Many European countries have decided to temporarily reduce VAT on tourist services. Unfortunately, Croatia is not among them. Specifically, tourism is currently taxed at two rates – 25 and 13 percent. A lower rate of 13 percent is only on serving and delivery of food in restaurants and cafes. Perhaps the biggest intervention in the tax system was made by Germany, which decided to cut the general VAT rate from 19 to 16 percent. The German government has also reduced the reduced VAT rate from seven to five percent. Also, The United Kingdom has decided to reduce the VAT rate on tourism and hospitality from 20 to five percent.
Cyprus and Greece – 5% VAT on tourist services
Greece and Cyprus, countries where the economy is dependent on tourism (as well as Croatia), have decided to help tourism by reducing VAT on accommodation and restaurants. In these two countries, the VAT for these activities has been reduced to only five percent. Reducing VAT rates is a prerequisite for raising competitiveness under normal circumstances. In circumstances where the world has been hit by a coronavirus pandemic, VAT is a matter of survival.
Turkey has only 1% VAT on tourist services
For the period from April 1 to November 30, 2020, Turkey will decide to reduce VAT in the hotel segment from a low 8 percent to just one percent, which is also the lowest VAT in any tourism segment in Europe. Turkey VAT rates are:
- 18% – E-books; all other taxable goods and services
- 8% – Certain basic foodstuffs; pharmaceutical products; books (excluding e-books); medical products
- 1% – Newspapers and magazines; some basic foodstuffs.
- 0% – Exports of goods and related services
Lower VAT in other EU countries
Hotels, accommodation, domestic flights: a reduction from 8 percent to 1 percent – until November 30, 2020
Non-alcoholic beverages: a reduction from 20 percent to 10 percent – until December 31, 2020
Serving food in restaurants, cafes, and catering: a reduction from 10 percent to 5 percent – until December 31, 2020.
Serving food in cafes and restaurants: a reduction from 12 percent to 6 percent – until December 31, 2020.
Food serving: a reduction from 21 percent to 9 percent – until December 31, 2020.
Services in hotels, restaurants, and taxis: a reduction from 9 percent to 5 percent – until January 10, 2021.
Accommodation: a reduction from 15 percent to 10 percent – until December 31, 2020.
Restaurant and catering services: a reduction from 19 percent to 5 percent – until July 1, 2021.
Hotel accommodation: a reduction from 7 percent to 5 percent – until December 31, 2020.
Non-alcoholic beverages: a reduction from 24 percent to 13 percent – until October 31, 2020.
Preparation, serving and delivery of food in restaurants and cafes: a reduction from 13 percent to 5 percent – until January 9, 2021.
Accommodation: a reduction from 21 percent to 9 percent – until December 31, 2020.
Services in restaurants, cafes, and hotels: a reduction from 20 percent to 15 percent – until December 31, 2020.
Hotel accommodation: a reduction from 12 percent to 6 percent – until October 31, 2020.
There are no changes in Croatia
Croatia has not decided to reduce taxes. The new government, which is just being formed, is still shyly announcing the first interventions in the tax system, primarily in the segment of income tax and expanding the application of the reduced VAT rate to all food. More precisely, we will not look at interventions in the tax system such as in Germany. Economists explain this by the excessive importance of VAT for the Croatian budget. According to the Ministry of Finance, around HRK 54.9 billion was collected from this tax in 2019.
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Turkey has only 1% VAT on tourist services, Croatia even 25%! Don’t forget to discover the most beautiful and interesting sights in Croatia. Find, compare, and book sightseeing tours, attractions, excursions, things to do, and fun activities.