Tax Reforms for Property Owners in Croatia: What You Need to Know in 2025

Property Tax Reform for Real Estate Owners in Croatia: What You Need to Know

The beginning of 2025 significantly changes Croatia’s tax system, particularly for real estate owners. A property tax becomes mandatory for all property owners, and the reform introduces certain exemptions and specific conditions you need to be aware of. Here, we’ll clarify who must pay property tax, who is exempt, when the reform takes effect, and who determines the tax rate.

1. Who is required to pay property tax?

All property owners in Croatia must pay property tax, regardless of the property type. This includes owners of residential and commercial real estate, whether rented out or used for personal or business purposes.

The reform requires owners to pay tax based on the surface area and value of the property. The amount of tax depends on the location and specific features of the property.

One of the key changes is the introduction of a general property tax that replaces the previous vacation home tax. The rate ranges from €0.60 to €8.00 per square meter of usable property area, depending on the decision of the local government. For a typical residential property of 80 m², the annual tax will range from 48 € to 640 €.

Examples of property tax rates on Krk Island (2025):

• City of Krk: 3.50 €/m² (base rate; increases apply for certain criteria: +1.50 €/m² for properties with a building permit issued after January 1, 2014; +1.00 €/m² for properties with a swimming pool)

• Omišalj: 4.37 €/m²

• Malinska-Dubašnica: 3.12 – 4.37 €/m² (depending on zone)

• Dobrinj: 4.00 €/m²

• Baška: 3.60 –4.50 €/m² (depending on zone)

• Punat: 2.00 €/m²

2. Who is exempt from property tax?

According to current Croatian legislation, there are several specific cases in which property owners may be exempt from paying the property tax:

• Individuals who use the property for providing services within a residential space, such as renting out a part of their own house, may be exempt. This applies when the owner rents out only one or a few apartments within their own home, while using the rest for personal or family needs.

• Agricultural properties – If the properties are used exclusively for agricultural production, they may be exempt from tax. This applies to land and facilities used for this purpose and not related to commercial rentals.

• Commercial properties – Those used for general business purposes (e.g., not tourism or short-term rentals) may also be exempt depending on the nature of the business.

• Protected tenants who acquire residential property in which they reside, based on a tenancy agreement, may also be exempt.

Note: Properties used as permanent residences or those in long-term lease (at least 10 months annually) are also exempt from taxation.

3. When does the reform take effect and who sets the tax rate?

The reform takes effect on January 1, 2025. From then on, all property owners will be required to submit a tax declaration and begin paying the property tax under the new rules.

Local governments play a key role because they are responsible for setting the property tax rate based on local conditions, such as development indexes, tourist activity, and other variables. Each municipality must adopt its decision on tax rates by February 28, 2025, after which they are obliged to inform property owners of the tax amount.

Notifications will be sent by post or electronically, and all owners must register their properties within deadlines set by the local government.

4. Conclusion

Every reform, especially a tax reform, can be challenging at first, but it’s important to understand that these reforms aim to make the real estate market more stable and fair. Croatia remains among the countries with a relatively light property tax burden compared to many Western European countries, and these changes align our system with international standards.

Advice for property owners on Krk Island: While changes may seem challenging at first, they can also present opportunities – now is an ideal time to assess whether to sell, rent out, or invest further in apartments, houses, or land on Krk Island.