1 of this Article shall be deemed a facility wherein a hospitality industry activity is carried out (hotel & resort, wild beauty resort, hotel, small hotel, boutique hotel, hotel garni, apartment hotel, condo hotel, hostel, boarding house, motel, tourist settlement, ethno village, eco lodge, villa, inn, mountain lodge, vacation resort, camp and similar) and which is located in the priority tourism locations zone.

(4) The tax rate between 5% and 5.5% of the market value of immovable property may be prescribed for a hospitality industry facility used contrary to tourist intended purpose defined in the planning documentation.

(5) Hospitality industry facility referred to in paragraph 4 of this Article shall be deemed a facility from a group of primary and complementary hospitality industry facilities, in accordance with the law governing the tourism.


Article 9f

(1) The tax rate for buildable land not fitted to fitful purpose in accordance with a planning documentation may be increased up to 150% in relation to the tax rate determined in accordance with Article 9 of this Law, except for buildable land intended for construction of economic facilities and facilities intended for further sale. for which will be determined a tax rate in the rage from 3% to 5% of the market value of immovable property upon expiry of period of five years as of the day the planning documentation is adopted.

(2) Buildable land referred to in paragraph 1 of this Article shall be deemed land located within boarders of the building area of a settlement whereat, in accordance with a spatial plan, building structures may be constructed, except for facilities for municipal utility infrastructure and other facilities of public interest, and without constructed building structures envisaged under the planning documentation on it or without a procedure for obtaining a building permit intuited..


Tax Exemptions
Article 10
(1) The immovable property tax shall not be paid for:
1) state-owned immovable property used by state bodies, organizations and services, bodies of the local self-government unit and organizations that provide public service functions they are established for;
2) immovable property under the ownership of the Central Bank of Montenegro;
3) immovable property owned or used by accredited consular and diplomatic representative offices, if the immovable property is used for such purposes and under the condition of reciprocity;
4) immovable property owned by international organizations if envisaged so by a treaty;
5) immovable property declared, in compliance with law, to be cultural monuments, except those used for housing;
6) immovable property owned by religious organizations used for religious services;
7) immovable property owned by non-governmental organizations used for functions they are established for;
8) public roads, streets, squares, and parks, ports, railroads and airports, protected and protective forests, and national parks.
(2) The exemptions referred to in paragraph 1 of this Article shall be realized provided that the immovable property is not used for gaining income in the market.
(3) The exemption referred to in paragraph 1 of this Article shall not pertain to structures referred to in Article 9a paragraph 1 item 3 of this Law.

(4) The immovable property tax shall not be paid on building structures and separate parts of a residential building owned by the investor which is registered in business books as “investment in progress” or “finished goods inventory” and which are intended for sale, in the period of three year from the year in which the building permit was issued.

(5) A legal or natural person for which the activity of construction of residential and non-residential buildings is registered in the Central Registry of Business entities Right and which is registered in the immovable property cadastre as the owner of the immovable property with grounds for acquiring such right states to be “construction” shall be entitled to the tax exemption referred to in paragraph 4 of this Article.

(6) The immovable property tax shall not be paid in the case when total tax base, for all immovable property of a specific taxpayer, does not exceed the amount of 5,000 EUR and if the immovable property is not used for gaining income.
Tax Relief
Article 11
(1) The immovable property tax on buildings and apartments that serve to a taxpayer as the main place of residence shall be reduced by 20% for the taxpayer and 10% for each family member of his/her household, but not exceeding 50% of tax liability.
Tax Period
Article 12
The period for assessment of the immovable property tax shall be a calendar year.

Assessment and Payment of Tax
Article 13
(1) The immovable property tax shall be determined by a decision of a competent local government authority by 30th April of the current year.

(2) The taxpayer shall pay the immovable property tax in two equal instalments of which one is due on 30th June and the other on 31st October of the year for which the tax is assessed.
Tax Return
Article 14
(1) Immovable property owner shall be obliged, within 30 days from the day of acquiring the immovable property, to submit a tax return to a competent local government authority for assessing the immovable property tax for that year.

(2) The taxpayer of the immovable property tax that keeps business books shall be obliged to submit to the competent local government authority by 31 March of the calendar year the tax return for assessing the immovable property tax for that year.

