As of 1 January 2025, Croatia has introduced a series of significant legal changes affecting the real estate sector, short-term rentals, taxation, the rights of foreign workers, and environmental protection. The new regulations require businesses to adapt their operations accordingly — this is particularly relevant for entrepreneurs, investors, and those active in the property market.
Changes to Property Rental and Building Management
The most significant changes concern short-term rentals: property owners must now obtain the consent of two-thirds of co-owners in a building, including immediate neighbours. Those already operating short-term rentals have until the end of 2029 to comply with this requirement.
A mandatory Register of Co-Owner Communities has also been introduced to streamline administrative processes and facilitate access to funds for building modernisation. New financial penalties have been introduced for illegal renovations, enclosed balconies, and unauthorised installations on building facades, aimed at improving urban aesthetics and structural safety.
The new law also revises the consent thresholds required for various building decisions: urgent repairs (e.g. roof repairs) now require approval from one-third of owners (previously 50%), standard building management decisions require 50%, while major investments — such as lift installation — require 80% (previously 100%). The new regulations also allow government grants of up to 33% of costs for lift installation and facade renovation in protected areas.
New Tax System and Changes to Taxation
The property tax system has undergone substantial reform. The former holiday home tax has been replaced by a new system with rates ranging from €0.60 to €8 per square metre. Local authorities have the discretion to set the exact rate, and exemptions apply to properties used as primary residences and those rented out long-term for at least 10 months per year.
The flat-rate tax for tourist rental has increased significantly — depending on the region, it now ranges from €19.91 to €199.08 per bed. The VAT registration threshold has been raised from €40,000 to €60,000, benefiting smaller-scale operators. Additionally, the personal income tax allowance has been increased, along with tax relief for families with children and people with disabilities.
Employment and Regulations for Foreign Nationals
The validity period of the EU Blue Card has been extended from 2 to 4 years, making it easier to hire highly qualified professionals. New three-year combined residence and work permits have been introduced for non-EU nationals, while seasonal workers can now obtain permits for up to 9 months.
Employers are required to provide a financial guarantee for foreign employees, and foreign workers’ remuneration must not fall below that of their Croatian counterparts. A requirement to learn the Croatian language has also been introduced for those applying for long-term residence. Foreign nationals now have 60 days following the expiry of their employment contract to find new work, during which they may register with the employment office and claim unemployment benefits. Employers are additionally required to ensure adequate housing conditions for foreign employees.
Environmental Protection and New Ecological Regulations
In the area of environmental protection, a charge for plastic bags used for fruit and vegetables has been introduced, with the price set by the retailer. The deposit on plastic bottles has increased from 7 to 10 cents, and the waste disposal fee is set to rise from €30 to €50 per tonne by 2029. These measures aim to reduce waste volumes and promote more sustainable practices in everyday life.
Stricter standards have also been introduced for companies holding waste management permits. The new rules require the implementation of additional technical measures to limit odour emissions and prevent fires at waste storage sites.
Support for Young People and Returning Emigrants
A package of tax relief measures and housing programmes has been introduced to support young people and returning emigrants. Those returning to Croatia after an extended period abroad will be exempt from income tax for 5 years. Workers under the age of 25 are fully exempt from income tax, while those aged 26–30 benefit from a 50% reduction. The state also provides a refund of 50% of VAT for buyers under 45 purchasing their first home.
Wage and Social Benefit Increases
The minimum wage has increased to €970 gross, representing a rise of 15.5%. Family benefits have also been raised, including child maintenance payments, which have increased to €200 per child per month, along with enhanced support for foster families.
Are you aware of how these changes may affect your business? If you are already operating in Croatia or planning to invest, it is worth preparing in advance. Contact CroBiz to find out how best to adapt your business to the new regulatory framework.