Croatia plans to shift its tax burden from individuals to property to combat rising real estate prices and rents, as stated by Finance Minister Marko Primorac. With 600,000 properties either vacant or short-term rentals, young residents struggle to find long-term housing, particularly in Adriatic tourist towns. The new legislation aims to encourage the return of Croats from abroad, digitize the tax system, and improve tax discipline. Apartments will be taxed, while agricultural and service properties will be exempt. The proposed tax, ranging from 0.6 to 8.0 euros per square meter, is set to take effect on January 1, 2025.
Croatia intends to shift its tax burden from individuals to property in an effort to address rising real estate prices and rents, according to Finance Minister Marko Primorac. He noted that the country has 600,000 properties that are either vacant or available only for short-term rental, making it challenging for younger residents to find long-term housing, especially in coastal tourist towns along the Adriatic.
During a meeting of Croatia's Economic and Social Council, Primorac stated that new legislation would also aim to encourage Croats living abroad to return, digitize the tax system, and enhance tax discipline. He emphasized that housing has become unaffordable for many because real estate has been viewed as a secure investment, and the influx of foreign buyers attracted by low taxes has created market imbalances.
Primorac expressed hope for establishing stable and predictable policies for real estate management that would promote long-term rentals. He mentioned that apartments would primarily be subject to the new taxes, while properties used for agriculture, production, and services would be exempt. Additionally, owners of properties rented for at least ten months a year would not have to pay taxes.
The tax administration has proposed a tax range of 0.6 to 8.0 euros per square meter, and Primorac indicated that the new tax legislation is expected to take effect on January 1, 2025, pending parliamentary approval.
In conclusion, Croatia's tax policy shift aims to improve housing availability for younger residents and encourage long-term rentals, potentially stabilizing the real estate market while attracting expatriates back to the country.
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