Is Croatia threatened with the closure of a large number of restaurants and cafes?

by croatiaweek
November 17, 2022
in News

Majda Mikulandra, Martina Bienenfeld, Tomislav Tomašević, Franz Letica, Dalibor Kratohvil (Photo credit: Ivan Mihelčić)

The legalization of tips brings an additional HRK 2 billion to the local economy

Zagreb’s Esplanade Hotel hosted the Forum of Zagreb Restaurateurs, where, along with respected experts and representatives of state institutions and institutions, about two hundred restaurateurs participated in order to find out more information about issues crucial to the hospitality sector.

The sponsors of the event were the Independent Association of Restaurateurs, the Croatian Chamber of Trades and Crafts, the National Association of Restaurateurs and the Zagreb Chamber of Crafts. The award-winning Zagreb restaurateurs (Ivan Oreški, Zvonko Barišić, Jasenka Ivić, Brankica Jovanoska, Zdravko Crnjak and Marina Krpan) who showed great affection and dedication during their many years of business in the hospitality industry, were applauded.

The lectures, panel and press conference attended by the Mayor of the City of Zagreb, Mr. Tomislav Tomašević, and the Director of the Tourist Board of the City of Zagreb, Martina Bienenfeld, opened many very topical topics, such as the non-taxable treatment of tips, the issue of outdoor terraces, changes brought about by the euro, rapidly growing inflation, galloping energy prices and expectations from this year’s Advent.

Taxes and death are impossible to avoid, but whether it is possible to curb the tax policy that is being prepared, and related to the concept of tips in our country, is one of the questions that the panelists tried to find an answer to: Ms. Svjetlana Maleković, the Mayor’s delegate and head of the Department for Incentives development of crafts and entrepreneurship and monitoring of the situation in the economy of the City Office for Economy, Environmental Sustainability and Strategic Planning, President of the Croatian Chamber of Trades and Crafts, Mr. Dalibor Kratohvil, Goran Rihelj, editor of the portal hrturizam, Jurica Protić, vice-president of the Independent Association of Restaurateurs and Petar Lovrić, owner of the agency for employment Kadus d.o.o.

Dalibor Kratohvil (Photo credit: Ivan Mihelčić)

The tipping problem has been trying to be legalized since 2019, and lately there are indications that it could be solved during 2023. Namely, when paying by card, only a small number of restaurateurs have the option of cashless payment. A tip is treated the same as a salary, income tax and contributions must be paid, and if paid by card, 50% of the amount goes to the state.

Franz Letica (Photo credit: Ivan Mihelčić)

A proposal was sent to the state authorities that 10% of the amount per account be tax-free annually, up to HRK 25,000 per employee, and above that only income tax without contributions would be paid. In addition to the problem of tips, the problem of retaining the current staff is indirectly related, and if the proposed legal changes on tips for employees were adopted, it would mean higher incomes.

Ivan Tadić (Photo credit: Ivan Mihelčić)

There are three benefits when it comes to tips: increased income of employees in the hospitality industry, motivated workforce and better service, and benefit for the entire economy through personal consumption. Setting a threshold of 10% tip per bill could even represent up to HRK 2 billion in additional income on an annual basis in Croatia, which would flow through the pockets of our employees into the domestic economy.

Martina Bienenfeld (Photo credit: Ivan Mihelčić)

Digitization in the hospitality industry through the National Recovery and Resilience Plan is one of the bright spots for the recovery of this industry.

Until now, grants in the sector could not be withdrawn, because tourism was considered a developed economic branch, but now, for the first time in history, several billion kuna have been approved to be invested in tourism, with the aim of digitization and green transition.

Jurica Protić (Photo credit: Ivan Mihelčić)

The company Metro is a good example of positive practice. They recognized the great scope for digitization in the hospitality industry and gathered representatives of the Croatian Chamber of Commerce, Croatian Chamber of Trades and Crafts, the Zagreb Catering Association and the National and Independent Catering Association and want to offer the Ministry of Tourism and Sports projects through which caterers can withdraw their funds.

Also unavoidable is the fact that restaurateurs have experienced the first and only doubling of VAT in the history of Croatia in the last six years, from 13 to 25%, and two years of the pandemic and an earthquake, as well as the fact that they have been living in an unprecedented energy crisis for the last year and also the global economic crisis.

Matea Dobrilović (Photo credit: Ivan Mihelčić)

If we speak more concretely, a 60 to 100% increase in food input costs, a 400% increase in the price of energy, one of the highest tax burdens in the world and a burning labor shortage have made their business unsustainable. In order to start solving at least some of the mentioned problems, the organizers of the Forum have prepared conclusions, which they will send to local and state authorities, because only with their support and cooperation can things be moved from the deadlock.

Svjetlana Maleković, Goran Rihelj, Petar Lovrić (Photo credit: Ivan Mihelčić)

The fact that restaurateurs have experienced the first and only doubling of VAT in the history of our country in the last six years, from 13 to 25%, and there are also two years of pandemics and an earthquake, as well as the fact that they have been living in an unprecedented energy crisis for the last year, are also unavoidable. and the economic global crisis. If we speak more concretely, a 60 to 100% increase in food input costs, a 400% increase in the price of energy, one of the highest tax burdens in the world and a burning labor shortage have made their business unsustainable.

Svjetlana Maleković Photo credit: Ivan Mihelčić)

The following conclusions will be sent to the City of Zagreb:

Inclusion of representatives of restaurateurs in the working group for the management of public areas for economic purposes as well as in all other matters important for the business of Zagreb restaurateurs.

(Photo credit: Ivan Mihelčić)

Consideration of objections, which the association of caterers will submit in consultation with the public on the proposal to increase the price of parking spaces for the installation of open terraces.

Creation of a strategy for the recovery and development of tourism in the City of Zagreb, which will, among other things, foresee the dynamics of changes in the business framework in the sector, with the inclusion, among others, of representatives of the hospitality profession.

(Photo credit: Ivan Mihelčić)

And to the state bodies of the Republic of Croatia:

Ensuring acceptable gas prices for entrepreneurs.

Tax relief and equalization of the VAT rate on all catering services at 13% as the only long-term quality measure for the recovery, competitiveness and growth of the sector.

(Photo credit: Ivan Mihelčić)

Tax-free treatment of tips.

Abolition of the obligation to keep material bookkeeping.

Securing financial resources within the NPOO for digitalization and green transition of food and beverage preparation and serving activities (NKD 56).