How to Croatia: VAT Obligations for Non-Resident Owners of Rental Property

Total Croatia News

As part of TCN’s series to demystify (if that is possible…) the bureaucracy of Croatia, we have teamed up with an accountant to give expert advise. If you have an area you would like clarification on, please contact us on [email protected] We start with the obligations of foreign property owners who are non-resident and renting out their Croatian property. 

Renting flats, rooms and beds to travelers and tourists and organizing camps in Republic of Croatia, are considered to be subject to tax under the provisions set out by the Law on Value Added Tax (Law).

In accordance with the Law, non-residents in Croatia (explanation: Non-resident is a person without a permanent or habitual residence in the Republic of Croatia) who rent rooms, beds, apartments and holiday homes to foreign and domestic tourists are required to register for VAT purposes. Also, one has to apply for a VAT ID number before the first service in Croatia. For both, the taxpayer needs to fill in the P-PDV Form.

To make it clearer, this is how it works in practice: after categorization of the house, apartment,…, the person receives „Approval to provide rental service in the household“ in her/his name. Croatian citizens have similar obligations as non-resident Landlords. For non-resident Landlords, the main difference is that they have to register for VAT purposes at the very beginning, while a Croatian can „wait“ until she/he reaches 230.000 kn of income and then register as a VAT taxpayer. Also, non-resident Landlord will have to fill out a document called „Declaration on the status of the non-resident Landlord“. In it, you’ll be asked to put some details from your hometown tax office, such as „tax status“, etc. The emphasis here is on the fact that you’ll probably have to provide „Certificate of Residence“ issued by your local tax office. Sometimes it takes longer to receive it, so it’s good to have this in mind.

For some, this may seem complicated or even unfair, but maybe it’s best to focus only on things to do in order to come to point of having a successful business that makes a good income. The important thing is to be aware of one’s rights and obligations to avoid problems. Having this in mind, now is the time to make a „revision“ of documents and start gathering those that are missing. This way, everybody can be prepared for the next tourist season.

Non-resident Landlords need to submitt an application for registration for VAT purposes to the Tax Administration, Regional Office Zagreb.

Furthermore, non-resident Landlords become liable to the submission of monthly VAT returns, regardless of whether in a particular month rental service was performed or not. Monthly VAT returns have to be filed by the 20th of each month for the previous month.
Non-resident Landlords (renters) can’t apply lump sum taxation as they have to be enrolled in the register of VAT payers.

Also, a non-resident that provides any other leasing services has to send a Leasing contract (plus contact details) to the Tax office, Department for Foreign Taxpayers which will notify a non-resident about all rights and obligations.

To conclude, a non-resident Landlord will have to keep accounts similar to those for craftsmen so she/he will have to hire an accountant to do it.

If you are interested in accounting services in Croatia, or have a topic you would like to see featured in this section, contact us on [email protected] 


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