(3) If the immovable property is located on the territory of two or more local self-government units, the taxpayer shall submit, in accordance with paragraphs 1 and 2 of this Article, the tax returns to the competent local government authorities of those local self-government units.

(4) The taxpayer shall be obliged to enter in the tax return accurate and complete data for assessing the immovable property tax.

(5) The competent local government authority shall stipulate the form and contents of the tax return referred to in paragraph 1 of this Article..

Obligations of the Body in Charge of Immovable Property

Article 15
The state administration authority in charge of immovable property shall be obliged to submit data on immovable property ownership as of 1 January of the current year, kept with that authority, to a competent local government authority by 31st January of the current year.
Obligations of Local Self-government Units
Article 16
(1) The local self-government unit shall be obliged to:
1) determine the market value of immovable property;
2) establish tax rates on immovable property;
3) perform activities related to assessment, audit and collection of the immovable property tax;
4) keep the register of taxable immovable property;
5) regularly harmonize the status of its immovable property register with the immovable property register kept by the state administration authority in charge of immovable property;
6) Provide the Ministry the data related to assessment and collection of the immovable property tax, as needed, but not less than once a year.
(2) The Ministry shall prescribe the form and contents of the register referred to in paragraph 1, item 6 of this Article.
Supervision
Article 17
The Ministry shall supervise the implementation of this Law.
Application of Regulations
Article 18
The provisions of the law regulating tax procedure shall apply accordingly in respect of tax procedure and other maters not specifically regulated by this Law (appeal procedure, inspectional supervision, enforced collection, interest, guarantees...).
Penalty Provisions

Article 18a

A pecuniary fine ranging from 2,000 euro to 6,000 euro shall be imposed for an offence on a notary if fails to submit documents (contracts, decision and other) to the local self-government unit where the immovable property is located, based on which the ownership on immovable property is acquired or changed, within 10 days as of the day the contract or another legal transaction is concluded, or within 10 days as of the day the decision becomes final and non-appealable (Article 7 paragraph 3).

Article 18b

A pecuniary fine ranging from 250 euro to 1,000 euro shall be imposed for an offence on a responsible person of the court or the state authority if fails to submit documents (contracts, decision and other) to the local self-government unit where the immovable property is located, based on which the ownership on immovable property is acquired or changed, within 10 days as of the day the contract or another legal transaction is concluded, or within 10 days as of the day the decision becomes final and non-appealable (Article 7 paragraph 3).


Article 18c

(1) A pecuniary fine ranging from 2,000 euro to 20,000 euro shall be imposed for an offence on the taxpayer-legal person, if:

1. fails to pay the tax liability in two equal instalments and so the first until 30th June and the second until 31st October of the year for which the tax is assessed (Article 13, paragraph 2);
2. fails to submit, as the owner of immovable property, to the competent local government authority the tax return for assessing the tax within 30 days as of the day the immovable property is acquired (Article 14, paragraph 1);
3. fails to submit to the competent local government authority the tax return for assessing the tax for such year by 31st March of the calendar year (Article 14, paragraph 2);
4. for immovable property located on territory of two or more local self-government units, fails to submit to competent local government authorities of such local self-government units tax returns in accordance with Article 14 paragraphs 1 and 2 of this Law (Article 14, paragraph 3);
5. in the tax return enters incorrect and incomplete data for assessing the immovable property tax (Article 14, paragraph 4).


(2) A pecuniary fine ranging from 250 euro to 2,000 euro shall also be imposed for an offence on a responsible person in the legal person.


Article 18d

A pecuniary fine ranging from 500 euro to 3,000 euro shall be imposed for an offence on the taxpayer-entrepreneur, if:

1) fails to pay the tax liability in two equal instalments and so the first until 30th June and the second until 31st October of the year for which the tax is assessed (Article 13, paragraph 2);
2) fails to submit, as the owner of immovable property, to the competent local government authority the tax return for assessing the tax within 30 days as of the day the immovable property is acquired (Article 14, paragraph 1);
3) fails to submit to the competent local government authority the tax return for assessing the tax for such year by 31st March of the calendar year (Article 14, paragraph 2);
4) for immovable property located on territory of two or more local self-government units, fails to submit to competent local government authorities of such local self-government units tax returns in accordance with Article 14 paragraphs 1 and 2 of this Law (Article 14, paragraph 3);
5) in the tax return enters incorrect and incomplete data for assessing the immovable property tax (Article 14, paragraph 4).
6) .

