As part of a tax reform, the conservative Croatian government wants to introduce a real estate tax next year. According to the government proposal, the amount of the tax will be between 60 cents and eight euros per square meter, Finance Minister Marko Primorac announced on Monday, according to media reports. In addition, the flat-rate tax for holiday rental companies will be increased.
The Croatian government wants to use the tax to, among other things, curb short-term rentals. “Unfortunately, we are faced with the situation that due to the low taxation of real estate and rental income, some citizens have turned to short-term rentals,” Primorac said Monday evening on private broadcaster RTL, with an eye to the negative consequences. on the affordability and availability of housing.
Minister: Too much investment in rental apartments
He also referred to the effects on the economy: “Instead of investing in innovative companies, in new technologies, in modernization, investments are being made in rental apartments,” said the Finance Minister.
The property tax should apply mainly to apartments for short-term tourist rental and vacant properties, unless they are uninhabitable. The new tax will also replace the current tax on holiday homes.
Permanently occupied or long-term rented residential buildings are not taxed. The amount of the OZB is determined per municipality. They will receive 80 percent of the income from the property tax, while the remaining 20 percent will flow to the state budget.
For holiday rental companies, the annual tax rate per bed offered also increases. The fixed rate is based on the tourism development index and ranges from 150 to 300 euros per bed in the most developed tourist areas.
Small landlords worry about family businesses
Criticism of the planned reform has come from small landowners, who warn that a higher tax burden could mean the end of family holiday rentals. The annual flat rate is currently capped at €199 per bed, which some media reports describe as a relatively low tax considering the income during the tourist season.
Source: Krone
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