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Latest Amendments to Tax Legislation

On 17 February 2012 Croatian Parliament adopted the amendments to four tax regulations: Value Added Tax Act, Personal Income Tax Act, Corporate Income Tax Act and Contributions Act.

The amendments are essentially the following:

1. Value Added Tax (VAT)

As of 01 March 2012 the basic VAT rate is 25 % instead of 23 %.

The decreased 10 % rate applies to edible oils, fats, children food and processed food on basis of cereals for infants and small children, white sugar and water supply, except water in bottles and other packaging.

Tax payers may not deduct VAT for:
  • supply and lease of vessels intended for recreation, aircrafts, cars and other means of personal transport, nor for supply of related goods and services (such as fuel, costs of maintenance, repairs, etc.), unless they are indeed intended for conducting business of transport of passengers and goods, rent-a-car, further sale or in case of personal transport vehicles used for training of drivers, testing of vehicles, repair services, etc.
  • business gift expenses.
As of 01 January 2013 the decreased 10 % rate shall apply to catering services, the threshold for registration with the registry of VAT tax payers shall be HRK 230,000,00 instead HRK 85,000.00 and the amount determining whether a tax payer is a monthly or quarterly VAT tax payer shall be increased from HRK 300,000.00 to HRK 800,000.00.

2. Personal Income Tax

As of 01 March 2012 the basic personal monthly deduction shall be HRK 2,200.00, instead of HRK 1,800.00 and in case of retired persons HRK 3,400.00 instead of HRK 3,200.00.

Dividends and profit payments above HRK 12,000.00 shall be regarded as capital income and shall be subject to taxation at 12 % rate.

3. Contributions

As of 01 May 2012 the health insurance contribution on wages shall be decreased from 15 % to 13 %.

The decreased rate of the said contribution shall apply to wages from May 2012 onward.

4. Corporate Income Tax

As of 01 March 2012 the payment of withholding tax at 12 % rate on dividends and profit payments to foreign legal persons shall be introduced.

However, where there are treaties on avoiding double taxation in some cases lower tax rates shall apply or there may be no taxation.

As of 01 January 2013 the tax base may be decreased by the amount of earned profit if used for increase of a company’s share capital.
03.04.2012. u 22:00

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