Croatia Rental Income Guide 2026

Rental Income Under IIT

Rental income from property is classified as income from property rights (dohodak od imovine i imovinskih prava) under the IIT law. The taxable income is the gross rent received minus allowable deductions. The standard deduction is 30% of gross rent (automatically applied for deemed expenses). Alternatively, landlords can deduct actual expenses if they can provide documentation showing expenses exceed 30% of rent. The net rental income is then added to other income and taxed at progressive IIT rates (20%, 30%, 45.5%). The personal deduction (EUR 4,200) applies to total income including rental income. See full IIT rate table →

Tourism Rental Flat-Rate Regime

Croatia's tourism sector benefits from a special flat-rate regime for private accommodation renters (iznajmljivači u turizmu). Under this regime: a deemed 50% flat-rate deduction is applied instead of the standard 30% or actual expenses; the remaining 50% of gross rental income is taxed at the progressive IIT rates; the taxpayer must be registered as a tourism rental provider (with the local tourist board and the Tax Administration). This regime is available for renting rooms, apartments, holiday homes, and campsites to tourists. The flat rate covers all expenses (cleaning, maintenance, utilities, marketing, agency fees, depreciation). It simplifies compliance significantly compared to tracking actual expenses.

Lump-Sum (Paušalni) Taxation for Small Landlords

Small-scale landlords with limited rental activity may qualify for lump-sum taxation (paušalno oporezivanje). Under this simplified regime: tax is calculated based on the number of beds/units and the tourist tax category of the municipality, not actual income; no IIT return is required; the tax is paid in quarterly instalments; the lump-sum regime is only available for tourism rentals (not long-term residential leases). The lump-sum amount is determined by multiplying the number of beds by a coefficient set by the local municipality. This regime is most suitable for landlords with 1–3 rental units and seasonal tourism activity.

Long-Term Residential Leases

Long-term residential leases (stanovi za najam) are taxed under the standard IIT rules: 30% deemed deduction, net income added to other income, taxed at progressive rates. There is no flat-rate or lump-sum option for long-term leases. Landlords can choose to deduct actual expenses instead of the 30% deemed deduction if expenses are higher (e.g., significant renovation costs, mortgage interest, utilities if paid by landlord). The rental agreement (ugovor o najmu) must be registered with the Tax Administration within 15 days of signing. Both parties should retain a copy for tax purposes.

VAT on Rentals

Residential rental income is generally exempt from PDV (VAT). Commercial property rentals may elect to charge PDV at the standard 25% rate if both parties agree. Tourism accommodation is subject to PDV at the reduced 13% rate (charged by hotels and larger accommodation providers). Small tourism renters under the lump-sum regime do not charge PDV. Landlords who are not VAT-registered simply include all rental income in their IIT return without any PDV obligations.

FAQs

How is rental income taxed in Croatia?

Rental income is taxed at progressive IIT rates (0–45.5%) with a 30% deemed expense deduction (or actual expenses if higher).

What is the tourism rental flat-rate regime?

Private tourism renters can use a 50% deemed deduction on gross rental income, simplifying compliance. Available for registered tourism accommodation providers.

Can I use lump-sum taxation for rental income?

Yes, small-scale tourism landlords (1–3 units) can opt for lump-sum (paušalni) taxation, paying a fixed amount based on bed capacity and location.

Do I charge VAT on rental income?

Residential rentals are VAT-exempt. Tourism accommodation may be subject to 13% PDV for larger providers. Small renters under lump-sum don't charge VAT.