Nedo Pinezić: Fierce attack on family accommodation renters

This is about the final solution, about the final reckoning with family accommodation. What is being done is in complete contradiction to the sustainable tourism agenda of the UNWTO

Author  Nedo Pinezić

4. October 2024.

Interview with Srđan Hebar, a journalist from Večernji List for the topic of the 29.9.2024 issue.

This is about the final solution, about the final reckoning with family accommodation. What is being done is in complete contradiction to the sustainable tourism agenda of the UNWTO. The result will be a completely concreted coast with thousands of mammoths, "aparthotels", in the nature of "mixed use" buildings that will be residential and apartment buildings at the same time. This will "put out of the game" domestic renters of accommodation in apartments for the benefit of real estate capital. That's what's happening. Pure real estate business.

Tourism is something completely different, it is a tool for the revitalization of areas that have no other economic basis. For places like ours on Krk, or some other island or coast, where there is no industry, where the population has been emigrating for generations...

Tourism in our towns has turned out to be a good tool that will reverse the trend of people leaving, and even others coming to live. This should be the basic thought when thinking about the tourism development strategy. And it should primarily refer to - man. Local, autochthonous, domiciled, and if we want from a tax point of view, a tax resident.

This means that everyone who lives in such an area should be encouraged or privileged in relation to all others who are not tax residents, who do not have that place of residence and who are not active members of the local community.

A small municipality lives on income tax from self-employment and self-employment. And this tax is paid according to the place of residence. My residence is in Krk, and if I had, for example, an apartment in Zagreb that I rent out, I would pay income tax from that apartment and property tax there. But I would pay all other taxes – tax on my first income, tax on royalties and the like – to Krk, because Krk is my tax center.

Here from the island, I cannot be equated with citizens who live in the metropolis for 12 months. If I invested in an apartment in Zagreb, wouldn't I have to be in a less favorable position than the people of Zagreb? Because that man from Zagreb has a child, he goes to kindergarten. Kindergartens are built, teachers are hired, then the child goes to school, schools are built for children, teachers and cleaners are hired, so the father will go to the neighborhood cafe with the boys, drink a round or two, and then a waiter should be hired. The family will also go to a vulcanizer in Zagreb, so he will also open a business because they come to him twice a year, he takes care of their tires. So they will go to an auto electrician and they will feed him, then to a hairdresser... Finally, they pay income tax every month from their salary, which goes to the coffers of the metropolis. I don't. My tax goes to Krk.

I say all this because all economic and social activities are related to the place of residence. We could apply it to any place in Slavonia, or on the Dalmatian coast and islands. It is clear that those who live there for 12 months are heroes. And they must be rewarded and not punished.

And foreign real estate owners on Krk? Reward or punishment?

They pay taxes in their country, and it is not clear how they can be in the same or better position than someone who lives on Krk or some other isolated island. The tax strategy must have a certain goal, and this is where we return to the story of how we must save ourselves from demographic collapse. The demographic picture in the rural areas of Croatia is catastrophic, and legal changes such as those announced will evict the few people who live on the islands all year round.

We must not turn into a weekend country, we must keep young people from going outside, and preserve life outside of large urban centers. And keep that life for 12 months, not just those two months when it's most attractive. It is clear that a distinction should be made who are - residents, those with residence who make a full contribution to the community, and - who comes to the island as an investor. They cannot be treated the same by the tax collector.

What will property owners have to pay?

Tax on income from property, i.e. renting apartments to tourists. The second is the tourist tax, or bed tax. The third is the membership fee for tourist associations, the fourth is the communal fees, i.e. the local tax per square meter, the fifth is the house tax for vacation homes, which is now becoming the real estate tax.

What is the solution?

Conversation. Communication with the field, because it seems that decisions are made by the cabinet. Our country is so different, each region has its own specificities, that it is impossible to take any one as an example to others. Communication should be opened, these are things that have been resolved for years. The situation should be recorded, the measures should be tested, but in a partnership relationship. We used to have a professional organization at the Croatian Chamber of Commerce, called the Association of Family Tourism HGK, so we talked and looked for solutions.

How many renters will be affected by the new taxes? You talked about a crackdown on family accommodation renters, who will get the upper hand?

120.000 decisions for categorization have been issued, and most of them are people who are fully Croatian citizens, residents. Even a third of these people, i.e. 40.000, are pensioners. And they will be the first to come under attack. The average Croatian renter of family accommodation has six beds for rent and earns an average of 5.500 euros in income, that second income from property. Of course, most of these accommodations are located on the coast, islands and in larger cities, in attractive locations. And now let's take someone who has a 400-euro pension, and he earned, let's say, three, four thousand euros over the summer by renting an apartment. He spends that money throughout the year - on medicine, bills, going to the store, he has to survive the winter. And now when you burden him with another tax, it will "hit" him much more than anyone else.

Take also the fact that older people can no longer clean themselves, kneel on the floor, stand on a chair and wash windows, but have to hire a cleaning service. Someone has to manage their digital business, booking, arrivals and departures, check-ins and check-outs, correspondence with guests, so someone from the younger generation has to help them with that. When everything is added up, not that such people will be in the red because they have been renting their houses to tourists in the summer for decades, but they will also be in debt, which will lead them to think about selling the property and going to some almshouse where they will end their lives, if they can find one. place.

The state should actually protect us, primarily those proud, elderly people who have never owed anything to anyone. First of all, you should have a different attitude towards a local person who rents or owns a cottage. Why? Because both are tax residents in Croatia. Different treatment should be given to foreigners who are not tax residents in Croatia or in the place where they own real estate for spending their free time. Every country primarily takes care of its citizens, and no matter how much they want it, those who come to that place in another country from outside are not equal, right?

Imagine yourself, for example, in Augsburg or Bled. Do you have all the same rights as your local neighbor who has been there for generations? OK, if someone comes, then changes his place of residence, and comes to live on the island, he should be stimulated and accepted unconditionally. That when you look at Zagreb, Munich or Malinska, you conclude that it is better to live in Malinska, that people move from large areas, that we reverse the trend. In the end, one thing is a foreigner who goes fishing with us and lives with us for the whole year, and another is a foreigner who brings his fellow foreigners to an unregistered apartment...

The problem is very practical, there are 20.000 of us who live there all the time and pay all taxes and duties. We also pay for those due to which roads were widened, water and sewage pipes were added, substations... expensive infrastructure. We pay for this infrastructure within 12 months with all the mentioned taxes and benefits, tourists also pay through the price of their stay, but vacation home owners pay far less.

You also mention suspicious foreign capital, what exactly is the problem?

People are coming, that's nothing new, with dubious capital from all over the continent. They build, buy, trade. This raises real estate prices, so tomorrow our children will no longer be able to buy real estate on the island. If someone does not inherit a house, they will not be able to buy anything to live in. He will have to move away. Imagine pensioners who don't have children here, the children have moved away, and they won't be able to withstand the tax pressure. He will have to sell the house, end his life as we have already said, and the children will have nowhere to return to... The fire on the hearth will go out.

www.nedopinezic.com

Author  Nedo Pinezić

4. October 2024.