The universal tax rate of 1.5% is within the European average, and the tax base is even more favourable in Croatia given that as much as 30% of the value of real estate is excluded from the tax, while in Europe it is usually some 20%, the minister said.

Furthermore, many tax reliefs will be applied such as relief of between 88% and 95% for real estate used as permanent residence, and it will be on local government units to establish the exact sum to be paid as real estate tax and the exact amount of tax reliefs.

Tax reliefs for real estate used occasionally range between 70% and 85%, and the exact sum will also be decided by local government units.

There will be no tax relief for vacant real estate. This is the main message of this government, Linic said underlining that the purpose of this legislation is to put real estate in use or pay the highest tax rate for vacant real estate.

The new tax on regularly occupied real estate will not be higher than fees currently paid for communal utilities and services which will be abolished with the enforcement of the new tax legislation, and some people can expect to pay lower sums than they have paid so far for communal utilities, the minister said.

The tax relief of between 70% and 85% for occasionally occupied real estate will cover holiday houses which owners use from time to time and the new tax will replace the existing tax on holiday homes or on facilities which their owners rent as bed and breakfast for tourists.

As for tax relief for real estate used for business purposes, the highest tax relief of 80% will apply to facilities used for industrial and manufacturing purposes, health care, education and no-profit making activities.

The tax relief of 60% will be levied on real estate leased and for real estate used for construction, transport and warehousing services as well as for restaurants and cafes, while tax relief of 40% is planned for real estate used for commercial activities as retail shops, and 20% of tax relief can be expected for real estate utilised for other activities.

The farmland will be exempt from this tax and taxes on farmland will be regulated by a separate law.

Exempt from this tax will be embassy buildings and consular offices, international organisations and the Red Cross, real estate in mine-infested areas and community commons, cemeteries, waste management storage facilities, public zoos, airports, memorial centres, national parks, sports facilities, facilities used by firemen and those used for religious purposes.

Local government units will decide who will be exempt from this tax, including pensioners, jobless people and other categories of citizens entitled to welfare benefits.

The value of every real estate will be entered into fiscal registries which will be established by the end of March.

For the time being, the method of mass appraisal of real estate will be applied, with the averaged value on the market, the minister added.

The application of this type of tax should contribute to the revival of the real estate market, he said, adding that the government is expecting huge effects, as it will have an impact on efforts to reduce prices, step up the legalisation of unlawfully built property and on the reporting of rented property. Also, this will lead to stronger decentralisation as revenues from this tax will go to local government units, the minister said.