How much land tax?

[oliverwright]

Hi there

I am looking at buying an apartment - but I'm not sure how much to budget for land tax

Is it 5% of the value of the land or 5% of the value of the property? (I understand that if there are say 4 flats then the tax will be divided by four)

So if a property with two flats was worth 200k Euros, and I bought one flat, would I have to pay 5k Euros in land tax?

Or is the land tax somehow less than this?

Any help gratefully received

Thanks

Oliver

[Peter Ellis]

First of all, the assessment of the 5% Property Transfer Tax will depend on whether the property price has a PDV(VAT) element in it. If it is being sold, new, by the developer, there will probably be PDV included; you don't usually find it added to the offer price here; it is already included. If, however, possibly for tax reasons, the apartments are being sold in the name of private individuals, then no PDV will apply. The latter is quite common as there is a Croatian tax concession whereby Croatians can build three properties in five years without a tax liability, so a block of twelve apartments is often actually being sold in the names of individual family members, each of whom will have three in their name, rather than the name of the apparent promoter.
The significance of all this is that if PDV is involved, then the Property Transfer Tax will be just on the land value, whereas if there is no PDV involved, it will be on the value of the property as a whole.
Officially, the tax is assessed on the value; in practice, provided the contract price is realistic, it will probably be based on the contract price. Since it is not unknown for developers to ask for a low contract price, with a cash element, in order to mitigate their own PDV liability, be aware that if this is unrealistically low, it could attract attention and the least of the problems could be having to pay 5% on the real value!

Taking your example of two flats, if it was sold by a company registered for PDV, your liability would be 5% of the land value. The land value will vary from place to place. Each flat will have an assumed equal land association. If, say the two flats were in a building sitting on a 400m2 plot and land there was selling at Eur100/m2, you would be paying 5% on half of Eur40,000 equalling Eur1000.
If the contract was in the name of a private individual, you would pay 5% on Eur100,000 equalling Eur5,000.

[Oliver Wright]

Thanks very much - that's really helpful

Oliver

[Karen]

Hello

Can you please advise why rentals must be done through a Croatian company?
Also, are there any tax liabilities on rental income in Croatia? If yes, are there ways to minimise the liability?


Thank you

[Peter Ellis]

Basically to avoid owners renting out from an overseas base and retaining all the income abroad, whilst their clients get the benefit of Croatian public facilities.
Croatia welcomes visitors, but for a country that hosts many hundreds of thousands of them, it is only reasonable that they make a modest contribution to the facilities that they use. A Croatian company will pay tax on its income.

For fuller details of Croatian tax, there is a link to KPMG Croatia on our other website www.croatiapropertyservices.com.