Taxation rules for foreign landlords from the European Union

In addition to citizens of the Republic of Croatia, renting services in properties such as rooms, apartments, holiday homes, and the like can also be provided by foreigners who own properties in Croatia. That applies to individuals from the European Union or third countries.

Tax position of foreign landlords from the EU

Foreign landlords’ tax position from the Value Added Tax (VAT) perspective depends on their registration status for VAT purposes in Croatia. Therefore, two tax possibilities arise:

  • Individuals from the EU cannot be considered small taxpayers in Croatia, and the supply threshold of EUR 816,84 does not apply to them. Therefore, if they intend to provide accommodation services in Croatia, they need to VAT register at the beginning of their service provision.
  • If a foreign individual from the EU provides and charges accommodation services to a Croatian taxpayer, they do not need to register for VAT purposes in Croatia. The VAT obligation takes over the Croatian taxpayer.

Determination of lump-sum income tax

Landlords from the EU can pay income tax in a lump sum amount up to the limit of EUR 39.816,84.

The decision on the amount of lump-sum tax is made by the representative body of the local self-government unit, with the tax being at least EUR 19,91 or more than EUR 199,08 per bed or accommodation unit. If they do not decide, the lump-sum income tax amount is EUR 99,54 per accommodation unit.

European Union citizens providing rental services and opting for lump-sum taxation must actively submit an Application to the Register of Taxpayers on Form RPO and request a Personal Identification Number (PIN).

Lump-sum income tax can pay a landlord who cumulatively meets the following conditions:

  1. Possesses the approval of the competent office authorizing the provision of services to individuals in their household by the provisions of the laws regulating the hospitality industry
  2. Is not a VAT taxpayer according to the Value Added Tax Act (except for non-residents who meet the condition specified in point 1) and earns income below the amount prescribed for mandatory entry into the VAT system.
  3. Does not determine income according to Articles 30-35 of the Value Added Tax Act, or based on business records, provided that:
  • organizes accommodation in rooms, apartments, and holiday homes, up to a maximum of 10 rooms or 20 beds and/or
  • organizes accommodation in a campsite and/or camping resort, organized on a piece of land, with a total of up to 10 accommodation units or up to 30 guests at the same time, and/or
  • organizes accommodation in a facility for Robinson-style accommodation where services provide in indoor or outdoor spaces, with a capacity determined by the number of guests who can safely stay there, but up to a maximum of 10 accommodation units or 30 guests simultaneously.

Direct provision of accommodation services

Landlords who are citizens of other EU Member States are actively obligated to issue an invoice and calculate VAT at a rate of 13% for the direct provision of accommodation services.

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