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Post by pinearoma on Feb 8, 2012 20:47:58 GMT 1
Hello - we own an apartment (not a new build) in our own names in Croatia. We live in the UK. The title is clean etc. We have owned it since 2004. It is categorized for renting to tourists and we pay our tourist tax. My query is this: we have been told in the past that only a company can rent to tourists so we as individual owners had to 'rent' the property to a Croatian company we would form and then the company would rent the property to tourists. Is this correct? The issue here would be one of the company needing employees as well as it being just quite a big hassle. Am i being advised correctly?
Many thanks.
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Post by crojoe on Feb 8, 2012 21:14:05 GMT 1
Hello - we own an apartment (not a new build) in our own names in Croatia. We live in the UK. The title is clean etc. We have owned it since 2004. It is categorized for renting to tourists and we pay our tourist tax. My query is this: we have been told in the past that only a company can rent to tourists so we as individual owners had to 'rent' the property to a Croatian company we would form and then the company would rent the property to tourists. Is this correct? The issue here would be one of the company needing employees as well as it being just quite a big hassle. Am i being advised correctly? Many thanks. I have a company with no employees and from UK. The problem arrives when renting in that you have to charge 25% vat (soon to be introduced in Croatia before the tourist season, although it could also be 10%, depending who you talk too) then with a company all takings get taxed a further 20% as personal income tax, then you have accountant fees and a few other fees per year for company. So, can be costly. Guess it all depends on how much you get charged by the tourist agency company you use. |
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Post by upthevilla on Feb 9, 2012 8:18:20 GMT 1
Hello - we own an apartment (not a new build) in our own names in Croatia. We have owned it since 2004. It is categorized for renting to tourists and we pay our tourist tax . If you own the apartment in your own Private names and not in a company name. Then how did you get the catagorisation licence to rent ? As a foreign citizen this would not have been possible. Only a Croatian national can get the licence in their private name. |
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Post by pinearoma on Feb 9, 2012 8:40:23 GMT 1
Thank you for your feedback. Sorry if i was not clear but we got the categorization through our company that we formed and rented the apartment out already a few times last season. Our book keeper has never mentioned a pdv issue. What is the threshold for the pdv? And Crojoe, is pdv yet to come in or is it just changing this year? January, there will not be any depreciation however, with the company we did buy another property. Can we off set any tax payable against the amount invested into the company?, ie. against losses I suppose. I never expected it to be easy but boy, what a minefield, after having a scoot around this great site.
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Post by crojoe on Feb 9, 2012 10:03:55 GMT 1
Thank you for your feedback. Sorry if i was not clear but we got the categorization through our company that we formed and rented the apartment out already a few times last season. Our book keeper has never mentioned a pdv issue. What is the threshold for the pdv? And Crojoe, is pdv yet to come in or is it just changing this year? January, there will not be any depreciation however, with the company we did buy another property. Can we off set any tax payable against the amount invested into the company?, ie. against losses I suppose. I never expected it to be easy but boy, what a minefield, after having a scoot around this great site. Concerning PDV, if you issue an R1 then it is to include PDV/VAT of 23% currently and then in a few months it is to be upped to 25%. Of course I heard that for companies in tourism then tax is at 10% or something around that number. I don't rent out property so have no idea about the percentages. Of course you can off-set expenditure against you takings, but it would have to be that your rental is in a company name. I also recall that you can have in effect like 15 "friends" visit you per year, but then you need to check with someone who has done it. Like maybe they can pay into your account in UK using this method?  What I've always wondered is if you can get part payment done abroad then have the remaining amount (symbolic amount) paid into your Croatia company account? What do tourist agencies in UK do when they sell a package that includes accommodation? |
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pink
Junior Member
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Post by pink on Feb 9, 2012 11:22:35 GMT 1
I am in the same position own and a property as a private individual and had to set up a company for categorisation. I have never been told I would need to employ staff.
I can confirm it is a very expensive excercise and there is very little left by the time you pay all the extra costs and endless taxes. You have to rent the property to your company and therefore end up paying tax both as a company and an individual.
I have now learnt that we also have to pay tax on a vacation property! Never heard of this before...is this another new tax? Has anyone else encountered this recently?
