Guide to Property Taxes in Croatia
Tax Rate on Rental Income |
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| Monthly Income | €1,500 | €6,000 | €12,000 |
| Tax Rate | 8.4% | 8.4% | 8.4% |
Nonresident individuals are generally subject to Croatian income tax only on income derived from Croatian sources, including income from real estate located in Croatia. Individuals are generally taxed separately for income tax purposes.
Rental Income Tax
Rental income derived from Croatian real estate is generally subject to income tax at a flat rate of 12%. A standard deduction equal to 30% of gross rental income is allowed for expenses, meaning that tax is generally imposed on 70% of gross rental income. This results in an effective income tax rate of 8.4% of gross rental income.
Different rules apply to short-term tourist accommodation, which may be subject to a separate lump-sum taxation regime.
Capital Gains Tax
Income derived by an individual from the sale of Croatian real estate is generally taxable if the property is sold within two years of its acquisition. The taxable gain is generally calculated as the difference between the property's disposal value and its acquisition value, subject to applicable adjustments and deductible costs. Taxable income from the disposal of real estate is generally subject to income tax at a rate of 24%.
A disposal is generally exempt from income tax if the property is sold more than two years after its acquisition. However, the exemption does not generally apply where more than three properties of the same type are disposed of within a five-year period. Specific exemptions may also apply, including where the property served as the taxpayer's or qualifying family members' residence.
Value Added Tax (VAT)
The long-term letting of residential premises for residential purposes is generally exempt from VAT. Different VAT treatment may apply to short-term accommodation, tourist rentals, commercial property and other taxable real estate activities.
Corporate Tax
Croatian companies are generally subject to corporate income tax on their taxable profits, including income derived from renting real estate and gains from the disposal of property. The corporate income tax rate is 10% for taxpayers with annual revenue of up to €1 million and 18% for taxpayers with annual revenue of €1 million or more.
Expenses incurred for business purposes, including qualifying expenses associated with earning rental income, are generally deductible when calculating taxable profit, subject to the applicable Croatian tax rules and limitations.
Buying and Selling Taxes and Costs
| Cost Component | Percentage of Property Value | Who Pays? |
| Property Transfer Tax | 3.00% | Buyer |
| Agent Fee (Buyer) | 0.00% - 3.00% | Buyer |
| Agent Fee (Seller) | 1.00% - 3.00% | Seller |
| Legal Fees | 0.50% - 1.50% | Buyer |
| Notary Fees | 100 EUR | Buyer |
| Costs Paid By Buyer | 3.50% - 7.50% | |
| Costs Paid By Seller | 1.00% - 3.00% | |
| Roundtrip Transaction Cost | 4.50% - 10.50% | |
| Source: Global Property Guide, KPMG | ||
Annual Property Tax
Beginning 1 January 2025, Croatia introduced a new annual property tax (porez na nekretnine), replacing the previous holiday-home tax. The tax is calculated according to the property's usable floor area, with rates ranging from €0.60 to €8.00 per square meter per year. The applicable rate is determined by the municipality or city where the property is located.
Properties used for permanent residential purposes are generally exempt from the tax. This includes properties used as a permanent residence as well as properties rented to tenants for permanent residence, provided the applicable conditions are satisfied. Other exemptions apply to certain properties that cannot be used for residential purposes or are unusable due to specified circumstances.
