Business Documentation Retention Periods

Business Documentation Retention Periods

Every taxpayer is obliged to keep business documentation that is obtained during the business within the deadlines prescribed by accounting, tax, customs, foreign exchange, and other regulations. The taxpayer may keep the accounting documentation on the business premises or elsewhere, but he must ensure that it is available to the inspection body within a reasonable time.

In addition to the regulations that define the obligation to keep and store documentation, certain bylaws of other laws prescribe the deadline for keeping certain documentation. Since accounting documentation is part of business documentation, different regulations prescribe different deadlines for storing documentation. The manner of keeping business documentation is regulated by the company in an internal act that defines the archiving procedure itself.

Who is required to keep business records?

Every taxpayer is obliged to store and archive business and accounting documentation. If you look at the General Tax Law, a taxpayer is any person who is determined as such by the law governing a particular type of tax. For a taxpayer to know how long and which documentation needs to be kept, he can study basic laws and regulations, such as the Accounting Act, the General Tax Act, and the Accounting Ordinance. Below is a brief overview of the most important deadlines.

Which documentation is kept for ten years?

If the General Tax Law is observed, it can be concluded that the taxpayer is obliged to keep records and documents on daily cash transactions, business books, accounting documents, and other records for ten years. This is valid only if no special deadlines are prescribed by a special regulation.

Which documentation is kept for eleven years?

The taxpayer is obliged to keep documents based on which the data were entered in the diary, general ledger and auxiliary books, tax records and accounts for at least eleven years. This period begins on the last day of the business year in which the data from the documents are entered into the business books.

Which documentation is stored permanently?

Permanently stored documentation includes payrolls, i.e., analytical records on salaries for which mandatory contributions are paid (JOPPD forms). Likewise, the taxpayer is required to permanently store financial statements and annual reports. These include the balance sheet, income statement, statement of comprehensive income, statement of cash flows, statement of changes in equity, notes explaining certain items in the financial statements, the audit report, and the annual report, together with a management report.

Can a taxpayer store documentation electronically?

The taxpayer may store business and accounting documentation electronically also. Electronic archiving of business documentation is a step that will be taken by everyone for whom the automation of business processes, saving time and money as well as data security is one of the main priorities in business. Electronic archiving has many advantages, some of which are: the availability of documents in one place, lower costs, easy and fast access to documentation, and most importantly, a high level of security of information and data.

Can a taxpayer keep the documentation outside the borders of the Republic of Croatia?

The taxpayer may decide to keep the documentation outside the borders of the Republic of Croatia. This rule applies only if the country in which he wants to keep the documentation is a member of the European Union. Regardless of where the taxpayer keeps the documentation, he is responsible for it at all times, and he is obliged to provide it to the supervisory authorities at any time, at their request.

What are the penalties for non-compliance with the deadlines for storing documents?

For non-compliance with the deadlines for storing accounting documents, business books, and financial reports, a fine of up to HRK 100,000.00 is prescribed for a legal or natural person and a fine of up to HRK 20,000.00 for a responsible person.

What happens to the documentation after the expiration date?

After the deadline for keeping the documentation expires, taxpayers must not arbitrarily destroy the documentation, as everything is defined by the Law on Archival Materials and Archives.

After the expiration of the deadline for keeping the documentation, the taxpayer must submit to the competent archive for approval a proposal for the destruction of certain documentation. This proposal must contain a list of the type, quantity, and time of the creation of the material and the basis for exclusion (prescribed retention periods). Once the taxpayer receives official approval, only then can the documentation be destroyed. It is also very important to take measures to protect the confidentiality of data during destruction, as well as environmental protection measures.

What happens to the documentation if the company ceases to operate?

After the company ceases to operate by the liquidation of the company, or with a shortened procedure, the business books and documentation of the company for which the retention period has not expired (and then which is kept permanently), are handed over for safekeeping to the Croatian Chamber of Commerce. For the storage and preservation of business books and documentation of the company, a fee is paid at the expense of the company before its deletion.

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