Montenegro’s property tax, a key source of local government revenue, could become a significant burden for property owners and potential buyers, particularly in rural areas and the agricultural sector. Proposed amendments to the law would give municipalities greater discretion to set tax relief levels, potentially increasing or decreasing the reductions currently capped at 70%.
President Jakov Milatović returned the amendments to Parliament on August 1, citing constitutional violations, legal uncertainty, and the potential loss of tax relief for approximately 22,000 registered farmers.
Veselin Dragaš, Vice President of the Chamber of Commerce’s Real Estate Group, warned that higher taxes could reduce interest in purchasing agricultural land, depress prices of properties used for farming, and force some producers to sell their land if municipal taxes rise sharply. He stressed that agriculture is sensitive to cost increases, and adding high property taxes could deter investment.
Currently, registered farmers receive a 70% tax reduction. The amendments would allow municipalities to adjust reductions up to 90% or below 70%, potentially creating unequal treatment between regions and raising concerns about unfair competition.
Dragaš also highlighted that a sharp increase in rural property taxes could push residents to sell their properties, leading to an oversupply and falling prices in these areas. He emphasized the need for careful adjustments to ensure property tax increases do not disproportionately impact citizens’ budgets or discourage investment.
The presidential office noted that certain provisions, particularly allowing municipalities to set tax relief levels independently, violate constitutional principles ensuring equal treatment, a unified economic space, and free market competition. Retroactive application of the law could further undermine legal certainty and negatively affect farmers who have already paid taxes under the current system.
