The final amendments to the Law which have entered into the force as of 1 January 2020 are published. Below you can find a summary of some changes which are related to different types of taxes.
Personal Income Tax
As of 1 January 2020, the basic personal allowance is increasing from 3,800.00 HRK to 4,000.00 HRK. The increased amount shall be applied in the payment of all salaries payable in January 2020, irrespective of the period payable.
The amount of non-taxable annual prizes (Christmas bonus, etc.) has been increased from 2,500.00 HRK to 3,000.00 HRK.
For persons up to 25 years of age, a 100% reduction in personal income tax on the basis of employment income is introduced; and for persons between 26 and 30 years of age, a 50% reduction in personal income tax on the basis of employment income is introduced. Reductions refer to the whole year in which the taxpayer reaches a certain number of years of life. These deductions will be applicable up to the amount of 360.000,00 HRK and it will be calculated on an annual basis directly by the Tax Authorities.
Supplementary and additional insurance premiums can be paid by the employer to their employee in the amount of HRK 2,500.00 based on credible documentation.
The amount of the minimum net salary increases from 3,000.00 HRK to 3,250.00 HRK.
Value Added Tax – VAT
While it was foreseen that the general VAT rate would be reduced to 24%, as of January 2020 VAT rate retained at 25%.
The VAT rate for preparation and serving meals in catering establishments decreased from 25% to 13%.
In case when a taxpayer exceeds the HRK 300,000.00 threshold of revenues for entry into the VAT system and does not submit an application for entry into the VAT system, the Croatian Tax Authorities shall enter it based on its legal duty.
The application of the profit tax rate of 12% is expanded to all taxpayers who have achieved a total income up to the amount of HRK 7,500,000.00. Therefore, the current threshold of 3,000,000.00 HRK is raised to 7,500,000.00 HRK. All others apply a rate of 18%. This change relates to the profit achieved from 1 January 2020 onwards.
If the taxpayer intends to initiate the procedures for the relocation of the seat or management out of the Republic of Croatia, mergers or acquisitions, liquidation and termination of business in a shortened procedure, it is obliged to announce such proceedings to the Tax Authorities 30 days before the commencement of formal activities to the competent authorities the latest.
Profit income tax return shall be submitted within 30 days of the opening of insolvency proceedings and within 8 days of the initiation of the liquidation. In case that profit income tax return is not submitted within prescribed deadlines, profit tax will be determined based on the assessment.