Real Estate Transfer Tax in Croatia: A complete expert guide

Buying a property in Croatia also means paying Real Estate transfer tax. Although the process can seem complicated, proper information and professional assistance can make it much easier. This guide provides all the key information about Real Estate Tax (RTT) and Value Added Tax (VAT) that every buyer needs to know.

Real Estate Transfer Tax (RTT) and VAT: The Difference That Affects Your Budget

There are two types of Real Estate transfer tax in Croatia, the difference is fundamental and depends on the status of the seller.

Real Estate transfer tax (RTT) – rate of 3%

Real Estate transfer tax (RPT) is paid when a buyer acquires Real Estate from a natural person who is not a VAT payer. This is the most common scenario when purchasing Real Estate on the secondary market (Real Estate that has already been owned and used).

When the Real Estate transfer tax (RTT) rate of 3% applies:

• In the case of sales between natural persons
• When making a gift (when there are no family exemptions)
• When exchanging Real Estate
• When purchasing Real Estate from a legal entity that is not in the VAT system

Value Added Tax (VAT) – rate of 25%

VAT is paid exclusively in cases of purchases from VAT payers, i.e. registered legal or natural persons who carry out the activity of Real Estate transactions.

When 25% VAT applies:

1. New buildings that have never been used or inhabited
2. Buildings that are less than two years old from the date of first occupancy
3. Building land with issued building permit

Important note: If more than two years have passed from the date of first occupancy to the date of the next sale, even if the seller is a VAT payer, a Real Estate transfer tax (RTT) of 3% is paid, not a 25% VAT.

Tax liability: The buyer is liable

According to the Real Estate Transfer Tax Act, the taxpayer is the acquirer of Real Estate – a natural or legal person who acquires ownership.

Deadlines and payment procedure

• Deadline for reporting: If the acquisition document is not certified by a notary public, court or other public body, the acquirer is obliged to submit the Real Estate Transfer Report to the competent Tax Administration branch office within 30 days from the transaction date.
• Payment deadline: After receiving the document, the Tax Administration issues a temporary or final tax decision. The buyer has 15 days from the date of personal delivery of the decision to make the payment.
• Payment method: Payment is made according to the instructions stated in the decision. An appeal does not postpone execution.

Exemptions from payment of Real Estate transfer tax (RTT): Legal framework

The law prescribes a number of situations in which Real Estate sales tax is not paid. Here are the most significant exemptions:

Family exemptions (acquisition without compensation)

Real Estate transfer tax (RPT) is not paid in the case of donations, inheritances and other acquisitions without compensation between:

• Spouse
• A common-law partner with a proven life partnership
• Formal and informal life partner
• Descendants and ancestors in the vertical line (children, grandchildren, parents, grandparents)
• Adopted child and adoptive parent

Other legal exemptions

• Separation of co-ownership: Persons who acquire separate parts of Real Estate by separation of co-ownership or division of joint ownership
• Former spouses/partners: When arranging property relations after the dissolution of a marriage or civil partnership
• Exchange of Real Estate of displaced persons and refugees: Exchange of foreign Real Estate for Real Estate in Croatia
• Protected tenants: Purchase of an apartment or residential building in which they live under a lease agreement
• Return of confiscated property: Acquisition of Real Estate in the process of return of confiscated property and land consolidation
• Social ownership transformation: Acquisition of Real Estate in the process of social ownership transformation

Key terms for understanding the process

Building land

Land is considered for construction only if there is an executive act that allows construction: building permit, location permit or other decision of the competent authority. The fact that the land is located in a construction zone is not enough.

First settlement

This is the moment when the building or part of it is put into use. The following is documented:

• Document from the competent authority on permanent residence or usual place of residence
• Rental agreement
• Contract on the supply of electricity, water, gas

Tax base: Market value, not contract price

The tax base is determined according to the market value of the property at the time the tax liability arises. This means that the Tax Administration may determine a tax base that is different from the price stated in the contract.

• If the contract contains all the facts relevant to determining the tax liability, the Tax Administration issues a temporary tax ruling.
• After a subsequent check, if a difference is determined, a final tax decision is issued with the difference in surcharge or refund.

Digitization of the procedure: e-Građani and ePorezna

The Tax Administration offers electronic services that significantly simplify the procedure:

• ePorezna – Jedinstveni portal Porezne uprave (eTax – Single portal of the Tax Administration): Allows for insight into the Tax Accounting Card (PKK), electronic filing of returns and payment of taxes via barcodes using mobile applications.
• e-Građani portal (e-Citizen Portal): Central point for all electronic government services.

If, for any reason, the acquirer has not collected the letter (decision) at the post office, all information on the tax liability is available via the electronic contact form on the Tax Administration website or by contacting the branch offices via email and telephone.

Practical advice for buyers

1. Check the seller’s status before signing the contract: The difference between 3% and 25% is significant. Check if the seller is registered with the VAT register.
2. For new buildings – check the date of first occupancy: If more than two years have passed since the first registration, the tax liability is 3% instead of 25%.
3. Family acquisitions – prepare documentation: When making a gift within the family, have birth certificates, marriage certificates, or court orders of adoption on hand.
4. Respect the 15-day deadline: Failure to download the solution does not cancel the payment obligation. Always check the status on ePorezna.
5. Dissolution of co-ownership: When purchasing a part of a property from a co-owner, the procedure is treated as a dissolution, not as a classic purchase. For the correct formulation of the legal action, please contact a legal expert.

The most common mistakes to avoid

• Lack of information about the obligation to report: The responsibility lies with the acquirer. The obligation to pay tax exists regardless of whether the acquirer has received a decision from the Tax Administration.
• Lack of documentation on first occupancy: If you are buying a property that is less than two years old, be sure to request documentation from the seller.
• Misinterpretation of family exemptions: The exemption for former spouses only applies in the context of regulating property relations, not for gifts outside of that.

Conclusion: Professional help is key

The Real Estate tax system in Croatia is quite complex and contains numerous exceptions. Properly understanding your obligations and rights can result in significant savings and the avoidance of legal complications.

At the IMMOBELLA agency, we provide complete support to customers, including:

• Tax liability analysis before any transaction
• Connecting with certified tax advisors
• Assistance with electronic registration and payment
• Legal support to avoid mistakes

Buying Real Estate is an important investment – approach it with information and professional support.

Frequently Asked Questions (FAQ)

1. Do I have to pay tax if I inherit an apartment from my grandmother?
   No, descendants in the vertical line are completely exempt from Real Estate transfer tax (RTT).
2. What if I buy from an investor, but the apartment is three years old?
   You pay Real Estate transfer tax (RTT) in the amount of 3%, after the expiration of two years from the first settlement, VAT is not applied.
3. How much time do I have to pay taxes after signing the contract?
   15 days from the personal delivery of the Tax Administration’s decision. Always check the status on ePorezna.
4. Can I pay tax through the mobile application?
   Yes, through ePorezna and the barcode system available in mobile banking applications.
5. Which is more advantageous – a gift or a purchase from parents?
   A gift is exempt from Real Estate transfer tax (RTT), but may have tax consequences upon future sale. We are available for further advice.