Introduction
On July 27, 2024, the new Accounting Act, published in the Official Gazette No. 85/24, brought significant changes that will impact various aspects of business operations in Croatia. This law introduces new bookkeeping rules and brings specific changes that affect private landlords and travel agencies. In this overview, we will delve into the key provisions of the law and their impact on these groups.
What Does the New Law Mean for Private Landlords?
Under the new Accounting Act, residents who rent out rooms, beds, apartments, or holiday homes can continue to pay income tax on a flat-rate basis under certain conditions, meaning the annual flat-rate income tax is calculated based on the number of beds or rental units and the corresponding flat-rate tax per bed or unit.
The tax is paid quarterly, with each instalment amounting to one-quarter of the annual flat-rate tax.
However, landlords who are citizens of other EU member states must now register for VAT purposes. These landlords must calculate and pay VAT, but they can still determine income and income tax on a flat-rate basis. On the other hand, landlords and citizens of non-EU countries must establish a business or company providing accommodation services to continue their operations.
Special Rules for VAT in Travel Agencies
The new law also introduces changes to VAT regulations for travel agencies, focusing on different business scenarios. Travel agencies must now apply different VAT procedures depending on how they provide their services:
Services provided in their name using the goods and services of other VAT payers: In this case, the agency must apply the particular VAT procedure.
Services provided in their name and for their account using their goods and services: In this scenario, the regular VAT procedure applies.
Mixed services: When an agency provides a unified service by combining its goods and services with those from other VAT payers, it applies both VAT procedures: the particular procedure for services involving other VAT payers and the regular procedure for its goods and services.
Services provided in their name but on behalf of another: Here, the agency acts as an intermediary and only calculates VAT on its commission.
Services provided in another’s name and on their behalf: In this situation, the agency exclusively acts as an intermediary and calculates VAT only on the amount of its commission.
Conclusion
The new Accounting Act brings a series of changes that will directly impact the operations of private landlords and travel agencies in Croatia. From the introduction of new tax obligations and VAT registration requirements to specific rules for taxation in different business scenarios, it is clear that these sectors will need to adapt to the new legal framework. It is crucial for all affected entities to closely monitor these changes and take the necessary steps to ensure compliance with the regulations.
For more detailed information about the new Accounting Act and its implications for your business, contact our experts at Confida Croatia. Our support and advice will help you navigate these changes smoothly while maximizing the opportunities they present.
