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The criminal offence of tax and customs evasion in croatian legislation

In the Republic of Croatia, tax and customs evasion is regulated primarily by the Criminal Code, although there are other laws related to these topics, such as the Companies Act, etc. Tax and customs evasion are criminal offences against the economy, which can generally be defined as the totality of the punishable behaviors committed in economic affairs.

The acts constituting the criminal offence of tax or customs evasion may be committed by both natural and legal persons. For a natural or legal person to commit a crime of tax or customs evasion, it is necessary to partially or completely avoid paying taxes or duties by providing inaccurate or incomplete information and facts that are relevant to establishing a tax or customs duty and to do those acts or omissions with intent.

The conditions for the existence of the criminal offence of tax or customs evasion are:

  1. that the taxpayer lawfully pursued the activity, in other words, that the failure to report income and other facts relates to the lawfully obtained income,
  2. whether the damage to the state budget has occurred because if there is no damage to the state budget then there is no possibility to report tax or customs evasion.

Therefore, the criminal offence of tax evasion or customs evasion is committed by a person who, intending to avoid, in whole or in part, the payment of tax or customs duty, gives incorrect or incomplete information about the income, objects or other facts that influence the determination of the amount of tax or customs duty or who for the same purpose in the case does not report the income, object or other facts which influences the determination of a tax or customs obligation, to which the person is obliged. It is important to emphasize that incrimination requires that these actions lead to a reduction or non-determination of tax or customs duty in the amount exceeding HRK 20,000.00.

The criminal offence of tax or customs duty evasion has two basic forms and must consist of:

  1. providing inaccurate information about the income and the items or other facts that influence the determination of tax obligations, and
  2. failure to file a tax return in cases where filing is compulsory.

Therefore, the first form of criminal offence of tax evasion or customs evasion can only be accomplished by the acts, that is, providing inaccurate information, while for the second form it is necessary to accomplish the act by not submitting or filing a tax return. The perpetrator of the criminal offence in question may be the taxpayer himself or herself as a natural person and when a debtor is a legal person, then the perpetrator is the person who, on behalf of the right person, is obliged to make available business information.

The level of (imprisonment) penalty for committing the criminal offence of tax and customs duty evasion depends on whether there is a large-scale tax obligation or whether the amount of tax or customs duty is greater or less than HRK 600,000.00, so in the first case the upper limit is 5 (five) years and in the case of large-scale tax liability, the upper limit is 10 (ten) years in prison.