LEGAL PERSONS
Profit tax
A company and other legal entity resident in the Republic of Croatia that
performs economic activity independently, permanently and for the purpose
of making profit or income or other economically assessable benefits is liable
to pay profit tax, and the taxpayer is the domestic business unit of a foreign
entrepreneur (non-resident).
Profit is determined according to accounting regulations as the difference
between income and expenses before the calculation of profit tax, increased
and decreased according to the provisions of the Law on Profit Tax. The tax
base of a resident taxpayer consists of the profit realized in the country and
abroad, and the tax base of the non-resident consists only of the profit
realized in the country. It also includes profits from liquidation or other
proceedings by which the taxpayer terminates operations in accordance with
special regulations, sales, changes in legal form and division of the taxpayer.
The profit tax rate is 10% if the income in the tax period is up to EUR 995.421,06
or 18% if the income in the tax period is equal to or greater than EUR 995.421,06.
Personal deduction (natural person)
The personal deduction of the taxpayer is a non-taxable part of the income,
and the base of the personal deduction is EUR 530,90.
PERSONAL DEDUCTION OF A RESIDENT:
The taxpayer may increase his personal deduction by the deduction for
dependent members of the immediate family and dependent children for
natural persons whose taxable income, tax-free income and other income
that are not considered income on an annual basis do not exceed EUR
3.185,40.
PERSONAL DEDUCTION OF A NON-RESIDENT:
In the tax period, non-residents may deduct a personal deduction in the
amount of the basic personal deduction when calculating the advance
income tax on non-independent work or in the annual tax calculation.
A resident of a Member State of the European Union or the European
Economic Area, except the Republic of Croatia who earns income from nonindependent word, self-employment in the Republic of Croatia, may use
personal deduction in the annual income tax calculation based on the
submitted annual tax return or in a special procedure for determining the
annual income tax, for the entire tax period, provided that he proves with
authentic documents that the said income earned in the Republic of Croatia
makes at least 90% of his total (world) income earned in the tax period and
that he is exempt from taxation in the Member State of residence.
Tax deductible expenses (applies to legal entities and natural persons
craftsmen/self-employed)
Tax-deductible expenses are all those expenses that actually serve the
performance of activities, ie a direct correlation can be proven between the
realization of income and these expenses.
These costs may include: field allowance, fee for using a private car for
official purposes, severance pay for retirement, gift to an employee in cash
in the name of Christmas allowance or some other compensation, costs of
using an official mobile phone, rewards for good work, a special bonus can
be paid the employees following with a non-taxable payment of (Christmas,
holiday pay, etc.) up to EUR 663,62, reward for work results (additional
salary, supplement to the monthly salary, etc.) up to EUR 995,43, hot
meal fee EUR 796,44 – all on an annual level.
These costs also include compensation for the costs of regular care for
workers’ children up to the amount of actual expenses, supplementary
insurance premiums of workers up to EUR 331,8 per year, compensation
for transport to and from work and the use of private cars for business
purposes, newborn benefits. This may include work clothes and footwear, so
for example, the official clothes of lawyers, trainee lawyers and other
employees in the law office also represent a recognized cost – if prescribed
by the Ordinance.
Porez na dohodak od kapitala po osnovi primitaka od dividendi plaća se po
odbitku po stopi od 10%.
Capital income and dividend tax – APPLIES
TO NATURAL-PERSONS CITIZENS
Income from capital is considered to be income based on capital, capital
gains, profit shares realized by allotment or option purchase of own shares,
dividends and profit shares based on capital shares, which were realized in
the tax period.
Capital income tax on dividend receipts is payable at the rate of 10%.
For taxable dividends, the payer is obliged to submit the JOPPD Form on the
day of payment / next working day, and for non-taxable payments by the
15th of the following month, with the prescribed marks.
Transfer of business share in the company (LEGAL
ENTITY AND NATURAL PERSONS)
The business share in the company can be transferred from one person to
another, whether it is a legal entity or a natural person.
The transfer of a business share requires a contract concluded in the form of
a notary deed or a private document certified (solemnized) by a notary
public, regardless of whether it is a sale, donation or other legal transaction
that results in the transfer of business share. In the case of inheritance, a
final decision on inheritance is required for the transfer of the business
share. It is important to point out that the transfer of business share in the
company is not subject to taxation, but only if the agreed transfer is free of
charge or if the transfer occurred after two years of acquisition or if there is
no difference in price.
Prohibition of double taxation (Croatia and Germany) –
for legal entities
For the purpose of protection against double taxation, the Republic of
Croatia and the Federal Republic of Germany have concluded an Agreement
between the Republic of Croatia and the Federal Republic of Germany on the
avoidance of double taxation with respect to taxes on income and on capital.
Pursuant to the said agreement, the profits of a company of a Contracting
State shall be taxable only in that State unless the company carries on
business in the other Contracting State through a permanent establishment
situated therein. If the company operates in this way, the profits of the
company may be taxed in that other Contracting State but only so much of
them as is attributable to that permanent establishment.
When it comes to dividends, dividends paid by a company which is a
resident of a Contracting State to a resident of the other Contracting State
may be taxed in that other State.
However, such dividends may also be taxed in the Contracting State of
which the company paying the dividends is resident, in accordance with the
laws of that State, but if the actual beneficiary of the dividends is a resident
of the other Contracting State, the tax shall not exceed:
a) 5% of the gross number of dividends if the actual beneficiary is a
company (but not a company of persons) that directly owns at least 10% of
the capital of the company that pays dividends;
b) 15% of the gross number of dividends in all other cases.
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