Page 15 - CEE Tax Guide 2024

Croatia In Croatia, the standard VAT rate is 25%. A reduced rate above EUR 4,200 /annual tax base above EUR 50,400).
of 13% applies to services involving the preparation
The 12% rate is withheld from certain types of income,
and serving of meals, tourist accommodation services, e.g. dividends, capital gains, lease of real estate, etc.
newspapers, the supply of electrical energy, etc., while The payment of occasional awards up to an amount not
a reduced rate of 5% applies to milk, books, etc. The VAT exceeding EUR 700 (e.g. Christmas and Easter bonus,
rate of 5% will be applicable to supplies of gas and heating etc.) and payment of a premium performance award
Mazars Cinotti Tax Consulting d.o.o. from thermal units, firewood, pellets, briquettes, and wood (e.g. bonuses) up to EUR 1,120 per employee per annum
Strojarska cesta 20, XVI. Floor, chips until March 31, 2024. is deemed as non-taxable. Also, it should be noted that
10 000 – Zagreb, The most important VAT-exempt services are banking there are many other non-taxable receipts (employee meal
Croatia services, insurance, educational services (under certain costs, reimbursement of rental costs, etc.). Tax regulations
Phone: (00385) 1 4864 420 conditions), gambling, certain services provided prescribe a non-taxable flat-rate compensation to cover
Fax: (00385) 1 4864 429 by medical professionals and dentists, and certain other the costs of employees working from home to an amount
www.mazars.hr
activities. The zero VAT rate (0%) also applies to the supply not exceeding EUR 4 per day working from home, or EUR
and installation of solar panels on private residential 70 per month. The examples below show the cost to the
buildings and public buildings. Activities of public interest employer and the employee in the cases of minimum and
are exempt from VAT regardless of their institutional form. average wage levels in the private sector. Basic personal
Corporate taxes and other direct taxes from October 12, 2023, there is no longer an obligation Entrepreneurs are obliged to register for VAT purposes allowance amounts to EUR 560.
to pay withholding tax on market research services, tax during the calendar year in which the total value of supplies
Depending on annual revenues, CIT rates in Croatia are set and business consulting, and auditing services provided exceeds a threshold of EUR 40,000. Active incomes fall under the scope of the SSC system:
at 18% (on revenues exceeding EUR 995,421.06) or 10% (except for EU non-cooperative jurisdictions). WHT Excise duties, special tax on motor vehicles, special tax individual pension social contributions equal 20%
(annual revenues below the prescribed threshold of EUR on dividends, profit shares, and performance by foreign on coffee and non-alcoholic beverages. (employee contribution) and health and unemployment
995,421.06). Enterprises with annual revenues below EUR performers is set at a rate of 10%. Croatia has 68 active contributions of 16.5% represent employer contributions.
995,421.06 have the option of determining the corporate DTT treaties. A withholding tax of 25% is applied Personal income tax / Social security system There are no contributions on salary (16.5%) for a period
income tax base using the cash flow principle. Losses can on all payments to offshore companies for services not of 5 years for persons under 30 years of age employed
be carried forward for up to 5 years, but special limitations mentioned in the Law. The EU Directives on withholding Instead of the current tax rates of 20% and 30% + for an indefinite period. Passive incomes are generally
are applicable in case of M&A transactions. Croatia uses tax apply. The latest amendments to the Law extend possible surtax on income, units of local and regional only subject to taxes. From January 1, 2024, the base for
thin capitalization (4:1), but thin capitalization does not the exemption from taxation of interest and royalty self-government apply tax rates within the following the calculation of contributions for the 1st pillar pension
apply if shareholders are financial institutions or CIT or PIT payments between affiliated companies from EU countries range, depending on the given local and regional self- insurance is reduced. For gross salaries up to EUR 700, the
payers in Croatia. There is a range of tax allowances for new to companies from EEA countries (Norway, Iceland, and government unit: lower rate: 15%–23.60% (monthly fixed allowance amounts to EUR 300, while for salaries
investments, R&D, the education of employees, etc. tax base up to EUR 4,200 /annual tax base up to EUR from EUR 700.01 to EUR 1300, the allowance is gradually
Liechtenstein).
A withholding tax of 15% is applied on interest and royalty A 3% real estate transfer tax (RETT) is applied to the 50,400) and higher rate: 25%–35.40% (monthly tax base decreased – 0.5 x (EUR 1,300 – gross salary).
paid by a Croatian company to a foreign company. Starting
transfer of immovable property. The taxable base is the
market value of an item of real estate at the moment
Transfer pricing in Croatia when the tax liability is incurred and the taxable person

Arm's length principle ü since 2004 is the buyer.
Average wage
Documentation liability ü since 2004 VAT and other indirect taxes Wage related taxes in Croatia Minimum wage in private sector
APA is available
APA ü as of January 1, 2017. VAT options in in EUR in EUR in EUR in EUR
Country-by-Country Croatia Applicable / limits 840 840 1,620 1,620
liability ü Since FY 2017. Total wage cost 979 117% 1,887 117%
Master file-local file Distance selling Threshold for exemption is EUR 10,000/
year, similar to other EU member states.
(OECD BEPS 13) No Master file-local file represents OSS applicable. Employer's contribution 139 17% 267 17%
informal legislative framework.
applicable Gross salary 840 100% 1,620 100%
Penalty Call-off stock ü Employee's contributions 134 16% 324 20%
Not specifically stated, general VAT group registration No Tax and surtax* 35 24% 174 24%
rules apply (up to EUR 26,545
lack of documentation ü – for a company and EUR 2,655 Cash accounting – yearly Net salary 672 80.0% 1,122 69.3%
for the responsible individual). amount in EUR (approx.) EUR 2,000,000/year
* Tax base differs from the gross salary, deductions apply.
Additional tax charged
tax shortage ü and 100% of that tax Import VAT deferment Yes, available to all Croatian VAT payers
is non-deductible. with the right to full input VAT deduction.
Direct or indirect control Construction work, the supply of used
Related parties > 50% (25% is commonly used by the materials, the transfer of allowances
(25%) tax authority and advisors) Local reverse charge to emit greenhouse gasses, and,
or joint control functions. in certain conditions, the supply
Interest rates on loans between of immovable property.
related parties / Simplified Option for taxation
approach for low-value adding
Safe harbors ü services (though not mandated letting of real estate No Pere Mioč
by law, it is generally accepted Partner – Tax Services
by Tax Authorities in practice). supply of used real estate ü Mobile: +385 (0)99 736 8746
Level of attention paid by Tax VAT registration EUR 40,000/year E-mail: pere.mioc@mazars.hr
Authority 8/10 threshold

14 Mazars Central and Eastern European tax guide 2024 Central and Eastern European tax guide 2024 Mazars 15