The Croatian association of restaurant owners warned on Tuesday that the excessive tax burden was threatening the hospitality sector and called for VAT on food preparation and serving in restaurants to be reduced from 25% to 13%.

The association warned that the tourism and hospitality sectors were on the verge of collapse in this situation of having to pay the highest VAT rate in Europe.

Speaking on behalf of restaurant owners, Marin Medak and Vedran Jakominic told a press conference that they would address their demands to the government and relevant institutions to save the tourism and hospitality sectors which are facing a collapse due to high taxes.

The situation is alarming and it is time for the government to finally open a dialogue with the hospitality sector, they said.

Medak underscored that Croatia had the highest VAT rate on food preparation and serving in the Mediterranean and one of the highest in the EU.

“We urgently call for the VAT rate to be reduced to 13% and for the 3% consumption tax to be abolished because these rates are making it impossible for us to adequately pay local workers who we would rather employ than foreigners,” he said.

“It is humiliating to watch people emigrating while the government is sending messages that the employers are insatiable,” Jakominic added.

He presented data from the FINA financial agency according to which more than 120,000 enterprises last year employed 882,884 workers and reported a turnover of HRK 680 billion, HRK 22 billion in profit or 3% of the turnover.

The association said that the quotas for foreign workers were a temporary solution and that Croatia requires an effective and long-term tourism and hospitality development strategy, which will among other things, enable Croatian workers to stay in Croatia rather than having to emigrate.