Cro Card Introduced to Encourage Domestic Travel in Croatia

Daniela Rogulj

December 19, 2019 – The Ministry of Tourism has officially introduced the Cro Card as a way to encourage domestic travel. 

HRTurizam writes that in the last 15 years, the number of domestic overnights in Croatia has remained almost unchanged, but due to the steady growth of foreign overnights, the share made by Croatians has dropped to only 7 percent.

By this indicator, Croatia is far below the average of comparable Mediterranean and Central European countries. The total tourist activity of the local population is decreasing, while Croatian destinations show a negative trend of domestic traffic growth.

For these reasons, the Ministry of Tourism wants to encourage domestic travel. One solution is the long-announced Cro Card.

Namely, at Wednesday’s 198th session of the Croatian Government, a measure was introduced to stimulate consumption in the hospitality and tourism sector in Croatia, that is, the Cro Card.

Thus, this measure aims to stabilize the mentioned relative decline in the share of domestic tourist traffic and reverse the trend in the full implementation period.

With this decision, a measure is introduced to stimulate consumption in catering and tourism for Croatian employees in a way that will allow them a more affordable vacation by increasing their remuneration based on work. This regulation introduced the novelty that income tax was not paid on fees for catering, tourist and other services intended for employee vacations up to the amount of HRK 2,500 per year.

So far, the employer has been able to pay HRK 7,500 annually to its workers (for Christmas, recourse, awards, etc.). Now, there is the option of an additional HRK 2,000 through Cro Cards.

This will be paid by a “Croatian Tourist Card”, which will be issued by commercial banks, while the commercial bank and the end-user will bear the cost of the card itself. It is also important to emphasize that cash from a Cro Card cannot be withdrawn. 

Cro Cards will be earned through compensation to cover the cost of holiday and catering services that the employer may pay to its employees following income tax regulations. It can be used solely for paying for catering and tourist services provided by legal and natural persons who are eligible for the provision of these services under the special regulations governing the hospitality industry and the provision of tourist services.

The implementation of this measure is expected to have a positive impact on the tourism activity of small and medium-sized enterprises, stimulate growth in supply, and strengthen the potential for tourism and rural development of continental Croatia.

“In the mandate of our Government, we have placed particular emphasis on the development of responsible and sustainable tourism, with particular emphasis on balanced development and the development of the continent. Today, we have adopted the Government Decision on introducing a measure to stimulate spending, which, with the reduction of VAT and regulating the entire legislative framework, makes us extremely pleased because we have made the most important decisions that no one dared to make earlier,” Minister Cappelli said.

The Ministry of Tourism, in cooperation with the Croatian Employers ‘Association, surveyed employers to determine their interest in applying in some form of a tourist voucher.

The survey aimed to explore the interest in participating in a potential tourism program under the working name “tourist voucher” without specifying specific tax benefits, investigated the intention to participate in the program for each of the five potential tax benefits individually, and examined the maximum financial value of the voucher employers are willing to pay. The survey results are based on a representative sample of 400 employers.

According to the survey, every other employer expressed a principled interest in the concept presented, while 63% of employers preferred values from HRK 1,000.00 to HRK 3,000.00 per employee per year, and as the most important advantage, most employers spoke positively about a tourist voucher as an employee reward model.

The introduction of this measure is based on examples of good practice in EU countries. For example, Hungary, Italy and France, which by implementing a similar measure, have produced respectable results in increasing domestic tourist traffic.

The Cro Card is based on the Hungarian model, the “Szep Card”. By implementing the Szep Card from 2010-2015, the number of overnight stays of domestic tourists increased in Hungary by 29 percent, while the total revenue of domestic tourism increased by 64 percent, with the Szep Card having a decisive role. So far, 26,500 companies have used the Szep Card for nearly 1.3 million employed citizens.

Furthermore, for two years (2010-2012), Italy had measures in place to subsidize domestic traffic. The measures were based on the family income bracket and issuing vouchers that could have been used for local vacations. France, on the other hand, subsidizes French tourism by employers through the Comite d’entreprise (CE). Up to 3 domestic trips are subsidized annually (and only one foreign trip).

The critical effects of introducing the measure are reflected, among other things, by the estimated potential of generating direct net income of approximately HRK 1 billion annually in the stabilized year of project implementation, estimated impact on new investments in the sector amounting to HRK 4 billion in the entire implementation period, and total tourism consumption of about 14.3 billion euro in 2020, of which about 1.8 billion euro domestic, the Ministry of Tourism expects.

This Decision shall come into force on the first day following its publication in the Narodne novine. For now, there are still some open questions regarding its implementation, which we will find out in the coming days.

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