September the 8th, 2024 – Croatian tourism rental, in which typically coastal properties are rented out for the very short summer period at high prices, provide a tax oasis and a lot of issues.
As Poslovni Dnevnik writes, the chief economist of the Croatian Employers’ Association (HUP) Hrvoje Stojić was a recent guest on N1 Studio live, where he discussed the issues surrounding Croatian tourism rental.
“At the moment, we’re waiting for two decisions of the government – one concerns subsidies for electricity and gas, and the other is tax reform, where the introduction of property tax stands out the most.
the end of subsidies for energy producers
For two years now, both people and businesses have been paying lower bills for gas, electricity and heating. However, now that the situation on the market is much more stable, these subsidies could come to an end.
“That move is in line with the moves of other European Union countries,” claims Stojić.
“We’re aware that there will be an adjustment period, but the most important thing for us is that our competitive position isn’t threatened, and I’m talking about Croatian companies here. Last year was the first in history that our companies paid a higher price for electricity on average compared to the European Union average. That was an unfavourable factor,” he explained.
The question now arises as to whether subsidies to small businesses should remain in place, and in finding the optimal solution, it’s crucial to take into account the vulnerability of small companies, of which there are many in Croatia.
“We need to take into account Croatia’s international competitive position here, but if we delve deeper, we’ll come across a very large share of small and medium-sized enterprises in the Croatian economy. This isn’t the same here as when we think of small enterprises in let’s say, Germany or France. The question is whether Croatia’s small businesses can handle these big price increases.”
“Now, we have the opportunity to do something about the competitiveness of domestic companies through tax changes. It should be clearly stated that there’s been a more permanent increase in energy prices and we should get used to the fact that prices will be slightly higher for a period of time. It’s a transitional period in which significant capacities of renewable energy sources have yet to enter the market,” he added.
property tax introduction and croatian tourism rentals
“HUP has been advocating the transition of the tax burden from work to property income for the past few years. The focus is primarily on Croatian tourism rentals, which are seasonal and occurs in the short term.
We’ve always advocated for its equalisation with the long-term rental tax in the continental part of the country. Croatian tourism rentals are a real tax haven and place all other actors involved in this activity at a strong disadvantage. There should be more emphasis on tax fairness here,” he explained.
Stojić also pointed out that we need to send out a stronger message that work should be valued more than Croatian tourism rentals and a renter’s market in general: “These have a number of unfavourable effects. In the short term, there will be a quick tax-free profit, but what if it happens that the demand there falls, and these people are neither educated nor contribute enough through taxes to the development of local infrastructure? Property prices are still rising unjustifiably, meaning very many young families can’t solve their housing issue. This interest group doesn’t see wider benefits for Croatian society at all,” he concluded.
