Croatia plans to tax second homes to bolster budget

Croatia plans to start taxing second homes, such as holiday rentals along the Adriatic, to boost budget revenue. The move aims to dampen short term...

Croatia plans to start taxing second homes, such as holiday rentals along the Adriatic, to boost budget revenue.

The move aims to dampen short-term holiday rentals, tackle a housing shortage and revive residential real estate sales in Croatia. Finance Minister Marko Primorac did not provide estimates of possible tax revenues, saying at a press conference in Zagreb on Monday that such sums "remain hard to foresee.”

The proposed tax bill, which needs to be approved by lawmakers and may enter force in 2025, would apply to more than 800,000 second and third homes.

The real estate tax could fall anywhere between 0.6 to 8 euros per square meter, Primorac told reporters. All properties that are empty or are rented out short-term at the cut-off date on March 31 next year will be taxed, he said.

A first property would be exempt from the tax along with properties under long-term rentals for least 10 months a year, as the government also seeks to limit the number of short-term rentals that has ballooned in recent years. So far only a modest tax has been levied at family vacation homes.