Page 14 - Mazars Central and Eastern European tax guide 2023

Croatia rate of 5% will be applicable to supplies of gas and heating etc.) and payment of a performance award (e.g., bonuses)
from thermal units, firewood, pellets, briquettes and
up to EUR 995.42 per employee per annum is deemed
wood chips until March 31 , 2024. Namely, the local tax as non-taxable. Also, it should be noted that there are
st
authorities have recently (during April) announced that many other non-taxable receipts (employee meal costs,
they are extending the deadline. VAT-exempt services are reimbursement of rental costs, etc.). Since the new
mainly banking services, insurance, educational services provisions of the Labour Law define work at a separate
Mazars Cinotti Tax Consulting d.o.o. (under certain conditions), gambling, certain services workplace (working from home), tax regulations were
Strojarska cesta 20, XVI. Floor, provided by medical professionals and dentists and certain amended accordingly and prescribe a non-taxable flat-rate
10 000 – Zagreb, other activities. The zero rate of VAT (0%) also applies compensation to cover the costs of employees working
Croatia to the supply and installation of solar panels on private from home to an amount not exceeding EUR 3.98 per day
Phone: (00385) 1 4864 420 residential buildings and public buildings. Activities working from home, or EUR 66.37 per month.
Fax: (00385) 1 4864 429 of public interest are exempt from VAT regardless of their
www.mazars.hr The examples below show the cost to the employer and
institutional form. Entrepreneurs are obliged to register for the employee in the cases of minimum and average wage
VAT purposes during the calendar year in which the total levels in the private sector. Basic personal allowance
value of supplies exceeds a threshold of EUR 39,816.84. amounts to EUR 530.89 and surtax is determined
Excise duties, special tax on motor vehicles, special tax
Corporate taxes and other direct taxes A withholding tax of 15% is applied on interest, royalty and on coffee and non-alcoholic beverages. by municipality/city and varies from 0% to 18%.
business consultancy services paid by a Croatian company Active incomes fall under the scope of the SSC system:
Depending on annual revenues, in Croatia CIT rates are set to a foreign company. WHT on dividends, profit shares and Personal income tax / Social security system individual pension social contributions equal 20%
at 18% (on revenues exceeding EUR 995,421.06) or 10% performance by foreign performers is set at a rate of 10%. (employee contribution) and health and unemployment
(annual revenues below the prescribed threshold of EUR Croatia has more than 65 active DTT treaties used to avoid PIT rates are set at 20% (monthly tax base up to EUR contributions of 16.5% represent employer contributions.
995.421,06). Enterprises with annual revenues below EUR WHT. A withholding tax of 20% is applied on all payments 3,981.68) and 30% (exceeding EUR 3,981.68), while For persons under 30 years of age employed for
995,421.06 have the option of determining the corporate to offshore companies for services not mentioned in the the 10% rate is withheld from certain types of income, an indefinite period, there are no contributions on salary
income tax base by cash flow principle. Losses can Law. The EU Directives on withholding tax apply. e.g., dividends, capital gains, lease of real estate, etc. (16.5%) for a period of 5 years. Passive incomes are
be carried forward for up to 5 years but special limitations The payment of occasional awards up to an amount not generally only subject to taxes.
are applicable in case of M&A transactions. Croatia uses Real estate transfer tax (RETT) is applied on the transfer exceeding EUR 663.61 (e.g., Christmas and Easter bonus,
thin capitalization (4:1), but thin capitalization does not of immovable property at a rate of 3%. The taxable base
apply if shareholders are financial institutions, CIT payers is the market value of an item of real estate at the moment
in Croatia or PIT payers in Croatia. There is a range of tax when the tax liability is incurred and the taxable person
allowances for new investments and R&D, the education is the buyer.
of employees, etc.
VAT and other indirect taxes
Transfer pricing in Croatia In Croatia, the standard rate of VAT is 25%. A reduced Wage related taxes in Croatia Minimum wage Average wage

Arm's length principle ü Since 2004 rate of 13% applies to services involving the preparation in private sector
The transfer pricing local and serving of meals, tourist accommodation services, in EUR in EUR in EUR in EUR
Documentation liability ü file must be available within newspapers, delivery of electrical energy, etc., while 700 700 1,427 1,427
30 days of its request by the
a reduced rate of 5% applies to milk, books, etc. The VAT
Tax Authority.
Total wage cost 816 117% 1,662 117%
APA ü APA is available as of VAT options in Employer's contribution 116 17% 235 17%
1 January 2017.
Country-by-Country Since FY 2017. Croatia Applicable / limits Gross salary 700 100% 1,427 100%
liability ü Employee's contributions 140 20% 285 20%
Threshold for exemption is EUR 10,000/
Master file-local file Distance selling year, similar to other EU member states. Tax and surtax* 7 0% 144 10%
(OECD BEPS 13) No Master file-local file represents OSS applicable. Net salary
applicable informal legislative framework. 553 79.0% 997 69.9%

Penalty Call-off stock ü *Tax base differs from the gross salary, deductions apply.
Not specifically stated, general VAT group registration No
lack of documentation ü rules apply (up to EUR 26.545 - Cash accounting – yearly EUR 2,000,000/year
for a company and EUR 2.655 -
for the responsible individual). amount in EUR (approx.)
Additional tax charged
Yes, available to all Croatian VAT payers
tax shortage ü and 100% of that tax Import VAT deferment with the right to full input VAT deduction.
is non-deductible.
Direct or indirect control Construction work, the supply of used
50% (25% is commonly used by the material, the transfer of allowances
Related parties (25%) < tax authority and advisors) Local reverse charge to emit greenhouse gas, the supply
or joint control functions. of immovable property in certain
conditions.

Safe harbours ü Interest rates on loans between Option for taxation Pere Mioč
related parties.
letting of real estate No Partner, Tax Advisory Services
supply of used real estate ü Phone: +385 (0)1 4864 424
Level of attention paid by Tax Mobile: +385 (0)99 736 8746
Authority 8/10 VAT registration EUR 39,816.84/year
threshold E-mail: pere.mioc@mazars.hr

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