The World Bank has sent some recommendations that should encourage faster development of entrepreneurship in Croatia and accelerate the exit from the financial crisis and recession.
Among these recommendations we noticed one related to the real estate tax. Experts from the World Bank claim that this tax is one of the biggest obstacles to further development of the Croatian economy. This tax is now paid at a rate of 5%, which discourages people to formally resolve the status of their properties. It was also stressed out that some other European countries with which Croatia is often compared, for example Poland and Slovakia, have long ago resolved problems with this kind of taxation. It is recommended that Croatia should fully abolish the tax on real estate and instead introduce a fixed fee for the transfer of ownership over the property.
To make matters more complicated, it is not only this tax that is problematic. There is also a bit absurd provision that any transfer of ownership must go through the court and is not legally valid until the court approves it. With regard to the “legendary” speed and efficiency of the Croatian courts, it is clear why such a provision hampers the development of entrepreneurship and real estate market in Croatia. Solution recommended by the World Bank is that this procedure should be completely removed from the jurisdiction of the courts and instead of it to create a sort of a one-stop-shop for property registration. It is also recommended to allow the registration of ownership electronically over the internet.
Problems with real estate greatly affect the development of new small businesses because they are slowed down by the non-availability of land, especially in coastal regions.
World Bank wants to see Croatia, a candidate country for the European Union, recover from the crisis as soon as possible, but the decision on acceptance or rejection of these advices related to real estate is now in the hands of the Croatian Government.