Montenegro is preparing one of the most significant tax reforms in recent years through a completely new VAT Law designed to align the country with European Union legislation ahead of eventual accession. The proposed framework introduces EU-style rules for digital platforms, online marketplaces, short-term accommodation providers and internet-based services, fundamentally changing how VAT is collected and monitored in the digital economy.
The reform reflects a broader trend across Europe, where governments are increasingly shifting tax collection responsibilities from individual sellers and service providers to the digital platforms that facilitate transactions. Under the proposed rules, online platforms involved in accommodation rentals, passenger transport and various digital services will face significantly expanded reporting and record-keeping obligations.
One of the most important changes concerns short-term accommodation platforms such as Airbnb, Booking.com and similar operators. These platforms will be required to maintain detailed transaction records and provide data to Montenegrin tax authorities. The information will allow authorities to verify whether VAT has been correctly calculated and whether property owners have exceeded thresholds that trigger additional tax obligations.
For Montenegro’s tourism sector, the implications could be substantial. Government estimates have long suggested that a significant portion of private accommodation activity remains outside the formal tax system. By gaining direct access to platform transaction data, authorities will be able to compare reported income with actual bookings and revenues, reducing opportunities for undeclared activity.
The legislation also introduces a much broader framework for cross-border digital services and e-commerce. The place of taxation for property-related services will be determined by the location of the property itself rather than the location of the platform or customer, bringing Montenegro into line with EU VAT directives. This is particularly relevant for international booking platforms and digital intermediaries operating across multiple jurisdictions.
Another major element is the future integration of Montenegro’s tax administration with EU information systems. Upon EU accession, tax authorities will gain access to cross-border VAT information-sharing networks, enabling more effective monitoring of transactions involving businesses, platforms and consumers throughout the European market.
Importantly, the reform does not alter Montenegro’s existing VAT rates. The current rates of 0%, 7%, 15% and 21% remain unchanged. Likewise, the VAT registration threshold of €30,000 in annual turnover is expected to remain in place, meaning that many small accommodation providers will still remain outside the VAT system itself, although their activities will become far more transparent to tax authorities.
From an investment perspective, the reform represents more than a tax adjustment. It is part of a wider effort to harmonize Montenegro’s regulatory framework with EU standards, particularly in digital services, platform economies and cross-border commerce. For international investors, tourism operators and digital businesses, regulatory convergence generally reduces compliance uncertainty and strengthens confidence in the country’s accession trajectory.
The broader economic significance lies in the formalization of the digital economy. As online platforms increasingly dominate tourism bookings, e-commerce transactions and digital services, governments across Europe are seeking to ensure that tax collection mechanisms evolve alongside technological change. Montenegro’s new VAT law signals that the country intends to follow the same path, bringing digital platforms more directly into the tax system while strengthening oversight of online economic activity.
