A fifteen-day public debate on the draft Decision on Amendments to the Decision on Real Estate Tax, prepared by the Mayor's Administration, has been completed in Tivat. Željko Komnenović.
In this year's budget, the Municipality planned to generate revenue of 8,5 million euros from property tax collection.
Apart from terminological harmonization with the provisions of the new Law on Real Estate Tax, the most significant change that the proposal for a new act of the Tivat local government brings in relation to the existing Decision on Real Estate Tax is the reduction of the municipal corrective coefficient for determining the average market price per square meter of a residential building. This coefficient is reduced from 0,95 to 0,80, “in a situation where the administrative body responsible for statistics for the Municipality of Tivat does not publish a separate average market price per square meter of a newly built residential building”.
This, as stated in the explanation, is being done due to the need to mitigate the sudden increase in this tax liability for 2026.
According to the current Article 6b of the Law on Real Estate Tax, when a separate average market price per square meter of a newly built residential building is not published for a local government unit, the average market price per square meter in Montenegro may be corrected by a municipal coefficient ranging from 0,10 to 2. The same legal provision also stipulates that a municipality may determine the tax base based on a three-year average only if, according to the Administration's data, the average market price per square meter of real estate has increased by more than 20 percent compared to the previous year.
“Monstat, in a letter dated March 9, 2026, informed that no separate data on the average price of a new apartment is published for the Municipality of Tivat, but that Tivat is an integral part of the average price for the Coastal Region, which, according to preliminary data for 2025, is 2.412 euros, while the average price per square meter of a new apartment for Montenegro in 2025 is 2.200 euros. For 2025, the Municipality of Tivat, by applying Article 6b, paragraph 4 of the then applicable law, determined the tax base in the amount of 1.571,66 euros, as a three-year average price for 2022, 2023 and 2024. The relevant price for 2024 was taken as 1.844 euros, for 2023 as 1.532 euros and for 2022 as 1.339 euros, from which derived three-year average of 1.571,66 euros.
Based on the above data, the conditions for the re-application of Article 6b, paragraph 4 of the Law on Real Estate Tax have not been met for 2026, because the increase in the average price of a square meter of a new apartment for Montenegro in 2025 of 2.200 euros compared to the price in 2024 of 1.844 euros is approximately 19,31 percent, therefore not more than 20 percent. Therefore, the Municipality does not have the possibility to re-determine the tax base for 2026 according to the principle of a three-year average," explained the Secretariat for Finance.
They point out that under these conditions, maintaining the existing municipal corrective coefficient of 0,95 would lead to a significant increase in the tax base and, consequently, to a significant increase in the amount of real estate tax liability for citizens and businesses for 2026.
"Namely, by applying the three-year average for 2025 and the current coefficient of 0,95, the effective base for 2025 was 1.493,08 euros, while by applying the current coefficient of 0,95 to the 2025 price of 2.200 euros, the effective base for 2026 would be 2.090 euros, which represents an increase of approximately 39,98 percent. By reducing the municipal corrective coefficient from 0,95 to 0,80, the effective base for 2026 would be 1.760 euros, which would mitigate the growth compared to 2025 to approximately 17,88 percent," the Secretariat explained.
They remind that since 2022, the Municipality has been continuously taking measures to protect taxpayers from the sudden increase in the tax burden "caused by the accelerated growth of the average market price per square meter of a newly built apartment in Montenegro."
"In the observed period, the average price increased from 951 euros per square meter in 2020 to 2.200 in 2025, which represents a cumulative growth of as much as 131,33 percent."
According to the calculation stated in the explanatory memorandum of the proposal, after the adoption of these changes, the annual amount of real estate tax for an average apartment in Tivat (a 51 square meter apartment in zone IIIa, 10 years old, with a quality coefficient of 1,09 and a tax rate of 0,25 percent) for this year will amount to 242,15 euros, compared to last year's 205,42 euros.
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