July the 9th, 2026 – Croatian municipalities are now seeking full powers to crack down on illegal holiday rentals and protect honest landlords across the country, particularly on the coast.
Croatian local authorities are currently calling on the government to give them greater powers to tackle illegal holiday rentals, arguing that municipalities are best placed to identify unregistered accommodation providers operating within their communities. Poslovni reports that this latest request comes as Croatia prepares a new (and controversial) Hospitality Act aimed at strengthening oversight of the short-term rental sector and curbing the country’s shadow tourism, or so-called grey, economy. Under the currently proposed legislation, online booking platforms will only be allowed to advertise legally registered accommodation, with every property assigned a unique identification number that can be monitored by the Tax Administration.
“Honest landlords deserve proper protection”
Representatives of local government say the current enforcement system leaves municipalities with little authority to act, even when they know properties are being rented illegally.
They argue that granting communal wardens and local authorities inspection powers would allow faster action against illegal operators while protecting thousands of law-abiding hosts who comply with tax and registration requirements. According to local officials, illegal rentals create unfair competition by undercutting legitimate accommodation providers who invest in their properties, pay taxes and meet legal standards. They also deprive municipalities of tourism-related revenue and make it more difficult to manage housing and tourism development.
New law will tighten controls
The proposed Hospitality Act is expected to introduce significantly stronger digital oversight of Croatia’s short-term rental market. Every registered apartment, holiday home and room would receive a unique identification number, allowing authorities to verify listings across major booking platforms. Platforms would be prohibited from advertising accommodation that lacks the required registration or operating approval. Many are referring to it as Big Brother, but it remains to be seen just how effective the new rules will be within Croatia’s extremely creative grey economy.
The government has repeatedly claimed that the system, introduced in line with wider European Union regulations governing short-term rental platforms, will allow authorities to monitor the sector digitally rather than relying solely on physical inspections.
Local authorities want to take on the enforcement role
While welcoming the tougher rules, municipalities say enforcement should not rest exclusively with national bodies such as the State Inspectorate and Customs Administration.
Instead, they are urging the government to authorise local communal wardens to investigate suspected illegal rentals, arguing they have the best knowledge of what is happening on the ground and can respond far more quickly than central authorities. They maintain that stronger local enforcement would not only reduce the black market but also safeguard fair competition, ensuring compliant accommodation providers are not disadvantaged by those operating outside the law. The government has indicated that expanding enforcement powers forms part of its wider strategy to eliminate illegal tourism activity, although the exact responsibilities of local authorities will be defined once the new legislation enters parliamentary procedure.
