Croatia last month announced plans to introduce a real estate tax.
Finance Minister Marco Primorac shared some details of the upcoming tax reform and explained what prompted the government to introduce the new tax.
"The real estate market has moved in an undesirable direction.Real estate is not bought to solve housing problems, but primarily for investment, sometimes even for speculative reasons," said Primorac.
This has led to an increase in housing prices and the fact that more than 600,000 properties are either empty or used exclusively for short-term rentals.The purpose of this reform is to reduce the imbalance in the real estate market.Although this will not lead to a sharp decline in real estate prices, which would be undesirable, it will certainly be a signal," the minister said.
Primorac explained that the property tax will not apply to those who live in it themselves or rent it out for at least 10 months a year.
In addition, owners of real estate used in agriculture, manufacturing or non-productive activities will be exempt from paying tax.
The tax will be calculated depending on the status of the property on March 31 of each year.If the property is empty or for short-term rent, the tax will have to be paid.The system makes it easy to calculate and pay this tax.Those who do not have a long-term lease agreement as of March 31 will not be able to fulfill the rental requirement for 10 months by the end of the calendar year, and these persons will be taxed, the minister explained.
Fines ranging from 1,000 to 6,000 euros will be imposed for failure to provide the necessary data.
The state has established a tax range from 0.6 to 8 euros per square meter. How much to charge within this range will be decided by the local authorities.
Part of the income from tax collections will go to local budgets (80%), and the rest (20%) to the state budget.
The tax will be introduced on January 1, 2025, but local authorities will have until the end of February 2025 to make a decision on the tax rate.Primorac also raised the issue of income tax on renting an apartment.The tax burden for long-term rentals is currently about 8.4%, and for short-term rentals about 2%. In other words, short-term rentals are not taxed enough, and long-term rentals are significantly more.Primorac announced that the minimum tax threshold for short-term rentals will be increased.
Source: Croatia Week