Montenegro’s European Alliance plans to submit an amendment to the Value Added Tax Law that would cut VAT on accommodation in hospitality establishments to 7%, lawmaker Branislav Nenezić said at a news conference on 27 October 2026.
The initiative is intended to help tourism businesses partly offset higher wage costs that hotel operators and accommodation providers are expected to incur under the “Euro model”, Nenezić said. He added that a lower rate should help preserve the competitiveness of Montenegro’s tourism industry, which he called a “strategic sector” on which the wider economy relies.
Nenezić said Montenegro had the region’s highest VAT rate on tourist accommodation and that the proposed cut should help the country’s tourism businesses compete with regional rivals.
Boris Mugiša said Montenegro had one of the most competitive VAT rates on accommodation until a year and a half ago. He said the country’s road infrastructure and air connectivity worked against its tourism sector, making the tax rate one of its competitive tools.
The European Alliance had previously submitted an initiative to reduce VAT on tourist accommodation, but the parliamentary majority did not accept it. The new proposal has yet to be submitted to Parliament.