Once you have a company, it is not possible to allow 15 friends to stay for free. We learnt this the hard way; the Accountant would not accept that our family were genuinely staying for free and the charge for that period was counted as income which brought my company into the PDV system.
If you want to stay in your own house, you will have to lease it back and pay rent.
As for being in the PDV system, I can't get a straight answer from the Accountant. Would really like to understand the advantages and disadvantages of being in the PDV system. What is the difference in costs? Can anyone advise? Too late for me now anyway as I have been informed now that I have to stay in the PDV system for 5 years even if my income is below the threshold of Kn 85,000 but would like to understand the system.
Will entry to the EU make a difference?
From what I've read on the forum, closing a company is also a nightmare.
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Post by upthevilla on Feb 9, 2012 14:15:56 GMT 1
I can confirm it is a very expensive excercise and there is very little left by the time you pay all the extra costs and endless taxes. You have to rent the property to your company and therefore end up paying tax both as a company and an individual. I have now learnt that we also have to pay tax on a vacation property! Never heard of this before...is this another new tax? Has anyone else encountered this recently? Once you have a company, it is not possible to allow 15 friends to stay for free. We learnt this the hard way; the Accountant would not accept that our family were genuinely staying for free and the charge for that period was counted as income which brought my company into the PDV system. If you want to stay in your own house, you will have to lease it back and pay rent. As for being in the PDV system, I can't get a straight answer from the Accountant. Would really like to understand the advantages and disadvantages of being in the PDV system. What is the difference in costs? Can anyone advise? Too late for me now anyway as I have been informed now that I have to stay in the PDV system for 5 years even if my income is below the threshold of Kn 85,000 but would like to understand the system. Will entry to the EU make a difference? . Renting to the company Can be a good thing if done correctly. For example Renting private to your company at 4,000 euro per year Company income from renting 6,000 euro per year The rate of private tax is considerable less than company tax therefore by making more profit privately you pay less tax then making more profit as a company . You should speak with your accountant for more details. Paying tax on a vacation property is nothing new. Every property in Croatia has to pay a tax . The properties are classified as holiday homes, residential homes, studios, etc and you pay the tax accordingly, similar to council tax or the old fashioned rates. Re – Friends staying. You can stipulate in the renting contract between yourself and your company that the property is not available during the month of August ( for example ) the friends would then not need to pay you rent, ( but they still have to pay the tourism tax.) Without the stipulation in the contrat then yes anyone including the directors of the company have to pay to stay at the property PDV. This really is an accountant issue, Every company is different with different circumstances, Me personally I prefer being in, everything I buy ( for my company ) I can claim the pdv back. The downside for many who just run a renting business during the summer is that even during the months when you have no income you have to produce a PDV report monthly. Your accountant should do this for. Accountancy fees vary from 100 – 150 euro per month. Europe question = Who knows, any answers are pure speculation |
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Post by tiggerai on May 4, 2012 10:07:57 GMT 1
Sorry to dig up an older thread - but let me get this straight.
A Foreign Citizen cannot receive money for renting out his apartment to tourists. However the Foreign Citizen can lease/rent the private property on a longer term contract to a company (I guess, long term for a year or something?) then the company can rent the property to tourists?
As you say guys, it seems that no one knows how the EU entry will change things (other than making us have the same rights as the Croatians and therefore not needing to get a special usage permit/set up a company etc - possibly)
I do wonder that with just over a year to go it's not worth setting up the company etc to gain the categorisation (and in our case, the usage permit to go with it) until we know what the deal is with EU Citizens.
Basically, we don't want the company to own the property, but just rent it in the holiday season. (thanks for the hint about stipulating when the property can't be rented - so that we can reserve it for ourselves without paying - although this is more likely to be may-june in our case!)
Its the ongoing costs that are a bit steep really!
