Cities Offering Free Public Transport in 2024

In 2024, several Croatian cities introduced free public transport for their citizens. Slavonski Brod, for example, ran a pilot project from April to June 2024 to gauge public interest in free transportation and encourage reduced car usage due to pollution concerns, while Velika Gorica implemented free local bus services starting in July.

 While these initiatives promote urban mobility, they also bring important tax implications for employers. According to Art. 7 of the Income Tax Regulation (Official Gazette, No. 10/17 – 143/23), when public transport is free on an employee's commuting route, or when the employee belongs to a group eligible for free transport, employers can no longer reimburse travel expenses as a non-taxable benefit. In such cases, any allowance paid to employees is considered income (salary) on which mandatory contributions and taxes are computed.

However, if public transport is only free for part of the employee’s commute, non-taxable reimbursement can still be provided for the portion of the route where transport is not free. Employers are advised to review and update their employment agreements and internal policies to ensure compliance with these tax regulations.