Croatia: Another setback for the property market from 01.01.2015 VAT of 25% on building plots

In accordance with EU regulations, a plot will be from the 1st of January 2015 additional calculated with VAT of 25 percent.

New Year will bring a new blow to the already slow real estate market in Croatia. In accordance with the commitments Croatia has undertaken towards the European Union, a building plot will be from 01.01.2015 made accountable for VAT, at at present rate of 25%. Please do remember that in Croatia that rate has changed a couple of times in the last years.  But the buyer or investor will have no longer have to pay real estate tax, which is now the case. That means you can expect an increase in prices of newly built apartments. However, experts warn, a large increase in prices is unlikely, as since the demand for housing is weak for years now.

What does this new tax system approximately cost

If, for example, an apartment of 70 square meters is sold in Zagreb for 100,000 euros til now, you would have to pay around 21,000 euros.

But how as the the overall value of the newly built apartment, which includes the plot, will be subject to VAT, so the buyer will owe the state for this transaction of about 25,000 euros.  The difference from the new year will be for  the same flat around 4,000 euros.

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Croatia: Another setback for the property market from 01.01.2015 VAT of 25% on building plots