The impact of new laws on Croatia’s family accommodation sector

As Croatia ushers in new property tax regulations, the landscape for homeowners and landlords is rapidly changing.

While the new taxes aim to bring clarity and fairness to the market, they also present fresh challenges, particularly for those offering family accommodation.

Apart from the concerns regarding foreign property owners, there is growing unease among individuals who are forced to rent out even their own homes to cope with rising costs, Večernji list said.

Additionally, there is the issue of accommodation categorisation, which necessitates inspections to ensure that landlords adhere to the assigned rating, or “star” classification.

From the beginning of the new year, a property tax will be introduced in Croatia, altering the situation for apartment owners.

This tax will not apply to properties that are either lived in by the owner or rented out for at least nine months of the year.

Furthermore, the flat-rate tourism tax in its current form will be abolished.

Barbara Marković, President of the Croatian Family Accommodation Association, commented that the new tax was expected, but there are other challenges that have made

“There’s always something new; we’re constantly being bombarded and criticised. The property tax isn’t surprising—it was announced and anticipated. However, every hit to family accommodation is a new blow,” she said on HRT’s Studio 4.

Marković revealed that landlords are advocating for the flat-rate tax to remain within the realm of family accommodation, separate from commercial accommodation, which they consider crucial.

“Let’s maintain family accommodation as it is, while commercial accommodation should be subject to taxes, the establishment of businesses, and trade registration,” Marković explained, noting that some apartments fall under family accommodation, while others are considered commercial.

“If a lady rents out a small apartment she inherited from her grandmother, that could be regarded as family accommodation. However, if you have a building with 10 apartments rented out to tourists, that’s commercial accommodation,” she clarified.

Marković highlighted a significant issue with foreigners purchasing properties in Croatia, presenting them as holiday homes, registering their guests as friends, and thus evading tax obligations.

She believes the new tax should help clarify the market situation. “Some things will be sorted out, but there may also be additional burdens on people who shouldn’t be affected. That’s why we’re discussing with the Ministry the possibility of keeping family accommodation under the flat-rate tax,” she stated.

She is also concerned about individuals who are compelled to rent out the properties they live in to survive the rising costs, as well as the categorisation of accommodation, which requires inspection to ensure compliance with the assigned star rating.

“We are talking with them about increasing inspections because it seems to me that those working illegally are more protected than those who are legal and pay all their dues. These inspections should be stricter,” the Association President urged.

To make a profit from apartments, Marković revealed, a minimum occupancy of 13 weeks is necessary.

She is also worried about the deteriorating infrastructure and the “unrealistic” price reductions that desperate landlords are offering to attract guests, which could draw a different type of clientele.

“We lack sufficient parking, there are places where water and electricity shortages occur, and at the end of the day, the quality of local life is diminishing. That’s why we advocate for family accommodation, because in my view, it doesn’t degrade the quality of local life. Commercial accommodation, however, is a different story,” she concluded.