- Montenegro’s tourism sector is struggling due to a new tax rule increasing VAT on hotel stays from 7 to 15 percent starting January 2025.
- The VAT increase was approved despite warnings from economists about severe impacts on the sector, which contributes about 30 percent to the country’s GDP.
- The higher VAT rate makes Montenegro less attractive compared to neighboring countries with lower rates.
- Approximately twenty hotels reclassified themselves as private accommodations to avoid the higher VAT, maintaining similar service levels.
- Private accommodations benefit from more favorable tax treatment and may not pay VAT if annual revenue is below 30,000 euros.
- Some hotel owners creatively divided operations among family members to stay under the VAT threshold.
- This reclassification results in significant revenue loss for the state.
- The issue highlights a larger problem of unregistered accommodations, with Montenegro losing an estimated 86 million euros in 2025.
- Many unregistered units are listed on platforms like Airbnb and Booking.com but are not reported to authorities.
- Efforts to monitor and control these units remain weak, and attempts to collaborate with booking platforms have been unsuccessful.
Source: travelandtourworld.be
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
