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Taxation in Croatia
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Taxation in Croatia
 
 
 

Corporate Tax

Profit tax rate: 20%

Resident companies pay tax on worldwide income, with a credit for foreign tax paid; non-resident companies pay tax only on Croatian-source income. An entity is resident for tax purposes if its legal seat or place of effective management and control is in Croatia. Profit tax is imposed at a flat rate of 20%. Dividends received by resident shareholders are exempt from profit tax.

Individual Tax

Progressive rates rising to 45%

Resident individuals pay tax on worldwide income; non-resident individuals pay tax only on Croatian-source income. Income tax is payable at progressive rates rising to 45%, increased by surcharges imposed by the local governments. Dividends received by individuals are exempt from personal income tax. Individual entrepreneurs are subject to the profit tax if total revenue exceeds HRK 2m or if certain other conditions are satisfied.

Capital Gains

Not subject to taxation

Capital gains derived by an individual are not subject to taxation in Croatia. However, capital gains derived by a legal entity are subject to profit tax. Gains derived by individuals from the sale of immovable property are subject to a 25% flat rate tax unless the property was owned for more than three years or the taxpayer lived in the property before the sale. Gains on intellectual property rights are also subject to the 25% flat rate tax.

Indirect Tax

Standard rate: 22%

Value-added tax (VAT) applies to most transactions. Exports, basic foodstuffs, and certain agricultural and fishing products are zero-rated. Exemptions include housing rents and financial, insurance and medical services.

Registration is compulsory for businesses with an annual turnover above HRK 85,000, and voluntary registration is possible below this amount.

Tax Administration and Compliance

Tax year: Corporations: accounting year ; Individuals: calendar year

Companies make monthly advance payments of tax, based on the previous year’s tax return. The tax return must be filed within four months of the end of the period. Employment income is taxed by monthly payments. Individuals that receive non-employment income must file a tax return by February 28th following the tax year.

Additional Tax Information

Withholding Taxes
Dividends 0%, Interest 15%, Royalties 15%. Rates may be reduced by double tax treaties.

Tax Treaties
Croatia has signed more than 25 double tax treaties, and also applies nine treaties concluded by the former Yugoslavia.

Dividends
Not taxable.

Revenue Protection
There are transfer-pricing and thin-capitalisation rules.

Groups
There is no provision for group treatment.

Incentives
Investment incentives; free zones; areas of special national concern; entities carrying out research and development activities; international shipping activities; mountainous areas of Croatia.

Other Taxes

Inheritance and gift tax, Firm tax, Advertising tax, Local surcharges, Consumption tax, Public utilities tax, Excise taxes, Tax on transfer of immovable property, Taxes on luxury goods.

 

 
 


 



 


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