Property Taxation: Croatian Practice And European Experiences

Although they are of minor importance in the modern tax systems, the revenues from property taxation are still an important source for financing the local budget. Taxable property usually refers to the real estate taxation (ownership and transactions), but the term is much wider and therefore we can take into consideration a whole range of taxable “sources†. Problems in financing both local and state budgets in Croatia resulted in discussions on the introduction of new taxes, including the property taxation. There is a possibility of amendments of a law in terms of tax on the principal place of residence and capital gains tax. The aim of the paper is to analyze the property taxation in Croatian tax system and the possibilities of its reforms. Although Croatian candidacy for European Union membership includes tax harmonization, there are no strict directives for property taxation. Widening the tax base of the existing and introduction of new taxes would result in relatively low tax revenues, at the same time causing significant costs and stronger taxation for tax payers so the possible reform requires careful preparation.