Click to download PDF: As per 1 January 2014, 20152016, 2017

Tax rate Two tax brackets (24% up to approx. 2.350 EUR, 36% above aprox. 2.350 EUR), various reliefs available to Croatian tax residents (and under certain conditions to foreign residents).
Tax period Calendar year
Tax residency / Domicile according to domestic law Residence (i.e. the flat or house available to the individual more than 183 days in one or two calendar years, where living in that flat or house is not necessary ).

Present for more than 183 days during one or two calendar years in Croatia

Tax registration Within 8 days from the day of the beginning of business activities.

If a person is considered a resident for tax purposes in Croatia, when entering or leaving the country certain froms should be submitted (TU or TI form).

Employment income definition Any income paid in cash or in kind related to the employment (includes all allowances regarding home leave, cost of living and other).
Examples of tax exemption Reimbursement of accommodation and travel costs for business trips, travel allowences, jubilee awards, severance payment for dismissal and retirement, reimbursement of costs of transportation to and from work, all up to amounts determined by legislation.
Specific expatriate concession Not applicable.
Income of board members Treated as employment income or as other income.
Tax returns Local employment agreement – the employer is liable for the monthly tax compliance.
Foreign employment agreement – individual tax compliance (tax advance payments sholud be made by the employee within 30 days of receipt of income). If advance payments are made on monthly basis, generally, there is no obligation of submitting Annual Tax Return.
Tax payments At the time of payment (if witheld by the employer), within 30 days after receipt (if paid by the employee).
Employment income / income from board members Art 15/16 Model OECD Tax Convention.
Cross border employments EU Regulation No 883/2004 and EU regulation No. 1408 / 71.
Exception under Art 16 of Reg. 883/2004
and Art 17 of Reg. 1408/71
Generally applicable.
Social Security Cost as % from gross salary and absolute amounts Due by the employee: pension insurance: 20%
Due by the employer (on top of gross income): health insurance: 15%, accident at work contribution: 0,50%, employment contribution: 1,7% (overall: 17,2%).
Work permit Croatia is currently applying principle of reciprocity for EU countries which restricted employment for Croatian citizens.
Mentioned countries as well as other countries need to obtain a proper work permit to work in Croatia.
Visa EU/EEA nationals do not need a visa to enter into Croatia although their duration of stay may be subject to restrictions.
Non EU nationals may need a visa, which needs to be obtained before their arrival in Croatia and should correspond to the purpose of their visit and can be obtained in general from the Croatian diplomatic mission in their country of residency and / or nationality.
Residency permits / registration certificate EU/EEA nationals need to apply for a registration certificate before staying for more than 90 days within the any 180 days period.
Non EU national in general need to apply for a residency permit before staying more than 90 days in any consecutive six month period and after having obtained their residency permit.
Driving license EU/EEA nationals can use foreign driving license, but can also apply to exchange it for the Croatian driving license (although it is not obligatory).
Other nationals can use their local (foreign) driving Croatia. Note that there is is a reciprocity provision.
Prior to the expiration of one year, foreign driver’s license should be replaced with a Croatian driver’s license.
STOCK OPTION PLAN There is no tax exception and it is taxed when stock options are exercised.
183 days Number of days is not defined by the national legislation. In case DTT us applied, number of actual days spent in Croatia are counted. All days which are at least partially spent in Croatia is counted as well as, weekly rest days, vacation days, sickness or occupational accident days off, days of departure and arrival, public holidays, short interruptions (e.g. training, strike days,…)
Notion of employer According to Labor Act, an employer is a natural or legal person who employs a worker and for whom a worker performs certain tasks. Furthermore, the same Act stipulates that the employment relationship is based on employment contract.
In case a person performs activities which have characteristics of employment (receives instructions for the work, works under certain timetable, receives salary from that person) it can be considered as employment even though there is no contract between the parties.
Existence of a permanent establishment  Existence of PE is defined by Corporate Income Tax Law an is in line with the provisions of DTT.
A permanent establishment of a non-resident shall be the permanent place of business through which the non-resident carries out, entirely or in part, a business activity in the Republic of Croatia.
Representative acting on their behalf in relation to any activity:
– have and usually use authority to conclude agreements on behalf of the foreign entrepreneur
– hold stocks of products or trading merchandise out of which they usually
perform deliveries on behalf of the foreign entrepreneur
Andrija Garofulic
Partner – Tax and Financial Advisory Services – Zagreb, Croatia
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