Since the Croatian authorities in 2014 allowed citizens of non-EU countries to buy real estate not only as a legal entity, but also as an individual, there has been a steady increase in demand for it from Russians. This is facilitated by both the relatively low price of apartments and houses and a fairly liberal tax system. Property taxes in Croatia, of course, exist, but not for all types.
The most important advantage is the absence of annual contributions to the treasury for owners of city apartments that are used for permanent residence. They wanted to introduce such deductions in January 2018, but due to massive public protests, the decision was postponed indefinitely. In all other cases listed below, taxes will have to be paid by everyone without exception.
1. Tax on the purchase of secondary real estate (on the transfer of ownership)
It was lowered twice (last time in January 2019) and now amounts to only 3% of the market value of the property. Paid within three months from the date of conclusion of the purchase and sale transaction.
2.Tax when purchasing a new building
VAT of 22%, which, as a rule, is already included by the developer in the total cost of the property.
3.Tax when renting out real estate
Renting housing in Croatia is subject to a 12% tax on the amount of income received. Non-EU citizens cannot be landlords without forming a legal entity – a Croatian firm/company. In addition, the object must be classified as one of the categories of rental real estate, and it must have an energy certificate.
4.Tax on the sale of real estate
Equal to 20% of the difference in transaction amounts. Paid when the sale occurs in less than three years and at a higher price. Exceptions are made if the sale is a consequence of divorce/inheritance, or if the property was the permanent residence of the owner and his family members.
5. Tax on gift of real estate
It is charged at the rate of 4% of its market value minus debts and costs of acquiring ownership.
6.Vacation property tax
If residential property in Croatia is used for recreation only a few months a year (that is, its owner is not a resident of the country), then a tax of 0.7-3 euros per year per square meter of area is levied. The rate is set by local authorities.
7. Tax on country houses
A similar rate exists for country houses/cottages/villas and is determined by their location and condition.
8.Additional tax when registering real estate as a legal entity
The founder of a legal entity pays a fixed tax every year, the amount of which can reach 300 euros, as well as income tax in the amount of 20% of the annual profit.
Real estate taxes in Croatia also affect commercial real estate – including unused property (the amount depends on the area of the property and is determined by the authorities of a particular locality), undeveloped land plots that were originally allocated for construction, and agricultural land that has not been cultivated for more than one year (taken into account location and quality of land).
Due to the fact that the Croatian government is committed to bringing tax legislation into line with European Union standards, the types of real estate taxes and their rates may undergo changes in the foreseeable future.