1. Property tax
Property tax replaces the existing tax on holiday homes, which both individuals and legal entities are liable to pay. The tax is paid annually, ranging from 0.6 to 8 euros per square meter.
The property tax provides exemptions from payment in cases where the property is used for permanent residence, long-term rental, properties owned by companies intended for sale, etc.
The amount of tax is determined by the city or municipality where the property is situated, depending on its location, whereas it may also be adjusted based on other criteria, such as the age of the property and surrounding infrastructure.
Taxpayers must report all necessary information to determine property tax payment until 31st March of the current year.
2. Minimum wage
The statutory minimum gross wage is 970 euros, while for board members and directors it amounts to 1,168.70 euros.
3. Income tax
Personal allowance has been increased to 600 euros (7,200.00 euros annually), as well as personal allowance for dependents, disabilities and threshold amount for dependents. Likewise, other non-taxable payments, such as severance pay, performance bonuses and other, have been increased.
The threshold for applying the higher personal income tax rate has been raised to 60,000 euros annually.
The maximum levels of the lower and higher income tax rates have been reduced with the aim of further easing the tax burden on income, as shown below.
Municipality / City |
Personal income Tax rate |
|
Lower rate |
Higher rate |
|
Municipalities |
15% - 20% |
25% - 30% |
Cities |
15% - 21% |
25% - 31% |
Large cities and county seats |
15% - 22% |
25% - 32% |
Zagreb city |
15% - 23% |
25% - 33% |
The tax on tourist rentals charged per “rented” bed ranges between 20 and 300 euros per bed, depending on the tourism development index for each municipal authority. The tax amount is determined by each municipal authority.
The criteria for determining property income in the case of sale/ transfer of the property has been clarified.
Croatian citizens returning to Croatia, or descendants of Croatian emigrants, who continuously resided abroad for at least two years can be exempt from paying personal income tax for a period of 5 years.
4. Mandatory contributions
The exemption from paying health insurance contributions on employment income of employees who are being employed for the first time, for up to one year from the date of establishing the employment relationship, remains in force.
The exemption from paying health insurance contributions on employment income of young workers for a duration of 5 years is being abolished.
5. Value-added tax
The threshold for entering the VAT system has been raised to 60,000 euros, with an obligation to enter the VAT system on the first day after the day of passing the threshold.
Domestic taxpayers, whose domestic annual turnover did not exceed 60,000 euros, are exempt from paying VAT on domestic supplies of goods and services.
Taxpayers with registered office, or with permanent or usual residence, in another member state are exempt from paying VAT if their annual turnover in EU did not exceed 100,000 euros, and the value of their domestic supplies of goods and services did not exceed 60,000 euros.
A special taxation procedure for small taxpayers from other members of the European Union has been introduced. Small taxpayers can be exempted from paying VAT in Croatia, provided that required conditions are met.
Admission to cultural, sporting, educational and similar events which are broadcasted on the Internet or virtually are taxable in the member state where the service is being consumed.
Reciprocity condition upon VAT refund to taxpayers who are not established in the European Union territory is being abolished.
Based on the decision of the Croatian Tax Administration, correction of the amount of deductible input tax is enabled, to ensure neutrality of VAT for taxpayers.
6. Personal liability for tax evasion
In case of failure to submit statutory monthly or annual tax return, there is a possibility of determining liability of the owner of the company.
7. Internet payment transaction ban
It is prohibited to execute payment transaction on the Internet in favour of the business undertaking which performs economic activity on the Internet without authorization. The ban is enforced by the payment service providers in the Republic of Croatia (e.g., banks).
8. Electronic submission of tax returns
The scope of obligation to submit tax returns through e-Porezna has been expanded to include taxpayers engaged in self-employment, landlords renting apartments, rooms and beds to travellers and tourists, as well as crew members of the ships engaged on international voyages.
9. Statute of Limitations on Collection
A taxpayer is not entitled to a refund of paid taxes or interest on payments related to customs duties if such payments were made after the statute of limitations had expired.
The statute of limitations on the collection of tax liabilities, interest, and enforcement costs does not apply in cases where the tax authority was unable to initiate the collection process.