With VAT Increase, Restaurants and Cafes Face Losses

Total Croatia News

Since the beginning of the year, revenues have fallen by 15 percent.

Since January, restaurant and cafe owners have earned 140 million kuna less than last year, which is the result of an increase in VAT on catering services from 13 to 25 percent. They demand urgent meeting with the Ministry of Finance, and many of them are thinking about possibly closing down their businesses, reports RTL on April 17, 2017.

About half of owners of cafes and restaurants in Primorje-Gorski Kotar County want to close their establishments, and their incomes have declined 15 percent on average, according to an analysis. The head of the Caterers’ Coordination in the county Vedran Jakominić said that the data showed that “there is an urgent need for an expert analysis by the Ministry of Finance to show what is happening because our numbers are so bad that we ourselves cannot believe them. We want to talk with the Ministry of Finance to find a common solution for all of us.”

The data of the Tax Administration of turnover in restaurants and cafes for the first three months show that the net amount which stays with owners after VAT is deducted is down by as much as 140 million kuna compared to last year. The number of invoices has also dropped.

Despite the numbers, many people are still sceptical and think that restaurateurs and cafe owners are still earning more than they want to admit. On the other hand, the owners say they were forced to increase prices by a kuna or two per drink, but still suffer losses. “It is absolutely clear that everyone will have to increase their prices further in order to be able to survive,” explained the president of the Association of Caterers at the Croatian Economy of Commerce Ivan Bogović.

The Town of Rijeka has decided that, starting from May, it would reduce the tax rate on consumption of alcoholic and soft drinks from 3 to 1.5 percent, which should bring caterers about 1.3 million kuna more. However, the VAT rate of 25 percent for caterers means that Croatia, alongside Denmark, is at the very top of the European Union, while other tourist countries such as Italy and Spain have this rate at 10 percent.


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