On the first day of the new year, several laws came into force in Croatia that had been announced in the media for months, primarily in the fields of construction and spatial planning, taxes, the status of foreigners and environmental protection.
Measures for emigration
Since January, there have been changes of the Law on Foreigners regulates the labor market in Croatia, which refers to the labor rights of foreign workers. Among other things, the goal of the law is to encourage the return of Croatian emigrants so that emigrants will be granted a two-year stay, and after three years they will have the right to permanent residence and the right to employment without special work and residence permits.
In addition, the law on Income tax introduces a significant tax relief for evicted Croatian citizens who decide to return to Croatia again. These citizens will be exempt from paying income tax for a period of five years, provided that they have resided outside Croatia continuously for at least two years.
Also, in mid-December 2024, the Government of the Republic of of Croatia, together with the Ministry of Demography and Immigration, presented a package of demographic measures for 2025.
One of the measures to encourage the return of Croatian emigrants is a program to encourage the immigration and employment of Croatian emigrants, which will connect Croatian emigrants and employers. The project will be implemented in cooperation with the Ministry of Labour, Pension System, Family and Social Policy, the Croatian Chamber of Commerce, the Croatian Association of Employers and the Croatian Employment Service.
In addition, experiential programs for young immigrants will be implemented, as part of which 420 young people will annually participate in cultural, sports, educational, scientific and innovation programs.
Scholarships for learning the Croatian language will continue, and a unique portal will be created to inform the Croatian emigrants.
Construction and spatial planning
From January 1, 2025, new provisions came into force of the Act on Building Management and Maintenance which bring significant changes in the way real estate is managed and the installation of new devices on the building's street facades. One of the key changes relates to short-term apartment rentals. Owners who want to rent their apartments for a short period, for example to tourists, or to rent an apartment to a larger number of people (for example to workers), will now have to obtain the consent of at least two thirds of the co-owners of the building. In addition, they must also include the consent of their immediate neighbors.
For those who already rent apartments in this way, the law introduces a transitional period: namely, they will be required to obtain the necessary consent within five years, by the end of 2029 to be exact.
The law also introduces the concept of a community of co-owners, and accompanying Register of the community of co-owners, with legal personality and its own OIB, which should significantly speed up administrative and court procedures and make it easier for buildings to apply for funds (façade renovations, energy renovations, etc.).
Another important change relates to decision-making in buildings. The law recognizes the problem of individual co-owners not being interested in participating in important decisions. In order to change this, the required majority of co-owners' signatures to make decisions for necessary repairs (such as for repairing the roof) and in the future it will not be necessary to collect consent for emergency repairs (for example, for burst pipes).
The authority to supervise the implementation of the law is given to communal wardens, who will determine measures to eliminate observed irregularities, and among other things, misdemeanor penalties are foreseen for contractors of illegal works (closing of balconies, installation of air conditioners on street facades etc.). Misdemeanor fines range from EUR 5500 to EUR 10.000.
Real estate tax
From the beginning of 2025, a new tax reform will start, and the most important part of this reform is the introduction of real estate tax for the first time. The real estate tax will replace the existing tax on vacation homes, and the Government has prescribed a range of tax rates from 0,6 to 8 euros per square meter, while the exact amount of the tax rate will be determined by local self-government units (i.e. cities and municipalities). This tax will be paid by both legal and natural persons for real estate that is not used.
Real estate tax will not pay those owners of the property who use it for permanent residence, nor for those who are on a long-term lease (at least 10 months a year). Derelict, uninhabitable real estate and real estate used for agriculture and non-residential activities will also be exempt from the tax.
"Hosts" will also be exempted from paying the new real estate tax, people who have a small tourist rental as an additional activity in a building where they have their own registered address.
By the end of February 2025, all local units will make decisions on the taxation of real estate in their area, by zone and the corresponding tax rates.
Listen to Croatians Online here:
Croatian American Media Association Corp is a tax exempt organization under Section 501 c(3) of the Internal Revenue Code (EIN # 99-1591741). Your donation is greatly appreciated and will be used to support our mission. Your contribution is tax deductible to the full extent permitted by law.
