Favorable taxation of tourist accommodation near the end?
As the Ministry of finance lacked the courage to increase the favorable rates which apply to the residents who rent their apartments and houses to tourists on short-term basis, the decision on this matter has been transferred on the local government (Municipalities), as per latest proposals of the amendments of the Income tax law.
Should the amendments be accepted, every local government will be able to determine the amount of tax payable per bed used for short-term letting, which could not be less than 150 HRK nor higher than 1.500 HRK per year.
Ever since 2005, the amount had been determined to 300 HRK on average. Knowing than over 90 thousand households in Croatia are letting their spare beds and apartments to tourists, it is clear why the central Government did not want to lose so many political votes.
According to the poll made by Jutarnji list, Dubrovnik and Zadar were looking forward to the changes proposed, as they would increase the tax above the current rate. With no doubt, many local governments, being always hungry for more income, will use any chance given to collect more taxes. The question remains: is this a good decision in a country that gets 20% of GDP from tourism?