Article 18e


A pecuniary fine ranging from 250 euro to 2,000 euro shall be imposed for an offence on the taxpayer-natural person, if:

1) fails to pay the tax liability in two equal instalments and so the first until 30th June and the second until 31st October of the year for which the tax is assessed (Article 13, paragraph 2);
2) fails to submit, as the owner of immovable property, to the competent local government authority the tax return for assessing the tax within 30 days as of the day the immovable property is acquired (Article 14, paragraph 1);
3) for immovable property located on territory of two or more local self-government units, fails to submit to competent local government authorities of such local self-government units tax returns in accordance with Article 14 paragraphs 1 and 2 of this Law (Article 14, paragraph 3);
4) in the tax return enters incorrect and incomplete data for assessing the immovable property tax (Article 14, paragraph 4).

Regulations for Implementation of the Law
Article 19
Regulations for implementation of this Law shall be adopted no later than within nine months as of the day this Law enters into force.
Transitional Provisions
Article 20
Taxation of immovable property for 2002 shall be carried out in compliance with provisions of the Law on Property Tax (‘Official Gazette of the Republic of Montenegro’, No 3/92, 30/93, 3/94, 42/94, 20/95, and 45/98) and regulations adopted pursuant to that Law.
Article 21
The Directorate for Immovable Property and Directorate of Public Revenues shall be obliged to make available the data in immovable property kept with such authorities to the local self-government unit within six months as of the day this Law enters into force..
Article 22
(1) Taxpayers of property (immovable property) under the provisions of the Law on Property Tax (‘Official Gazette of the Republic of Montenegro’, No 3/92, 30/93, 3/94, 42/94, 20/95, and 45/98) shall be obliged to submit the tax return to the competent tax authority of a local self-government unit within nine months as of the day this Law enters into force.

(2) The tax authority referred to in paragraph 1 of this Article shall stipulate the form and contents of the tax return.
Article 23
Odredbe člana 11 ovog zakona primjenjivaće se do 2005. godine.

Article 23a

Provisions of Article 9a paragraph 6 of this Law shall apply from 1 January 2012.

Provisions of Article 9a paragraph 7 of this Law shall apply from commencement of the third fiscal year from the day the Government regulation on determining the priority tourism locations and appropriate planning documents are adopted.

Provisions of Article 9a paragraph 9 of this Law shall apply from commencement of the second fiscal year from the day appropriate planning documents are adopted.


Article 23b

Secondary legislation referred to in Article 9b paragraph 2 and Article 14 paragraph 5 of this Law, shall be adopted within sixty days as of the day this Law enters into force.

Final Provisions
Article 24
On the day this Law enters into force, the provisions of the Law on Property Tax (‘Official Gazette of the Republic of Montenegro’, No 3/92, 30/93, 3/94, 42/94, 20/95, and 45/98) and regulations adopted pursuant to that Law, which refer to taxation of immovable property, shall be rescinded..
Article 25
This Law shall enter into force on the eighth day following the day of its publication in the ‘Official Gazette of the Republic of Montenegro’ and it shall apply from 1st January 2003.

Law Provisons
The consolidate text of the Law does not include the following provisions of the Law Amending the Law on Immovable Property Tax (Official Gazette of Montenegro, No 75/2010)


Article 11

This Law shall enter into force on the eighth day following the day of its publication in the ‘Official Gazette of the Republic of Montenegro’ and it shall apply from 1st January 2011.


Article 14

This Law shall enter into force on the eighth day following the day of its publication in the ‘Official Gazette of the Republic of Montenegro’ and it shall apply from 1st January 2016.

This law is translated from the page: http://www.poreskauprava.gov.me/ResourceManager/FileDownload.aspx?rid=194531&rType=2&file=Zakon%20o%20porezu%20na%20nepok%20-pre%C4%8Di%C5%A1%C4%87eni%20teksti.doc

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