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Tax on property transactions in Croatia could be cancelled

Croatia

ZAGREB, July 25 (Hina) – Legal amendments which will cancel the tax on property transactions could be in parliamentary procedure in the autumn, but when they could go into force remains unknown, Vecernji List daily said on Saturday.

As the ruling HDZ party promised in its parliamentary election campaign, the Andrej Plenkovic cabinet has announced that during this term it will cancel the 3% tax on property transactions, which last year brought local governments between HRK 1.1 billion and 1.2 billion, the paper said.

The tax revenue belongs to the towns and municipalities where properties are located. According to the Zagreb Institute of Economics, last year 111,000 properties in Croatia changed owners, first and foremost land and buildings whose value was HRK 40 billion.

In 2019, the year before COVID-19, property transactions accounted for 10% of the annual GDP. Most of the money (HRK 16.6 billion) was invested in the purchase of flats, buyers invested HRK 8.4 billion in building land, HRK 7.5 billion in family houses, and only HRK 1.8 billion in farmland. The average price of a flat sold was about HRK 630,000.

In the first half of this year, the value of properties sold dropped by 25% from H1 2019.

The government would not confirm if the 3% tax on property transactions will be cancelled at the beginning of 2021 or later.

According to unofficial reports, the government could put forward the relevant legal amendments in the autumn, when income tax is expected to be cut from 24% to 20% and from 36% to 30%, Vecernji List said, adding that property tax changes would depend on developments with the coronavirus.

(€1 = HRK 7.5)

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