The Croatian Government adopted 66 economic measures due to the COVID-19 outbreak on 17 March, with their main purpose being the preservation of jobs and financial liquidity. In accordance with the measures concerning tax issues, the Croatian Parliament amended the General Tax Act, Profit Tax Act, and the Income Tax Act.
The main amendment is the introduction of the term “special circumstances” in the General Tax Act. It is defined as an event or a condition that could not be predicted and which threatens the life and health of citizens, property of greater value, significantly damages the environment, disrupts the economic activity or causes significant economic damage. The occurrence of such special circumstances is the basis for the decision on deferred tax payment and/or payment of tax in instalments, without interest or statute of limitations. Particularly, if special circumstances affect the ability to settle tax liabilities, the maturity of the tax liabilities incurred and/or due may be deferred and/or their payment in instalments may be approved. This also applies to public contributions (e.g. fees for state health and pension insurance) as the General Tax Act is relevant both for taxes and public contributions.
In that respect, it is announced that due to the financial damages caused by the COVID-19 epidemic, payment of corporate income tax and personal income tax will be deferred for a period of three months (with possible extension for another three-month period).
In addition, any incentives received due to special circumstances will not be considered as a tax base for the calculation of corporate income tax and personal income tax.
The Government also amended the procedure for calculations of income tax returns earlier, so that the return of income tax can be received in June rather than in August, as was the case until now.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.