For short-term landlords
Croatian government wants to introduce property tax
As part of a tax reform, the conservative Croatian government wants to introduce a property tax next year. According to the government proposal, the amount of the tax will be between 60 cents and eight euros per square meter, as Finance Minister Marko Primorac announced on Monday, according to media reports. In addition, the flat-rate tax for vacation landlords will be increased.
The Croatian government wants to use the tax to curb short-term rentals, among other things. "Unfortunately, we are confronted with the situation that due to the under-taxation of real estate and rental income, some citizens are focusing on short-term rentals," said Primorac on Monday evening on private broadcaster RTL, referring to the negative consequences on the affordability and availability of real estate.
Minister: Too many investments in rental apartments
He also referred to the effects on the economy: "Instead of investing in innovative companies, new technologies and modernization, investments are being made in rental apartments," said the finance minister.
The property tax will primarily affect apartments for short-term tourist rentals and vacant properties, unless they are uninhabitable. The new tax will also replace the previous tax on vacation homes.
Residential buildings that are permanently occupied or rented out on a long-term basis will not be taxed. The amount of property tax will be determined by the respective municipalities. They will receive 80 percent of the revenue from the property tax, while the remaining 20 percent will flow into the state budget.
For vacation rental companies, there will also be an increase in the annual flat-rate tax, which will be levied per bed offered. The flat rate will be determined on the basis of the tourism development index and will amount to between 150 and 300 euros per bed in the most developed tourist areas.
Small landlords concerned about family businesses
The planned reform has been criticized by small landlords. They warn that a higher tax burden could spell the end for family-run vacation rentals. Currently, the annual flat rate is limited to 199 euros per bed, which some media reports have described as a relatively low level of taxation in view of the income generated during the tourist season.
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