Taxes and Taxation in Croatia

Taxes and Taxation in Croatia

Croatia became integrated into the European Union in 2013. Since then, the country has been experiencing rapid development economically with continuous modernization of its commercial legislation. This move attracts investors, especially in the coastal region, an important tourism center with a high potential to grow business.

With that said, Croatia has three primary forms of taxes, which include:

  • Income tax, which is levied on wages and income interest
  • Capital gains tax, which is imposed on the profit of an enterprise
  • Value Added Tax

These taxes are subject to modifications. By allowing modification, the Croatian Government looks to modify the regulations and amount of taxes in response to the dynamic changes in the economy. Tax modifications can also be made in response to the frequent legislation reformulations. If you are new or looking to move to Croatia, it would be a point plus if you employ a law firm to stay up to date with the latest tax information.

Want to learn more about taxes and taxation in Croatia? Continue leading to get an overview of important information.

Income Tax in Croatia

The rates of enterprise revenues in Croatia are dependent on the number of earnings. These rates are subdivided into three different levels, including:

  • A 12% rate on income below 26 400 HRK
  • A 25% rate on revenues above 26 400 HRK but below 105 600 HRK
  • A 40% charge on income that exceeds 105 600 HRK

Croatian Value Added Tax (VAT)

Anyone who engages in an economic activity involving products or services worth more than 230,000 HRK must register for a VAT number with the tax authority. If you are a non-resident but a citizen of any country in the EU, you should hire a tax representative.

It would help if you kept in mind that Croatia has three different VAT rates, including 5%, 13%, and 25%. The former is the standard rate while the others are discounts for various goods and services.

Products and services under 5% and 13% tax levels are explained below.

The 5% tax is applicable on items such as:

  • Milk and bread
  • Newspapers, magazines
  • All types of books and journals written by scientists
  • Movie tickets
  • Medicines, medical equipment, and surgical products are eligible for the 5% tax.

The 13% applies to restaurant services, oils and fats, sugar and its products, and water. Concert tickets and hotel and housing services are also subject to the 13% tax.

The Corporate Income Tax in Croatia

The corporate income tax (CIT) in Croatia stands at 18% and is far more useful from a commercial enterprise point of view. A decrease CIT of 10% fee applies to groups (visible as taxpayers in China) with sales decrease than HRK 7.5 million registered within the tax period. Branches of overseas groups in Croatia, groups controlling stocks in the capital, or even herbal individuals challenge CIT. In the case of the remaining class of taxpayers, they could now select no longer to pay the private profits tax or PIT and rather be levied with CIT.

Are there home principles for tax assessment purposes in Croatia?

Croatia has a high duty system, yet this shouldn't influence you except if you have income from sources inside the nation or become an expense inhabitant. Charge inhabitants are by and large burdened on their overall pay.

In light of actual presence, you are an assessment occupant in Croatia, assuming you stay for 183 days under conditions that show your visit isn't brief. The 183-day visit might cover calendar years.

These are citizens who should enroll for tax assessment in Croatia. On account of people with a home in Croatia and the nation of beginning, the tax assessment is made in the nation where the family resides. Given keeping a home in Croatia, you are a duty citizen assuming you have a home there at your restrictive and ceaseless removal for no less than 183 days under conditions that show you mean to keep and utilize that convenience. Once more, this period might overlap your calendar year.

Your length of stay isn't significant, nor does it matter assuming the convenience is claimed or leased.

We advise you that it is essential to inform relevant parties in Croatia, particularly the Ministry of Foreign Affairs, assuming you presently do not live in Croatia or shut down the business exercises in this country. Making this report will remove tax charges whenever you seize your operations in Croatia.

The property tax rate in Croatia

The property tax in Croatia applies to pieces of land and building. It's also imposed on the VAT for the sale of the property. Below is vital information you need to know about property tax in the country:

  • All real estate transfers are subject to a 5% tax, which applies to gifted, inherited, or sold properties
  • A 25% applies to all sold properties. The tax is calculated on the total price of the property in question
  • An annual tax is imposed on rented properties, especially if they are used for tourist purposes
  • A tax of HRK 5 for every 15 square meters is also imposed on holiday properties

FAQs on Taxation in Croatia

Here are the frequently asked questions about taxation in Croatia for quick referencing.

1. What Is The Corporate Tax Rate In Croatia?

Croatia has an 18% on profits generated from businesses inside the country.

2. What Is The VAT Rate In Croatia?

A general tax of 25% applies to sold goods and services. There are also lower rates for specific goods like food, medical, water supply, and accommodation.

3. What Is The Tax On Capital Gains?

  • 10% on revenue from dividends, interest capital gains
  • 20% levy on grants stock or own shares based on a favorable price on the purchase
  • 30% tax on income generated from the use of services and withdrawal of assets

4. Is There A Wealth Tax In Croatia?

No, Croatia doesn't impose a tax on wealth, which is considered a major relief and an irresistible advantage for owning assets.

5. Is Croatia A Tax Haven?

International entrepreneurs appreciate Croatia for its low taxes and levy advantages. Due to these reasons, the country aligns itself with powerful financial places like Luxembourg and Switzerland.

Investing in Croatia

Here are reasons why you should:

From a business point of view, Croatia is a safe and highly appreciated center. The proof is based on the high number of foreign businesses in the country, proving that investing in Croatia has numerous benefits. Besides favorable tax rates and advantages, Croatia enjoys a stable economy, experienced workforce, and an evolving market. Croatia is also open to numerous business sectors.

Key Takeaway

It's pretty easy to understand tax and taxation in Croatia, but it can be quite complicated since the amount and general rules are subject to change. If you are interested in learning more or staying updated about tax, you are welcome to send your inquiries to our lawyers. Contacting us will be a point plus, especially if you are interested in starting a business in the country.

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