Tax incentives for high-category hotels

Legal basis

Property tax rules; Law on Spatial Planning (2025); VAT law

Applies to

Four- and five-star hotels; all accommodation and F&B for the VAT rate

The rules

What the investor gets

• From 2026, tax incentives for digital nomads and strategic investors that reduce operating costs by up to 30%

How it works in practice

These incentives reward the top of the market. Every accommodation and food business benefits from the reduced VAT rate, but the property tax and construction reliefs apply only to four- and five-star hotels, and the larger ones only to five stars. They suit developers building or repositioning a high-category hotel in a location the state treats as a priority for tourism, and owners of older hotels deciding whether an upgrade will pay back.

A developer choosing between a four-star and a five-star build on the same plot can put a value on the difference. At five stars, supplies for construction are exempt from import VAT and no municipal construction contributions are due, which lowers the capital cost before opening. Once trading in a priority tourist location, the annual property tax can be cut by up to 70% for five stars against up to 30% for four. The higher cost of five-star finishes and staffing should be weighed against both savings, and against the room rates each category can command.

Confirm with the municipality whether the site lies in a priority tourist location and what reduction it will actually grant, since the figures are caps rather than automatic rates. Check how the import VAT exemption is claimed, which supplies count as construction supplies, and at what point the hotel must hold its five-star categorisation for the reliefs to stick. On VAT, remember that alcoholic, sugared and carbonated drinks and coffee stay at the standard rate, so the food and beverage mix changes the blended rate a hotel pays.

These reliefs work alongside the land routes rather than instead of them: a five-star resort on leased coastal land, or a four-star hotel in a northern Tourism Development Zone, can still claim them. The same star rating also decides access to the condo-hotel model. The guide also refers to new tax incentives for strategic investors from 2026 without setting out their terms, so ask the Montenegrin Investment Agency what applies to your project before building it into a model.

This is a summary of the rules as the guide describes them, not tax or legal advice. Confirm current terms with the Ministry of Tourism, the Montenegrin Investment Agency or a local adviser before relying on them.

Where it could apply

Open opportunities where this instrument is likely to be relevant. Eligibility depends on the final project, so treat these as starting points.

OPP-HN-03 · Herceg Novi

Herceg Novi: Sutorina–Pećine coastal hotel and berths

CoastalPlanning set

Area

12,019 m²

Beds

75

Berths

25

OPP-HN-01 · Herceg Novi

Herceg Novi: Rt Ograda–Žanjic, Luštica

CoastalPlanning set

Area

14,822 m²

OPP-ZB-02 · Žabljak

Žabljak mountain hospitality cluster

NorthernMountainPlanning set

Area

37,794 m²

Altitude

1,456 m

Beds

300