Montenegro is preparing a significant expansion of state oversight over the rapidly growing online accommodation market, as authorities move forward with a new VAT law that would require digital rental platforms to provide transaction data related to short-term accommodation bookings.
The draft legislation, currently under public consultation, represents one of the country’s most important attempts so far to formalize and monitor the expanding online tourism and private accommodation economy that has grown rapidly alongside Montenegro’s tourism boom.
Under the proposed framework, both domestic and foreign online platforms involved in accommodation rentals would be required to maintain records of transactions and provide relevant data to state authorities. The initiative is primarily aimed at improving tax compliance, reducing informal activity and increasing transparency within Montenegro’s tourism-related services sector.
The proposal reflects a broader trend visible across Europe, where governments are intensifying regulatory scrutiny of short-term rental platforms amid concerns over tax collection, informal accommodation activity and the rapid expansion of platform-based tourism economies.
For Montenegro, the issue carries particular economic importance because tourism remains one of the country’s largest economic sectors and a major contributor to GDP, employment and foreign currency inflows.
Over the past decade, online booking platforms fundamentally transformed Montenegro’s accommodation market. Private apartments, villas and short-term rental units increasingly compete directly with traditional hotel capacity, particularly along the Adriatic coast where tourism-driven real estate investment accelerated sharply.
However, the rapid expansion of platform-based accommodation also created significant regulatory gaps.
Authorities have long faced challenges around monitoring actual occupancy levels, tax collection and registration compliance within the private rental market. A substantial portion of short-term accommodation activity has historically operated partially or fully outside formal reporting systems, limiting visibility into tourism-related revenues and creating unequal competitive conditions between registered hotel operators and informal rental providers.
The proposed VAT-law changes are therefore part of a wider effort to strengthen fiscal oversight and align Montenegro’s tourism economy more closely with European regulatory standards.
For the state, direct access to platform-related transaction data could materially improve tax administration efficiency, particularly during peak tourism seasons when private accommodation activity surges across coastal municipalities such as Budva, Kotor, Tivat, Herceg Novi and Bar.
The measure could also have implications for Montenegro’s real estate sector.
Short-term rentals have become deeply integrated into coastal property investment economics, especially in premium tourism destinations where apartment purchases are often justified through seasonal rental income expectations. Greater reporting transparency and tighter tax compliance could gradually alter yield calculations for certain investor segments, particularly smaller private operators relying on partially informal rental activity.
At the same time, institutionalization of the sector may ultimately strengthen the long-term credibility of Montenegro’s tourism and real estate markets.
International investors, banks and hospitality operators increasingly prioritize transparent regulatory frameworks, formalized tourism statistics and traceable revenue structures when assessing hospitality-linked assets. More comprehensive accommodation reporting could therefore improve the country’s broader investment profile over time.
The proposed law also illustrates how Montenegro’s digital economy is entering a new regulatory phase.
Governments across Europe are increasingly attempting to adapt tax systems to platform-based business models that often operate across borders and outside traditional regulatory structures. Digital accommodation platforms have become a central focus because of their direct intersection with tourism revenues, local taxation and housing-market dynamics.
For Montenegro, balancing stricter oversight with continued tourism competitiveness will remain critical.
Tourism growth continues to drive large parts of the national economy, while private accommodation capacity remains essential during peak summer demand periods. Policymakers therefore face the challenge of increasing transparency and fiscal compliance without undermining the flexibility and investment attractiveness that helped fuel the country’s tourism expansion over the past decade.
The public consultation process around the VAT-law amendments is expected to continue in the coming weeks as authorities gather feedback from tourism operators, platform participants and business associations before moving toward formal adoption of the legislation.
