Income tax and what do we need to know about it?

Few topics have so stirred the spirits of those who "cheered" for higher tax burdens on the citizens of accommodation providers in the household and on the family farm as the current new ...

Few topics have so stirred the spirits of those who "cheered" for higher tax burdens on citizens of accommodation providers in the household and on the family farm as a current new way of determining the amount of flat-rate income tax.

Economic experts, consultants, journalists… fired "heavy fire" in the public space at the representative bodies of cities and municipalities that are in charge of deciding on the amount of "lump sum" per bed and camp in the household. In that "barrage fire", the amounts were auctioned, the tax on income from property and property rights was compared with the tax on income from self-employment, non-residents and residents were confused, the permanent population was forgotten and so on…

IGNORANCE CREATES THE WRONG PICTURE

Those who consider themselves experts in this field have not really proven their expertise in their statements. On the contrary, on this occasion, it was shown that the difference in perception of the real situation between "the field" and "Zagreb" is dramatically different. That is why there was a great surprise when most of the decisions of the representative bodies of local self-government units were on the side of keeping the previous amounts of the "flat tax". What does "terrain" know and "Zagreb" do not know? („Zagreb "is on this occasion a synonym for all these experts in the public and private sector who are concentrated in the Croatian capital).

LET'S GO IN ORDER

To which income group does the "activity of renting and organizing accommodation in tourism" belong? It is income from property and property rights. The same group of income also includes income from the sale of property, rental of property. For example, renting apartments for tourists belongs to the same group with renting accommodation to tourists.

What is the tax rate on renting apartments for housing and business premises? The income tax rate on receipts from the rent of business premises and residential apartments is 12%. However, before taxation, the reported amount of rent is reduced by 30% (at the expense of costs) and the income tax is calculated on the reduced amount at a rate of 12%

What is the recalculated rate of fiscal and parafiscal levies for the "activity of renting and organizing accommodation in tourism?" Also 12%.

How did we get to that rate? According to the Croatian National Tourist Board, the average number of beds in a household is 6, and the average gross income is 6.000,00 euros (45.000,00 kn). If the taxation system were applied as in the case of renting an apartment, then this amount would be reduced by 30% to the thus obtained base of EUR 4.200,00. Income tax of HRK 300,00 per bed amounts to a total of EUR 240,00 or 5,7% taxes. When the flat-rate sojourn tax is added to this benefit, which in this case has the character of a tax because it is paid regardless of whether overnight stays were realized at all, in the amount of HRK 345,00 per bed, we get a further burden of 6,6%. A tourist membership fee of approximately 0,22% is additionally charged for this amount. The total fiscal and parafiscal burden is 12,52%.

Receipts from the same income group and similar in nature are taxed at the same rate. The only difference is that for the "activity of renting and organizing accommodation in tourism" this tax is converted on the basis of the average to a fixed amount per bed and camp and is part of the total tax in a lump sum consisting of tax and sojourn tax, as before . The method of distribution of income tax and sojourn tax revenues is similar, namely 60% of tax revenues and 65% of sojourn tax revenues belong to the local community. When renting apartments for housing, no sojourn tax is paid. If the tax rate for the activity of renting and organizing accommodation in tourism would increase significantly, then it would certainly pay more to rent an apartment or a holiday home as a residential apartment because the fiscal tax would be lower (no tourist tax is paid).

The difference between taxpayers with a place of residence in the area of ​​the local self-government where the tax liability arises and taxpayers who have a place of residence in the territory of another local self-government

A natural person who has a place of residence in the place of occurrence of the tax liability directly contributes to the budget of the same local self-government in which he operates. Not only that, the income tax from his salary (income from self-employment) also "fills" the budget of the same LGU. The part that is paid into the local government budget is 60% of the total tax, and 40% of the funds "go" to the county budget. A citizen, a natural person who has a different place of residence from the place of occurrence of the flat-rate income tax liability, does not contribute to that local self-government unit with the tax expense of the "flat rate" as well as with the income tax from self-employment. Both taxes are paid to the local self-government of his residence and the corresponding part also "goes" to the budget of the county to which the local self-government belongs territorially.

What about non-residents? Unlike residents who do not have the same place of residence and incur a flat-rate income tax liability, non-residents from EU Member States, the European Economic Area and the Swiss Confederation who choose to use the flat-rate income tax option for their real estate activities still contribute to the budget. and the same JLS.

HOW IS THAT POSSIBLE ?

In accordance with international regulations, in this case the tax liability is reported according to the place of origin, and the tax is paid to the local self-government and the county to which the property territorially belongs.

Thus, currently in a more favorable position are those local self-governments that have more non-resident property owners in their area than residents with a place of residence in another local self-government. Of course, provided that these non-residents decide to engage in the activity of renting and organizing accommodation for tourists. Then they still have to pay 13% VAT on such a service. If they operate through domestic agencies, then they do not pay VAT, but income tax is paid to the budget of the local government headquarters of the agency…

STATUS OF NON-RESIDENTS, EU AND EEA TOURISTS + SWISS CONFEDERATION

Non-residents from these countries can stay in the Republic of Croatia for up to 90 days in 180 days without the obligation to register their residence. This means that they can rent apartments and holiday homes every 90 days. In such apartments and holiday homes can stay their friends who also have no obligation to register residence. Smart enough.

There will be opportunities for a more detailed explanation of the whole set of legal possibilities that can be activated in the case of "excessive shelling" of natural persons by fiscal and parafiscal benefits.

Author: Nedo Pinezić, www.nedopinezic.com

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