Short-term rentals have become one of the most popular ways to generate passive income in Montenegro, especially in tourist destinations. More and more property owners are using platforms like Airbnb and Booking.com to attract tourists from all over the world. However, to operate legally, it is essential to understand and comply with local short-term rental laws. In this guide, we’ll cover the most important aspects of the regulation, such as registration, taxation, rental rules, and the consequences for non-compliance.
Registration requirements
In order to rent properties on a short-term basis in Montenegro, owners must follow certain registration procedures. This is a crucial step that ensures the legality of the rental and helps you avoid potential penalties.
Property registration
Any property intended for short-term rental must be registered with the local municipality office. The owner is obliged to submit an appropriate application along with documents that confirm the ownership of the property and its compliance with building regulations.
Object category
In Montenegro, properties rented to tourists are often classified according to quality standards (e.g. apartments, holiday homes). The owner must obtain a classification certificate that determines the category of the property based on equipment, location and available amenities.
Guest registration
According to the regulations, owners must register all guests in the local administration system. This is usually done through electronic platforms that allow tourists to report their stay within 24 hours of their arrival.
Cooperation with local authorities
Owners are required to regularly contact local authorities, such as tourist inspectorates, who can control the compliance of the rental with current regulations.
Property insurance
Although it is not required by law, it is recommended to have adequate insurance for the property rented to tourists. This protects the owner from potential losses due to damage or other unforeseen events.
Taxes and fees
Short-term rentals in Montenegro are associated with the obligation to pay taxes and fees, which are regulated by local and state regulations. Knowing these requirements is crucial to avoid financial penalties and act in accordance with the law.
Income tax
Income obtained from short-term rentals is subject to taxation. Owners must report their income and pay income tax at the rates set out in national law. The amount of tax may vary depending on the form of business (private person or company).
Tax
Montenegro has a tourist tax that is charged to each guest. Owners have to collect this fee from tourists and pay it to the local authorities. The amount of tax depends on the region and category of the property.
Administrative fees
In addition to taxes, landlords may be required to pay additional administrative costs, such as registering a property or issuing a classification certificate. These fees vary depending on the location and type of property.
VAT (Value Added Tax)
In case the owner conducts the rental business as a business and achieves a certain level of income, he may be required to register for VAT. The current VAT rate in Montenegro for tourism services is 7%, but registration requirements may vary.
Tax returns
Property owners must file tax returns regularly, including rental income. Most often, these declarations are submitted quarterly or annually, depending on the form of business.
Rules for renting to tourists
Short-term rentals in Montenegro are governed by laws that determine how owners can offer their properties to tourists. These rules are designed to ensure the safety and comfort of guests, as well as to maintain order in the rental market.
Minimum property standards
Properties intended for rent must meet minimum quality standards. This includes, m.in, cleanliness, adequate equipment, access to basic utilities such as water and electricity, and basic security.
Rental time limits
In some regions of Montenegro, there may be limits on the maximum number of days a property can be rented out per year. This is to prevent residential districts from being transformed into strictly tourist zones.
Noise regulations
Owners are responsible for complying with noise regulations. Tourists renting a property should be provided with the rules regarding quiet hours and maintaining order in the area, especially in residential areas.
Cancellation and reservation policy
The regulations require owners to clearly define the rules for bookings, cancellations and refunds. These terms and conditions should be transparent to guests to avoid disputes.
Security and protection of personal data
Owners must ensure the safety of tourists, m.in. by installing fire extinguishers, smoke detectors or first aid kits. In addition, they are obliged to protect the personal data of visitors that is processed during the registration process.
Penalties for non-compliance
Failure to comply with local short-term rental laws in Montenegro can lead to serious financial and legal consequences. Property owners need to be aware of potential penalties in order to avoid problems and act within the law.
Financial penalties
The most common form of sanctions are fines. The amount of the fines depends on the type of offense, such as failure to register the property, failure to pay taxes, or failure to register guests in a timely manner. In some cases, fines can reach several thousand euros.
Rental ban
Landlords who grossly violate the regulations may be temporarily or permanently deprived of the right to rent out their property. This type of sanction is particularly used in the case of repeated violations of the regulations.
Enforcement of overdue taxes
The authorities may impose an obligation to pay the outstanding taxes with interest. Additionally, in the event of non-payment, enforcement procedures such as foreclosure may be initiated.
Inspection Checks
Tourist and tax inspectorates have the right to carry out inspections of short-term rented properties. Irregularities detected during inspections may lead to the imposition of penalties and the need to adapt the property to the applicable regulations.
Liability
In the event of negligence of duties that led to damage to guests (e.g. failure to properly secure the property), the owner may be held liable and ordered to pay compensation.
The Importance of Compliance for Short-Term Rentals in Montenegro
Short-term rentals in Montenegro offer great income potential for property owners, especially in popular tourist destinations. However, to operate legally and avoid fines, owners must comply with local laws. Registering your property, paying taxes, following rental rules, and ensuring the safety of tourists are crucial to success in this industry.
Understanding local regulations not only helps you avoid legal issues, but also builds tourist confidence and supports the long-term growth of the rental market. With the right knowledge and planning, short-term rentals can become a stable source of income in an increasingly competitive tourism environment.
