Turnover Tax of Used Vehicles

The Parliament of Montenegro has adopted the Law on the Turnover Tax  of Used Motor Vehicles, Vessels, Aircraft and Flying Devices (“Official Gazette of Montenegro”, no. 127/25 of 31.10.2025), introducing a new, clearer and more comprehensive system of taxation on the turnover and acquisition of these categories of property. This law is significant both for natural persons and legal entities that purchase or otherwise acquire used property that is not subject to VAT.

What is taxed under the new turnover tax law?

The law applies to all forms of acquisition of used motor vehicles, vessels, aircraft and flying devices, except where VAT payment is required. Any vehicle or vessel for which the previous owner did not have the right to deduct input VAT is considered used.

The taxpayer is always the buyer, i.e. the acquirer.

Turnover tax rate and deadlines

The tax rate is prescribed very clearly:

• 5% – regular tax rate
• 2.5% – reduced rate for taxpayers who pay the tax within 180 days from the beginning of the law’s application

The tax obligation arises at the moment of purchase or other form of acquisition, and the taxpayer is required to submit a request to the tax authority for tax assessment within 15 days.

Without proof of tax payment, it is not possible to register the vehicle, vessel, aircraft or flying device.

Tax base and verification

The tax base is the market value of the property at the moment the tax obligation arises. The tax authority has the right to verify the declared value and—if it is not realistic—to determine it based on an assessment or comparative data.

Tax exemptions

The law provides several categories of tax exemptions, primarily in cases of:

• acquisition between first-line family members,
• division of joint property due to termination of marriage or common-law union,
• receipt of donations by state authorities, public institutions and other budget beneficiaries,
• transfer of property in probate proceedings.

Obligations of courts, notaries and technical services

Entities involved in notarization, registration or technical inspections are required to submit to the tax authority all acts related to changes in ownership within 15 days.

This represents a significant step toward greater transparency and more complete control of property turnover.

Penal provisions

The law includes strict penalties for:

• failure to submit a request for tax assessment,
• failure to pay tax within the prescribed period,
• failure to provide the required documentation to the tax authority.

Fines range from €100 to €11,000, depending on the type of entity and the severity of the violation.

Deadlines for adopting bylaws

Bylaws for the implementation of the law must be adopted within 60 days of the law’s entry into force. This enables the full operational application of the law in practice.

Upon the start of application of the new law, the previous law from 2003/2014/2017 ceases to be valid.

The new law represents a comprehensive reform of the taxation system for the turnover of used vehicles and other means of transport. It provides:

• a clearer definition of the taxpayer and the tax base,
• simpler procedures,
• precise deadlines,
• stricter control and accountability of all participants in the process.

For all buyers and sellers of used property, as well as legal entities involved in the registration process, it is important to become familiar with the new obligations and deadlines in order to avoid unwanted sanctions and ensure timely fulfillment of obligations.