Tax obligations when buying real estate in Croatia

Tax obligations when buying real estate in Croatia

Purchasing real estate in Croatia carries with it certain tax obligations, and these depend on several factors, among others, whether it is a real estate in which no one has lived until now. Read below about what the obligations are when paying real estate sales tax, but also which factors should be taken into account.

New or used property?

When it comes to tax obligations when buying real estate, the first question is whether the real estate is new (that is, whether it has been inhabited) or not.

If you buy a new property (ie one that has not been inhabited) from a VAT payer, then you are obliged to pay VAT (25%) on the delivery of the building (or part of the building), including the land on which the building is built. findings. The same applies to the purchase of a used building with land within two years if the supplier of the building is liable for VAT. In this case, you do not need to pay real estate transfer tax.

If you are buying real estate that does not belong to the previous category, then when buying real estate you are obliged to pay real estate sales tax at a rate of 3% in relation to the market value of the real estate at the time of tax liability. Thanks to the fact that the real estate purchase contract is certified by a notary public, they, the notaries public, deliver the real estate acquisition documents to the competent tax administration, which then issues a temporary tax ruling. The acquirer of real estate is obliged to pay the determined amount of tax within 15 days from the date of delivery of the tax decision.

Sending to the tax administration

In the event that the document on the acquisition of real estate was not certified by a notary public, but issued by a court or another official body, then the real estate acquirer is obliged to personally report the sale of real estate to the tax administration in the place where the real estate is located.

Who is exempt from real estate tax?

Various categories of citizens are exempt from real estate sales tax, in the case of:

● Gifts and inheritances without compensation by spouses and common-law partners, descendants and ancestors in the vertical line

● Divisions of joint property in case of divorce

● Protected tenants

● Tenancy right

● Other.

Detailed information about who is exempt from real estate tax and under what conditions can be found on the website of the Tax Administration: https://www.porezna-uprava.hr/Gradani/Stranice/Nekretnine/Vodi% c4%8d-for-acquirer-of-property.aspx

Buying your first property is no longer a relief

Regardless of whether you are buying your first real estate or your second, third or one after that, it is good advice to check the applicable tax obligations before signing to avoid unpleasant surprises.

What if the property is exchanged?

In the event that you have decided to exchange real estate, then according to the Real Estate Sales Tax Act, the taxpayer for real estate sales tax when exchanging real estate is every participant in the exchange, and for the value of the real estate they acquire, which means that although in this process you are both buyer and seller, you are obliged to pay real estate sales tax in the amount of three percent on the property you are buying.

Since tax regulations in Croatia change relatively often, especially if you do not dare to interpret them yourself, you can always ask for help from a tax advisor or, when buying and selling real estate, use the services of a real estate agent or a specialized agency that will instruct you in all the obligations you have in that procedure. In this way, you will still be sure that you are familiar with all obligations.