Croatia: Property Taxes
Overview
Non-residents are subject to taxation on income derived from Croatian sources, including rental income and capital gains from property sales. Croatia employs a flat tax system for these income types, differing from the progressive tax systems found in some other countries. Married couples are assessed individually, which can influence overall tax liability. Additionally, property transactions may incur local taxes and fees, such as real estate transfer tax and annual property taxes. Familiarity with these obligations is essential for effective investment planning.
Rental Income Tax in Croatia
Rental income from Croatian properties is taxed at a flat rate of 12%. Non-residents are taxed solely on income sourced within Croatia. A standard 30% deduction is allowed to account for expenses related to property maintenance and management, simplifying the tax calculation process.
Key Points:
Tax Rate: 12% flat rate on net rental income.
Standard Deduction: 30% of gross rental income.
Tax Base: Gross rental income minus the standard deduction.
VAT Considerations: Residential rentals are exempt from VAT. However, if the property is rented for business purposes or as tourist accommodation, VAT at 13% or 25% may apply.
Corporate Taxation
For non-resident companies operating in Croatia, corporate income tax (CIT) applies to profits generated within the country. The CIT rates are:
10% for companies with annual revenue up to €1 million.
18% for companies with annual revenue exceeding €1 million.
These rates are competitive within the European Union, offering an attractive environment for corporate investors.
Capital Gains Tax
Capital gains from the sale of real estate are taxed at a flat rate of 24%. The taxable gain is calculated as the difference between the selling price and the purchase price, adjusted for inflation and associated selling costs.
Properties held for more than two years may be exempt from capital gains tax.
Transaction Costs
When purchasing property in Croatia, buyers should anticipate additional costs beyond the purchase price. These may include:
<table> <tbody> <tr class="blue-row" > <td><strong>Description</strong></td> <td><strong>Cost Range</strong></td> <td><strong>Who Pays</strong></td> </tr> <tr> <td>Real Estate Transfer Tax</td> <td>3% of property value</td> <td>Buyer</td> </tr> <tr> <td>Legal Fees</td> <td>1%-2% of purchase price+VAT</td> <td>Buyer</td> </tr> <tr> <td>Real Estate Agent Fee</td> <td>2%-4% of purchase price+VAT</td> <td>Buyer/Seller</td> </tr> <tr> <td>Notary Fee</td> <td>€200</td> <td>Buyer</td> </tr> <tr> <td>Registration Fee</td> <td>€35</td> <td>Buyer</td> </tr> </tbody> </table>Annual Property Tax in Croatia
As of 2025, Croatia has implemented a new property tax system applicable to all habitable properties not under long-term lease. The tax rates range from €0.60 to €8.00 per square meter, determined by local authorities based on factors such as location, property age, and amenities.
Exemptions:
Properties used as permanent residences.
Properties rented out under a lease agreement for at least 10 months annually.
Properties owned by socially disadvantaged individuals.
Conclusion
Understanding the tax obligations associated with real estate investment in Croatia is essential for non-resident investors.From rental income and capital gains taxes to transaction costs and annual property taxes, being informed enables better financial planning and compliance. Consulting with local tax professionals can provide personalized guidance tailored to individual investment strategies.