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Croatia: Taxes and Costs

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Effective tax rates are
moderate in Croatia

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	10.5%	10.5%	10.5%
Click here to see a worked example
Source:			Disclaimer

INDIVIDUAL TAXATION

Non-resident individuals are taxed on their Croatian-sourced income. Married couples are taxed separately.

INCOME TAX

Personal allowances extended to both domestic and foreign taxpayers are not applicable to property income.

Rental Income Tax

Rental income from property is taxed at 15%, with allowed deductions fixed at 30% of the incurred expenses. (If the property is rented to travelers and tourists, the allowed deduction is equivalent to 50% of expenses.)

Local Surcharges

Surtax is levied on top of the tax due from taxpayers by local authorities at the following rates:

• Maximum of 10% for communities
• Maximum of 12% for cities with the population of less than 30,000
• Maximum of 15% for cities with the population of more than 30,000
• Maximum of 30% for the capital city, Zagreb

CAPITAL GAINS TAX

Capital gains from the sale of immovable property are subject to a flat withholding tax rate of 25%. Allowable deductions are the acquisition cost of the property as adjusted by inflation and the fees incurred in the transfer.

The sale of real estate is exempt from capital gains tax if (1) the sale took place more than three years from the date of purchase, or (2) if the property was used as the residence of the taxpayer and/or dependent members of the taxpayer’s family, (3) or the sale was directly connected with a divorce or an inheritance.

VALUE ADDED TAX (VAT)

VAT is waived on the leasing of housing premises.

PROPERTY TAX

Tax on Holiday Homes

Tax on holiday homes are payable by owners of holiday homes in Croatia. The tax is levied on the useful area of the property. The tax is HRK5 (€0.70) to HRK15 (€2) per square meter, depending on the municipality or town where the property is located.

CORPORATE TAXATION

INCOME TAX

Rental income, excluding deductible expenses, is considered as ordinary taxable income and is taxed at 20%. Deductible expenses include investment, maintenance of buildings, management services, leases and rentals, depreciation costs, and financing costs such as interest payments. A 15% withholding tax is also levied on interest payments.

Depreciation is allowable as a business expense for both income and profit tax. Straight line depreciation is allowed on most long-life assets. Buildings command an annual depreciation rate ranging from 2.5% (regular depreciation rate) to 10% (accelerated depreciation), and a depreciation period from 40 to 10 years, respectively.

CAPITAL GAINS
Capital gains are considered as ordinary business profits and are subject to regular profit tax of 20% on the net gains. The acquisition cost of the property as adjusted by inflation and the fees incurred in the transfer are deductible.

Croatia - more data and information

• Guide to buying houses and registering property sales in Croatia

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