Montenegro drafts EU-style VAT rules for digital services, online platforms and short-term rentals

Montenegro’s move to reshape its VAT system comes as the country’s digital economy and tourism-driven short-term rentals have expanded faster than the regulatory framework around them. By drafting a new VAT law aligned with EU rules for digital services, cross-border e-commerce and online platforms, the Government is signaling that platform-based business models will face tighter supervision—and potentially different tax obligations—well before formal EU accession.

New VAT treatment models for digital intermediaries

The draft introduces entirely new VAT treatment approaches for digital intermediaries such as Airbnb, Booking and online marketplaces. Under the proposed framework, platforms that facilitate accommodation rentals, transport services or online commercial transactions could, in certain cases, be treated as if they were the direct supplier of services. That would make them responsible for calculating and collecting VAT in Montenegro.

The shift reflects a broader European effort to close regulatory and tax gaps created by the growth of digital business models. For Montenegro, it carries particular weight because tourism-linked short-term rentals and informal online commerce have become major components of the domestic economy in recent years.

EU-style focus on electronic services and cross-border trade

The legislation places strong emphasis on electronic services, online sales, cross-border internet trade, cloud infrastructure services and digital platforms. It also introduces a €10,000 threshold for certain cross-border digital services and e-commerce activities—an approach that mirrors mechanisms already used within the EU VAT system.

In practical terms, this means Montenegro is beginning to operationally integrate parts of the European VAT architecture even before it formally joins the EU.

Potential knock-on effects for short-term rental economics

For Montenegro’s accommodation market, the changes could materially alter the economics of short-term rentals. The country has seen an explosion of apartment-based tourism accommodation, much of it booked through international platforms. The draft indicates authorities want greater visibility over these transaction flows, improve fiscal collection efficiency and reduce informality tied to private accommodation services.

Broader real estate provisions tied to construction and property activity

Beyond digital commerce, the proposed VAT reform expands regulation of real estate transactions and construction land. New rules are expected to define VAT treatment for construction land sales, newly built apartments, property-linked transactions and VAT deduction mechanisms connected to specific real estate activities.

This matters because real estate and tourism-related construction have been among the dominant drivers of Montenegro’s GDP growth and foreign investment inflows in recent years.

A sensitive moment amid tighter financial controls

The draft arrives at a time when Montenegro has already introduced tighter anti-money laundering requirements: property transactions above €10,000 must be processed exclusively through domestic banking channels. Industry representatives have warned that stricter financial and regulatory requirements could slow transaction activity—especially for non-resident buyers who may face difficulties opening local bank accounts.

Implications for IT firms: more legitimacy, more compliance

For Montenegro’s IT and digital services sector, the reforms point to both increased regulation and increased legitimacy. Cloud services, AI-linked services, SaaS models and cross-border digital providers are being formally integrated into the domestic tax framework. That could create a more predictable environment for international businesses operating in Montenegro.

At the same time, compliance requirements are likely to rise for smaller digital firms and freelancers that previously operated in less clearly regulated spaces.

EU accession dynamics increasingly shape fiscal policy

The draft also illustrates how EU accession dynamics are influencing Montenegro’s fiscal architecture. Much of its terminology and structure mirrors European VAT concepts used across the single market—particularly around platform liability, taxation of digital services and destination-based VAT principles.

This alignment is strategically important because future participation in the EU market will require interoperability with European tax systems, especially in digital commerce and cross-border services.

What investors should watch next

Overall, investors are likely to view the reform as part of a broader transition toward tighter European-style supervision of digital economy activity and platform-based transactions. While increased tax transparency may improve fiscal revenues and reduce informal activity over time, the transition period could create operational pressure for tourism operators, small online merchants and digital entrepreneurs—particularly those operating through platforms without established VAT structures.

The Government’s draft suggests that businesses may need to adjust quickly as platform reporting expectations evolve; at minimum, it marks an end to some of the lighter-touch conditions that characterized parts of Montenegro’s tourism and digital economy over roughly the past decade.