Croatia to Slap Taxes on Savings and Property

Struggling to reduce its hefty budget deficit, Croatia's government on Thursday announced a package of new taxes aimed at cutting the deficit.

The changes include new taxes, changes to existing taxes and scrapping some of the supplements given to salaries in the public sector.

Taxes on personal savings will be introduced in 2015.  The proposed rate on savings is 12 per cent, and the government plans to collect some 40 million euro annually from the tax.

According to the Croatian National Bank, HNB, Croatian citizens had around 22 billion euro in savings in May 2014, which is 2 per cent more than in May 2013.

It is for this reason that the government wants to access this money - and encourage citizens to remove their savings from banks and use the cash for consumption or investment.

The planned tax on private property tax will be introduced only in 2016, and is bound to cause more dispute, as 92.1 per cent of all Croatian households live in private accommodation. The rate of privately held property in Croatia is the third highest in the EU, behind Romania and Lithuania.

On corporate income tax, it is proposed that only reinvested profit should be exempted from taxation in future. In this way, the government plans to collect some 65 million euro and to boost reinvestment of profits by companies.