Croatian Real Estate Taxes
Property Tax
In general, you should allow 10% on top of the purchase price to cover associated taxes and fees. There are no annual property taxes on private dwellings (except if the property is registered as a holiday home), but purchase tax is levied when buying real estate. Payable by the buyer, this tax is usually 5%. (The word “usually” is applicable, as there may be a big difference if you’re buying a new home off a builder. It’s something to watch out for.)
For a property built before Dec. 31, 1997, you’ll pay 5% purchase tax. The same rate applies to properties built after that date that change hands as a private sale. However, if you buy a property built after Dec. 31, 1997, from a developer or self-employed builder, they may charge you an additional 22% VAT (sales tax) on the costs of building the property. The builder usually absorbs this cost into the quoted price, but not always. On top of that, you’d still have to pay the usual 5% real estate transfer tax, calculated on the land value portion of the sale. If you’re buying as an individual rather than through a company, make sure you’re aware of whether or not the price of a new-build property is inclusive of sales tax.
Capital Gains Tax
You will pay no capital gains tax on the sale of your Croatian property if you meet one of the following requirements:
- You occupied the real estate while you owned it
- You have held the property for more than three years
- You sell the property to your spouse or to a member of your immediate family.
If a property in private ownership gets sold within three years, capital gains tax is levied at 35%. For Croatian corporations, standard corporate income tax is paid at a single rate of 20%. This is reduced to 10% (or 0% in some cases) for companies operating in free zones.
Rental Income Tax
If you receive rental earnings from your Croatian property, you will be subject to Croatian income tax. The corporate income tax rate is 20% (or 10% or even 0% for companies operating in the free zones). For individuals, the rate is 25%.
Taxation on Vacation Homes
Vacation-homeowners are subject to an annual tax of between 5 and 15 kuna on each square meter of usable floor area. How much you are levied depends on the municipality.