Real Estate Taxation in Croatia

As a foreign national if you are buying property in Croatia then you must be well versed with the real estate taxation laws of the country. Once you select the Croatia luxury villas for sale, hiring a qualified lawyer (if agency does not provide it) is a good idea to understand the property tax regime of Croatia which is a bit complex. As a buyer you pay Real Estate Transfer Tax of 3% of the market value of the property. For new built real estate sold by the company, Value Added Tax or VAT is 25% is paid when the property is sold, but it is paid by the company , you only have to to check is VAT included in listed price. Value of the corresponding land and costs of communal equipment is not taxable by VAT.

There is a tax to be paid by the owner of the property for Holiday Homes when a property is not used for permanent living but as a holiday home. Tax rate depends on the location and other factors. Capital Gains Tax is levied when a property is sold or gifted within three years after purchase. The tax rate is 25% on difference of sale price, if it is sold for same or lower price then there is no Capital Gains Tax.

There is an Annual Flat Rate Tax levied when letting properties to tourists or visitors. It is to be paid by the landlord who has a categorized property and is not a person liable to VAT. The amount of tax to be paid is determined by the tax administration. Tax on Self Employment Income is levied on a owner of real estates in Croatia if they sell more than three real estates in a span of five years. A resident is an individual in the Republic of Croatia who has a domicile or habitual residence or has no residence but is employed in the civil service of Croatia and receives a salary, same rules apply for foreigners who own property in Croatia.

For non residents in Croatia the tax is calculated on the total amount of self employment, property income, capital income and other incomes realized in Croatia. A non-resident is an individual in Croatia who has neither a domicile nor habitual residence in the Republic of Croatia, but earns an income which is taxed under the provisions of the Income Tax Act. Effective as of January 1, 2019 the real estate transfer tax (stamp duty) in Croatia was decreased from 4% to 3%. This is important for all the domestic and foreign buyers as from now on the total cost of buying a property in Croatia will be lower.

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Added: 15.03.2019.

Category: CROATIAN REAL ESTATE INFO

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