Government proposal for increase of non-taxable payments to employees
Public e-consultations were opened on 15 September 2022 for the Bylaw amending the current Personal Income Tax Bylaw. The proposed amendments to the Bylaw refer to the increase in the amount of non-taxable payments and new rules regarding the settlement of employee meal costs.
If accepted, the changes related to the new amounts of non-taxable payments should enter into force on 1 October 2022. Other changes should enter into force on 1 January 2023.
More details can be found below:
If accepted, the changes related to the new amounts of non-taxable payments should enter into force on 1 October 2022. Other changes should enter into force on 1 January 2023.
More details can be found below:
1) Amendments expected to enter into force on 1 October 2022
| Non-taxable payment | Current amount (HRK) | Proposed amount (HRK) |
| Non-taxable Christmas bonus (per year) | 3,000.00 | 5,000.00 |
| Non-taxable reward for work results and other forms of additional remuneration for workers (per year) | 5,000.00 | 7,500.00 |
| Non-taxable gift for a child up to the age of 15 (per year) | 600.00 | 1,000.00 |
| Non-taxable lump-sum allowances for employee meal costs (per year) | 5,000.00 | 6,000.00 |
| Non-taxable fees for the use of a private car for business purposes (per kilometre) | 2.00 | 3.00 |
| Non-taxable severance pay in case of retirement | 8,000.00 | 10,000.00 |
2) Amendments expected to enter into force on 1 January 2023
According to current tax legislation, employers can settle employee meal costs in only one of the following ways within one tax period (i.e., year):
- By giving a lump-sum allowance (from 1 October 2022: maximum non-taxable amount up to HRK 500.00 per month or HRK 6,000.00 per year), or
- By settling food costs based on trustworthy documentation (maximum non-taxable amount up to HRK 1,000.00 per month or HRK 12,000.00 per year).
According to the proposed changes, from 1 January 2023 employers will be able to combine the aforementioned options on a monthly basis (i.e., each month they will be able to choose from one of the two options).