For years, the very idea of introducing a property tax in Croatia seemed like blasphemy. Rent-seeking was considered a social category, and thus it was treated and taxed symbolically. Not so long ago, the current Prime Minister Andrej Plenković swore that there was no need to encroach on private property, that this was a line that should not be crossed – but now that it has been crossed and we finally have a property tax, we can only conclude that neither the state nor local government units will become significantly richer from it, nor will those who live off rent lose that much. In other words, we have a conservative tax that will hit hardest those engaged in short-term rentals, and that quite mildly and cautiously. And since landlords are not the first to be hit, someone had to be, and it seems that this time the information that the presented tax reform abolishes the exemption from health insurance contributions for young employees has passed completely unnoticed, which is a wake-up call for another sector – especially IT companies and start-ups.
Passed Under the Radar
Namely, at the presentation of the tax reform, the announcement by Finance Minister Marko Primorac that the incentives for hiring young people up to thirty years old are being abolished went under the radar. These incentives, it seems, were not so negligible and significantly reduced tax revenues, costing the state 385 million euros annually, as calculated by Primorac. The incentives are being abolished for new hires, which means that employers who have contracted them will still be able to use them, but for those employing mostly young workers, this will ultimately be a significant cost.
That the main losers of the tax reform are neither landlords, nor the state budgets, nor local governments, but exclusively employers who have employed young people up to thirty years old, primarily in the IT sector, was also emphasized by Tajana Barančić, owner of Astra Business Engineering, a long-time business consultant for technology companies, primarily from the IT sector, and former president of the CISEx association representing software exporters.
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