Croatia - Latest Amendments to the Tax Legislation

Contribution Regulation for Company Managers

Under the new Contributions Act, mandatory insurance now covers management board members, executive directors and liquidators in companies, unless they have mandatory insurance on another basis. When appointed to those functions (even when not employed), they are obliged to pay contributions on a monthly basis. This obligation includes contributions for pension insurance and an increased contribution rate for health insurance from 15% to 16.5% (employment contributions and health protection contributions are excluded from the new Contributions Act). Fines for not fulfilling this obligation range from HRK 5,000 to HRK 30,000.

A novelty is that mandatory insurance also covers part time employed management board members, executive directors and liquidators. The minimal contribution basis is HRK 5,491 (the Croatian average salary multiplied with a coefficient of 0,65) and part time employed management board members, executive directors’ and liquidators’ contributions are payed in proportion to the contribution basis (i.e. 4 hours work time – HRK 2,745 contribution basis)

Reduction of Real Estate Transfer Tax Rate from 4% to 3%

In order to stimulate the real estate market and improve Land Registry statuses, the Croatian Ministry of Finance continued with the reduction of real estate transfer tax rates. However, considering that the real estate transfer taxes are a source of revenue for local municipalities, this reduction might result with a growth in public utility charges.

VAT rate decrease

As of 1 January 2019, certain VAT reduction rate apply as follows:

  • 24% to 5% VAT rate reduction in relation to: bread, milk, books, non-prescribed medicaments, medical equipment for personal use, cinema tickets, newspapers and scientific magazines;
  • 24% to 13% VAT rate reduction for supplies of certain goods or services such as: accommodation services, services regarding the intellectual property of writers, composers and performing artist, public services related to the collection of communal waste, services related to the supply of electric energy and the supply of various food products.

This VAT reduction had an instant impact on market prices, even before the VAT reduction entered into force. Although the most of the VAT rate reduction entered into force on 1 January 2019, the most important, general VAT rate reduction from 25% to 24% is postponed for the beginning of 2020.



The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.