The government believes that owners of tourist rental apartments pay too low taxes compared to other taxpayers.
Owners of hundreds of thousands of rental apartments could face significantly higher taxes starting from January if the proposals currently discussed by the finance ministry are officially adopted in the autumn, reports Večernji List on August 18, 2018.
This year, as many as 586,000 beds in private rental apartment and houses have been offered to tourists. According to the current tax rules adopted in 2005, the owners pay between 150 and 300 kuna a bed in annual taxes. In 2017, the total amount paid to the budgets of local government units, towns and municipalities, amounted to about 140 million kuna. According to the new proposal, the tax would be increased between four and five times, and the tax per single bed would amount to between 700 and 1,500 kuna a year.
Rough calculations show that each of about 100,000 individual owners paid to the budget 1,400 kuna a year on average. The government says this is not enough, especially when compared to tax rates paid for other kinds of income – for example, salaries are taxed by between 24% and 36%. The effective tax rate for private rentals in tourism is three times lower than for other forms of income, and four times lower than the capital income tax.
The media recently reported that an average owner of a one-bedroom apartment in Split earns about 10,000 euro in two months. When all expenses are deducted (sojourn tax, booking websites commissions, cleaning services, electricity and water costs), the net earning is around 6,000 euro, or 45,000 kuna. On this amount, the tax obligation is just 600 kuna a year.
Danijela Čavlović, the chairwoman of the Family Tourism Association, says that the latest proposals are another blow to the industry segment which has already been hit by worse than expected results of this tourism season. “On 1 January 2019, the sojourn tax will be increased by 25%, so the question is how many households will still be willing to invest in this economic activity if the government keeps behaving this way. I think that the authorities should take a more long-term view since this is a sector which directly or indirectly employs 350,000 people,” says Čavlović, adding that in addition to 140 million kuna of taxes, the owners also paid in a similar amount to Croatian tourist boards on the account of sojourn tax.
“In the last couple of years, we have been paying each year about 10 to 15 million more, and the question is what we got from that money? Taxpayers have the right to know how the money is being spent,” adds Čavlović.
According to the proposal, municipal and town mayors will be the one who will decide whether the rental owners pay the lowest tax of 700 kuna a year or the maximum amount of 1,500 kuna. Some of them say that even they were surprised to find out how high the taxes will go, adding that they expected the minimum amount to be 600 kuna.
On the other hand, officials from the ministry who worked on the proposals say they are not surprised by such position of local leaders since many of the mayors are owners of rental units themselves.
Translated from Večernji List (reported by Ljubica Gatarić).
