Property taxes in Croatia and Europe: where we are now and what awaits us?

Real estate taxes have been an increasingly frequent topic in European public discourse in recent years. Their importance lies not only in filling state and local budgets, but also in their strong influence on the housing market. While some countries are trying to regulate price growth and housing availability through taxes, others still use them to a much lesser extent. Where does Croatia fit into this story?


Croatia in the "golden middle"


According to data from the European Commission for 2023, the share of real estate taxes in Croatian GDP was approximately 1%. This places us in the lower part of the European ranking, along with Germany, while the European Union average is 1.9%.
For comparison, France and Great Britain lead with a share of 3.7% of GDP, while Belgium holds third place with 3.2%. In absolute figures, the differences are even more pronounced - Great Britain collected 115 billion euros in 2023, France 104.5 billion, while Croatia is at a more modest level, with revenues measured in hundreds of millions.


Real estate transfer tax – key revenue for local units


In Croatia, the most significant form of real estate taxation is the real estate transfer tax, which amounts to 3% of the value of the purchased property. This revenue does not go to the state, but to local units, so cities and municipalities largely depend on this tax form.
In addition, a broader real estate tax was introduced this year as a replacement for the existing tax on vacation homes. It applies to properties used for short-term tourist rentals, which is especially important for coastal cities and municipalities. In doing so, the state is trying to respond to the growing pressure of tourism on local housing markets.


Comparison with Europe


Looking at the share of real estate taxes in total tax revenues, Croatia is also below average – it is around 1% in our country, while the Union average is 4.7%. France is at the top of the list with as much as 8.4%, followed by Belgium (7.4%), Greece (7%), Spain (6.7%) and Portugal (5.9%).
In Germany, with which we are often compared, that share is only 2.5%, which shows that even the largest European economies do not necessarily have to rely heavily on taxes related to real estate.
Within real estate taxes, an important segment is also the property transfer tax, which includes all transactions such as buying and selling or registration in land registers. Italy is the leader with a share of 1% of GDP, while Croatia with its real estate transfer tax of 3% also occupies a significant place, although the total amounts remain lower due to the smaller market volume.


Controversies and proposals in Europe


One of the most interesting examples comes from Spain, where the government proposed the introduction of a 100% tax on the purchase of real estate for non-EU citizens. The aim was to reduce the pressure of foreign investors on the domestic market and make apartments more affordable for the local population. This idea sparked a lot of debate, and many experts warned that such radical measures could have negative consequences for investments and the market.
Read more about it here.


Expert opinions: should Croatia increase taxes?


According to experts, Croatia is currently balancing between the need for revenue and the desire not to burden citizens further. However, the OECD and numerous economists point out that there is room for fairer and more efficient real estate taxation. This, with properly designed measures, could also help alleviate the rise in apartment prices.
Professor José García Montalvo from the Pompeu Fabra University in Barcelona warns that constant policy changes and the inconsistency of tax measures often lead to inefficient results and unpredictable consequences for the market. Croatia, experts believe, should be careful – because although higher taxes can bring more revenue, their coordination with policies that encourage construction and housing availability is crucial.



Croatia is currently in the "golden middle" of Europe – real estate taxes exist in our country, but their significance in budget revenues is far less than in France, Belgium or Spain. However, trends show that the debate on fairer and broader real estate taxation will increasingly open up, especially in the context of rising prices and housing availability problems.
To what extent Croatia will decide to follow European examples remains to be seen. What is certain – tax policy towards real estate is becoming one of the key issues that will shape the market in the years to come.