The growing demand trend for daily and overnight pet accommodation services rases the question regarding the classification of the service from the VAT aspect. Therefore, on the 27th of June 2022, Croatian Tax Administration has issued an opinion on the matter of application of reduced VAT rate of 13% on daily and overnight pet accommodation in a Dog Hotel.
According to the Value Added Tax Act, reduced VAT rate of 13% is applicable for the services of accommodation or accommodation with breakfast, half board or full board in commercial hospitality facilities. Regarding the fact that temporary accommodation of pets does not meet the prescribed conditions and since the lodging cannot be defined as a commercial hospitality facility, the reduced VAT rate of 13% is not applicable for the pet accommodation services, therefore the service is taxed with regular 25% rate.