Real estate taxation across the Balkan countries is diverse, reflecting each nation’s unique economic strategies and fiscal needs. These taxes are a significant revenue source for local governments and play a critical role in regulating property markets. Typically, taxation frameworks include recurrent property taxes, which are paid annually based on the property’s value, size, or type.

This article aims to provide an overview of real estate taxation in several Western Balkan countries, specifically Albania, North Macedonia, and Montenegro. It is designed to offer readers, including those considering relocation or investment, a comprehensive and insightful understanding of the personal income taxation and benefits available in each of these countries.

Overview of the Real Estate Taxation

Albania

Property Tax

Real estate tax is levied on buildings according to the type of activity of the business that owns the building and, therefore on the value of the building. It is calculated annually and expressed as a percentage of its value, adjusted by the usage of the building:

• Residential properties: 0.05% of the value of the property is taxed.
• Commercial Property: 0.2% of the value of the property.
• Incomplete building sites: when construction has not been completed on the due date appearing in the license. Taxed at 30% of the standard rate depending on whether the plot is to be considered residential or commercial.

This structure ensures that different uses of property are adequately taxed, incentivizing the timely completion of construction projects and ensuring property owners pay their fair share based on what function their asset serves.

To learn more about Albania click here.

Transfer Tax

The transfer of ownership of real estate in Albania, whether land or buildings, is taxed at 15% on the capital gain earned from the sale. This tax applies to the profit made by the seller, calculated as the difference between the property’s sale price and its original purchase price or acquisition cost.

North Macedonia

Property Tax

There is an annual property tax on owner-occupied properties that depends on their assessed value, including buildings and land. The standard tax rate is proportional, typically ranging between 0.1% and 0.2%. Various exemptions and reliefs are available, depending on the circumstances.

Starting January 1, 2022, the tax rate increases to three times the standard rate in two cases:

Properties left unused by the owner or unleased for more than six months in a year.

Agricultural land is not utilized for farming activities.

These increased rates are intended to discourage underutilization of property and promote more effective land and building use.

To learn more about North Macedonia click here.

Transfer Tax

A property transfer tax ranging from 2% to 4% is levied upon the transfer of real estate in North Macedonia. This is normally paid by the seller, whether a natural or juridical person. However, it could be that upon agreement by the parties, another arrangement, which could be the payment of such tax by the buyer, should be resorted to, or it could also be divided between both parties. This is so that flexibility in the process of transfer would answer to the needs of both parties.

 Montenegro

Property Tax

In Montenegro, real property tax is applied to immovable property (such as land, houses, or commercial buildings) based on its market value. The standard tax rate ranges from 0.25% to 1%, but it can go as high as 5% for specific types of properties, according to the Law on Real Estate Tax.

To read more about Montenegro, click here.

Transfer Tax

The real estate transfer tax is paid by the buyer upon purchasing a property. The tax is based on the market value of the property at the time of transfer, with a fixed rate of 3%.

Table: Real Estate Tax Rates

Why Consider Western Balkan Countries to Invest in Real Estate?

Albania

Foreign individuals or companies that invest in Albania can purchase land after completing their investment according to the construction permit. The investment must be worth at least three times the value of the land, or they should have bought or built properties worth more than three times the land’s price.

State properties larger than 500 m² can be leased to third parties for a symbolic fee of 1 euro per contract. This is done by the Council of Ministers when the winning bidder from a competition proposes activities on the property from a list of approved activities deemed strategic for the country’s development.

North Macedonia

In the Republic of North Macedonia, land within free zones can be leased long-term for up to 99 years at discounted rates. Investors enjoy exemptions from local municipal utility taxes and fees associated with land building permits. Additionally, there is free access to the natural gas, water, and sewage networks. The government also offers potential support for capital investments by providing a 10% return on investment costs for new machinery, equipment, or investments in buildings and land.

Montenegro

Montenegro’s tourism sector is growing, driven by its beautiful landscapes and historical sites, as well as its emerging status as a luxury travel destination. This creates investment opportunities in hospitality and real estate development. The real estate market is also growing, offering chances to invest in properties and development projects.

If you want to read more about investment opportunities in Montenegro, click here.

If you are considering Albania, North Macedonia, or Montenegro to live and/or conduct your business, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Albania. Please feel free to contact us.