A flat tax rate of 1.5 percent on 70 percent of the appraised value of the property will be imposed on all real estate in Croatia, replacing the current council utility charges. However, there will be tax breaks, up to a maximum of 95 percent, reducing the burden for many home owners. Tax breaks will be given for owners who live in their properties, rent them out or use them for another purpose such as business.
There will be no tax breaks for those who have homes that are not used, and the 1.5 percent tax rate will come into play for those real estate owners. The Minister says that the wealthy will have to pay more under the new tax, but that Croatia needed that change.
Linic stressed that the aim of the new property tax was to reduce the burden of labour costs and to increase government revenues. He also said it would bring into line current local council utility charges, which currently vary from city to city. The new law, which is still to be passed through parliament, will come into effect on 1 April 2013.