In March of this year, a significant increase in the number of residence changes within the Republic of Croatia was recorded – a total of 18,624 changes, according to data from the Ministry of the Interior. For comparison, in the same month last year, there were 10,792, representing an increase of as much as 73 percent in just one year.
Given that the data essential for property tax assessment had to be reported by March 31, it is not difficult to assume that one of the reasons for such a pronounced increase in ‘relocations’, or changes of residence, is the implementation of the property tax introduced at the beginning of this year. In other words, that the changes of residence are motivated by fiscal reasons.
According to amendments to the Local Taxes Act, no tax is paid on property used for permanent residence, and the property tax decision is made for the calendar year based on the status, purpose, and ownership of the property determined on March 31 of the year for which the tax is assessed. This provision has likely prompted thousands of citizens to register their residence in properties they actually use, but have not previously reported their residence where they live, as well as likely some of those who wish to avoid paying tax on another property by changing their residence.
As of the end of March, it is unknown how many citizens filled out forms with the aim of reporting data essential for taxation or data for exemption from property tax, as well as how many will ultimately be liable for this tax. The actual impact of the property tax, as well as its social and fiscal repercussions, will only become clearer after a longer implementation period and detailed analysis of data on the number of taxpayers and revenues of local government units based on this.