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Post by Carol on May 4, 2012 11:16:20 GMT 1
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Post by upthevilla on May 4, 2012 11:51:00 GMT 1
A Foreign Citizen cannot receive money for renting out his apartment to tourists . ( privately owned = No )
However the Foreign Citizen can lease/rent the private property on a longer term contract to a company = YES
(I guess, long term for a year or something?) = 3 months
then the company can rent the property to tourists? = yes, providing you the company can get the licence. ( see below A.B.C. licence and NO if you you cant get the licence
If you lease / rent the property on a long term contract to a 3rd party company ( minimum 3 months ) then it is NOT for tourist use and this is possible and you do not need the 3rd party to be a company , it can be an individual.
If the 3rd party intend to rent to tourists then they need to apply for the licence.
If the 3rd party is a Croatian company ( regardless of nationality of the directors ) then the property needs to be classified as a commercial building or tourist area.
If the 3rd party is a Croatian national then the property can also be classified as residential as well as the above.
Whoever gets the licence, the licence is in their name and is NOT transfearble.
Setting up a company takes less than a week.
If you personally own the property, then you also set up your own company and do a long term rent to your own company who apply for the licence. ( your company owns the licence, this way you cannot be held to ransom by whichever company gets the licence )
The property that you are trying to get a licence for
must be any of the following
A. Built before 1968
B. classified as a commercial building
C. Classified as a tourist buildin
if it is non of the ablove then a Croatian company CANNOT get the licence.
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Post by tiggerai on May 10, 2012 14:58:59 GMT 1
Can a building be classified as Residential and Touristic then?
I've still not got my head round Usage permits - which is the bit that is outstanding for us - trying to get hold of the planning office to see what we can get. There are permanent residents in our building so don't want to cause them trouble if it's usage is touristic.
Quite clear on the rest - e.g the catagorisation/licence etc.
Thank you upthevilla for that comprehensive confirmation of things I'm trying to get my head around!
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Post by Valleycat on May 10, 2012 17:24:18 GMT 1
Is there an issue if you just have a home, a private home, not a business and have family and/or friends come for a visit. No money is exchanged. Just good times and lots of laughs.
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Post by upthevilla on May 11, 2012 7:13:10 GMT 1
Yes, a slight issue
During the main summer months July and August you are only permitted friends staying 14 - 17 days.
All friends, guests, visitors, must be registered at either the police station or at a tourist office.Even you as the foreign owner must be registered and the tax paid,
They must pay the 20 kn one off registration fee plus the tourist tax per day, varying from 4 kn - 7 kn per day, per person over the age of 12 years old, under 12s are free.
If you take your ownership papers ( not older than 3 months) to the police station then the owner will pay less, aprox 3 kn per day
obviously a paper trail is formed, which is how you can be cought if exceding the 2 week friend/ family rule.
If you do not sign guests, friends in then you face a much higher risk of being cought and prosecuted, ( 5,000 euro, property sealed and a court date )
The agency that you sign the guests in, by computer are connected to the police .The agency collect the money, but the information is registered at the police station and once you start having lots of friends / guest / visitors regerstering at the property, then it wont be long before you get a visit.
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Post by keepsmiling on May 11, 2012 7:31:33 GMT 1
Upthe villa, is the info you have given above new for this year? Last year we paid 60kn per person for the whole year, don't have to pay for subsequent visits but need to keep receipt.
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Post by crojoe on May 11, 2012 7:49:53 GMT 1
Yes, a slight issue During the main summer months July and August you are only permitted friends staying 14 - 17 days. All friends, guests, visitors, must be registered at either the police station or at a tourist office.Even you as the foreign owner must be registered and the tax paid, They must pay the 20 kn one off registration fee plus the tourist tax per day, varying from 4 kn - 7 kn per day, per person over the age of 12 years old, under 12s are free. If you take your ownership papers ( not older than 3 months) to the police station then the owner will pay less, aprox 3 kn per day obviously a paper trail is formed, which is how you can be cought if exceding the 2 week friend/ family rule. If you do not sign guests, friends in then you face a much higher risk of being cought and prosecuted, ( 5,000 euro, property sealed and a court date ) The agency that you sign the guests in, by computer are connected to the police .The agency collect the money, but the information is registered at the police station and once you start having lots of friends / guest / visitors regerstering at the property, then it wont be long before you get a visit. I wonder if this will change once they go into the EU since they cannot restrict EU people from coming and going in Croatia? |
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