New Croatian law to redefine holiday rentals

Big changes ahead for people renting out properties in Croatia

The Croatian Ministry of Tourism and Sport has launched a public consultation on proposed amendments to the Hospitality Industry Act, introducing significant changes for rental property operators.

Croatia currently has over 220,000 apartments and rooms available for rent in more than 125,000 properties, collectively providing more than 665,000 primary beds at the end of this past season.

As daily 24sata reports, the most notable change is the introduction of the term “host.”

Previously, all rental property owners were treated the same under the law, regardless of whether they rented a property in their primary residence, in a secondary location, or abroad. Now, however, a “host” is defined as someone who rents out accommodation in the same area where they are officially registered as a resident.

For example, someone could be considered a host if they own and let an apartment building on the other side of town, as long as they also live there.

This designation allows “hosts” to provide breakfast but does not apply to individuals renting flats in multi-dwelling buildings, even if they live in the same building. The aim is to discourage the conversion of residential properties into holiday rentals.

Under the new rules, “hosts” will be eligible for a more favourable tax rate than other rental operators.

This differentiation, intended to support genuine family-run rentals, aligns with new tax amendments for property and higher flat-rate taxation on rental income.

A second key change affects all rental property owners in multi-dwelling buildings, who will now require consent from 80% of other residents in the building before renting out their flats.

Even for current rentals, property owners have a five-year period to obtain neighbour approval; failing this, their rental permits will be automatically revoked.

The third update concerns the 15,000 properties still undergoing legalisation processes.

Their temporary operating permissions, originally set to expire in 2024, will be extended until the end of 2026.

The government recognises delays in the legalisation process and aims to minimise any disruption to the tourist season by providing this extension, 24sata said.