In the case of taxation of individuals, a taxpayer may be an individual who earns income or an heir for all tax liabilities arising from the decedent’s income until the decedent’s death. In this regard, joint acquisition of income is possible in such a way that each natural person is considered a self-employed taxpayer according to the share of income.
Income tax is levied on income earned in the Republic of Croatia, by residents and non-residents. Residents are natural persons who have their permanent or usual place of residence in the Republic of Croatia or who earn their income in the Republic of Croatia. Non-residents are those who earn their income in the Republic of Croatia, although they do not have their permanent or habitual residence in the country. It should be emphasized that income earned domestically by non-residents is taxed according to the principle of “domestic income”, while income earned domestically and abroad is taxed in the case of residents. It is possible to tax income from non-self-employment, self-employment, capital, property and property rights, etc., which constitute the tax base, and reduce it through the personal deduction for residents and non-residents.
RATE: applies only to income from non-self-employment or self-employment (also not applicable to taxation of income from property and capital
- 20% up to 47.780,28 EUR per year
- 30% over 47.780,28 EUR per year
Natural persons deriving income in another Member State
The question of taxation in cases where an individual earns income outside the country of his or her own residence or habitual abode is mainly governed by bilateral double taxation treaties between Member States, which do not disadvantage employees earning income in other Member States with regard to the free movement of workers.
INHERITANCE AND GIFT TAX
For the purposes of taxation of inheritances and gifts, the taxpayer is any natural or legal person who has inherited, received or otherwise acquired property in the Republic of Croatia free of charge. A tax of 4% is payable on the inheritance and gift, and 3% on gifts of real estate. Inheritance and gift tax is paid in accordance with the Act on Local Taxes on Cash, Receivables and Securities (Securities) and on Movable Property if the individual market value of the movable property exceeds 6.636,14 EUR on the date of determination of the tax liability.
Inherited and donated real estate
When acquiring real estate by inheritance or gift, tax exemption is possible for the following persons:
- Spouses, extramarital partners, formal and informal life partners, descendants and ancestors forming an upright line, as well as in the case of adoptees and adoptive parents of the donor testator or donor
- To a legal and natural person who gratuitously donates or provides real estate to the Republic of Croatia or to a unit of local and regional self-government as compensation or for other reasons in connection with the War of Independence
- Former spouses, former extramarital partners, and former formal and informal domestic partners in settling their property relationships.
Real estate transfer tax
When acquiring real estate, whether by purchase, inheritance, or any other means of acquiring real estate, an individual becomes a taxpayer for real estate transfer tax. An exception is real estate, which is subject to the VAT system.
The tax rate is 3% of the market value of the property at the time of its acquisition, while the assessment base for the real estate transfer tax is the market value of the property at the time of tax liability.
TAX FOR VACATION HOMES
Tax on vacation homes is paid by individuals and legal entities once a year. According to the decisions of a municipality or town where the vacation house is located, it is from 0,66 to 1,99 EUR per square meter of usable area. Exemption from this tax is possible if they cannot use the vacation home themselves due to war destruction or natural disasters (e.g. fire), due to age and decay, for a period when the house accommodates displaced persons and refugees, or if the house is rented out for tourist purposes or real estate business (Administrative Court ruling).
VACATION HOME RENTAL
It is not uncommon to rent vacation homes in the Republic of Croatia. In this regard, taxation must be explained in relation to the part of the vacation home that the owner does not use himself, but rents out to others. A distinction must be made between income tax, which is determined on a flat-rate basis based on rental activities, and tax levied on vacation homes, which is determined on the basis of ownership of a vacation home. The income tax is determined by a tax assessment issued by the competent branch of the Tax Administration in the form of a product of the number of beds, i.e. the number of accommodation units in the campsite and/or camping site and/or accommodation facility Robinson, and the amount of the flat-rate tax per bed or per accommodation unit. The amount of flat-rate tax may not be less than 19,91 EUR and not more than 199,08 EUR.
In clarifying the issue of taxation of natural persons in the Republic of Croatia, it should be emphasized that Croatian national legislation does not provide for the payment of property tax on property, nor does it provide for the payment of property tax on real estate for natural persons.