Distribution of profit, as well as dividend payments and the profit shares, are considered as capital gains and as such is taxable, i.e. in the process of pay-out, personal income tax at a rate of 12% increased by the appropriate city surtax rate should be calculated.
However, dividends paid out of the profit gained until 29 December 2012 (except for those realized in the period from 1 January 2001 to 31 December 2004) are exempt from taxation.
The payer is obliged to submit a JOPPD form to the Croatian Tax Authorities for taxable dividends on the day of payment/next business day. Regarding non-taxable payments, they should be reported via JOPPD form to the Croatian Tax Authorities by the 15th of the next month with the prescribed markings for such payments.
If dividends and profits are used to increase the company’s share capital, personal income tax does not have to be calculated and paid. However, such payments should also be reported via JOPPD form to the Croatian Tax Authorities.