Tax-deductible expenses in a Croatian d. o. o.

Limited liability companies are subject to corporate income tax. The difference between the increased or reduced revenue and expenditure according to the provisions of The Corporate Income Tax Law is used as the basis for tax assessment.

There are several ways to reduce the tax basis. One of the best ways to do this and at the same time reward company employees is through tax-free payments to employees. Such payments increase the cost to the company, resulting in less tax being paid.

The employer has a wide range of tax-free payments available to pay out to the employee. They are as follows:

– Daily allowance for business trips – for example to Germany or Austria EUR 70.00 per day
– Reimbursement of travel expenses for a business trip – in the amount of the actual costs
-Reimbursement of travel expenses to and from work by public transport
– Reimbursement of expenses for hospitality, tourism and other services related to the employee’s vacation – up to EUR 331.81 per year
– One-off financial allowances to cover workers’ food costs:
a) In the event that food expenses are deducted for several months of the same tax period, these can be paid out tax-free up to a total amount of EUR 796.44 per year cumulatively for the number of months for which they are paid
b) up to EUR 1,592.76 per year if the necessary requirements are met and documents are submitted
– The costs incurred for the accommodation of employees during the employment relationship – up to the amount of the actual costs
– Rewards – Christmas bonus, holiday bonus etc – up to 663.62 euros per year
– Payment allowances and other forms of additional employee rewards – up to 995.43 euros per year
– Seniority Rewards
– Severance allowance due to retirement – ​​up to EUR 1,327.24
– Severance pays due to discharge for operational reasons and personal discharge – up to EUR 862.70 for each completed year of work with the same employer
– Severance benefits due to an accident at work or occupational disease – up to EUR 1,061.79 for each completed year of work with the same employer
– A gift for a child up to 15 years old – up to EUR 132.73 per year
– Benefits in kind – up to EUR 132.73 per year
– Reimbursement of the costs of regular childcare for employees in pre-school educational institutions – up to the amount of the actual costs
– Support for a newborn
– Contributions to voluntary pension insurance
– Additional and supplementary health insurance premiums– up to EUR 331.81 per year
– Grants due to property destruction and damage due to natural disaster declared by the Government of the Republic of Croatia
– Education and training costs related to the employer’s activity – up to the amount of the actual costs
– Allowances for living apart from the family
– Disability support for an employee
– Assistance in the event of the employee’s death
– One-off benefit in the event of the death of a close family member of the employee
– Support for the education of a child of a deceased employee.

More about tax-free payments and other income that is not considered self-employment income.