Content overview (newest to oldest):

• Implementation of second package of tax measures
• COVID-19 grants for working capital
• Establishment of FINA on-line portal for application of economic measures
• The new package of government measures due to COVID-19 Pandemic
• Delay in payment taxes, contributions and memberships during the special circumstances
• Implementation of measures by Croatian Agency for SMEs, Innovations and Investments (HAMAG-BICRO)
• Overview of Government measures in order to assist the economy during coronavirus epidemic

Implementation of second package of tax measures 

Due to special circumstances caused by coronavirus on 9 April 2020, new provisions entered into force regulating the following:

• Deferral of VAT liability;
• Exemption from contribution liabilities for co-financed net salaries;
• VAT on donations and imports;
• Deadlines for the financial statements and other tax documentation.

DEFERRAL OF VAT LIABILITY

Through this measure, taxpayers shall pay VAT liability on a cash basis and input VAT can be recovered on paid invoices. Taxpayers submit VAT return in accordance with the regular taxation procedure and on position VIII.2. of the VAT return reports the difference of VAT assessed on the cash basis. The amount stated on position VIII.2. will be deferred until 31 July 2020. Deferral can be applied for VAT liability arising from:

• March VAT return due by 30 April 2020;
• April VAT return due by 31 May 2020; and
• First quarter (1-3) due by 30 April 2020.

If special circumstances will last longer, deferral can be extended for another three months and for second quarter (4-6).

EXEMPTION FROM CONTRIBUTION LIABILITIES FOR CO-FINANCED NET SALARIES

Employers utilizing the grant provided by the Croatian Employment Fund to support job preservation are exempted from paying contributions for supported net salaries in the amounts:

• 203,12 HRK for March per employee; and
• 250,00 HRK for April and May per employee.

Exemptions will be determined ex officio by the Tax Authorities.

VAT on donations and imports

• Donations of goods and services for the purpose of mitigation of adverse COVID-19 effects will be VAT exempt;
• Import of goods for the purpose of mitigation of adverse COVID-19 effects will be exempt of customs and import VAT;
• On import VAT reverse charge mechanism applies.

DEADLINES FOR THE FINANCIAL STATEMENTS AND OTHER TAX DOCUMENTATION

COVID-19 grants for working capital

In addition to already established measures, agency HAMAG-BICRO has activated new financial instrument, COVID-19 grants for working capital in order to support the economy during corona virus pandemic. The applicant must prove that COVID-19 had a negative impact on his business, i.e. that in the first quarter of year 2020 the company achieved a revenue decrease of more than 20%, or that the company expects such revenue decrease in the following quarters of year 2020.

Grants are for the purpose of financing working capital, including VAT. Grants are not for the purpose of refinancing existing loans/lease obligations or to finance liabilities incurred before year 2020. Funds received must be strictly used for its purpose. The user of the grant shall not pay any fee related to the grant approval.

What are requirements for grant obtaining?

• More than 50% of private ownership,
• At least one full-time employee,
• The company does not have giro account permanently blocked for more than 30 days in the last 6 months, and
• The company does not have difficulties in conducting its business.

Which terms are defined with the grant?

How to apply for the grant?

Applications can be submitted by post, e-mail, through online system or personally addressed to the address of HAMAG-BICRO.

Which documentation is required?

The list of documentation required for the application is available on the following link: https://hamagbicro.hr/wp-content/uploads/2020/04/Popis-dokumentacije-COVID19-zajam-za-OBS.pdf

What is the deadline for the application?

The Program shall be available until the utilization of the funds; however, no later than 31 December 2020.

Establishment of FINA on-line portal for application of economic measures

We inform you that starting 31 March 2020, FINA has established a unique portal MJERE based on which all economic subjects in the Republic of Croatia which business activities are affected due to COVID-19 pandemic can apply for Government measures in order to keep their liquidity and economic activities.

Stated measures relate to the following:

• liquidity and working capital loans;
• payment delay; and
• loan reprogramming.

Companies which activities are affected or disabled due to epidemic can apply for the above-stated measures.

Applying through the portal MJERE does not mean automatic granting of loans. Namely, the system collects applications and after verifying the entered data, the system is sending applications to the banks. Each bank will contact the applicant and take over the further process of granting the loans.

Currently is available application for measure liquidity and working capital loans only. Soon is expected that applications for the following measures will be available also: payment delay and loan reprogramming.

During the application for liquidity and working capital loans, the applicant will need to:

• register into the system;
• enter data on the subject for which the loan is requested;
• choose a credit institution;
• fill out the following forms:
• a statement of estimated reduction of revenues in the year 2020 in comparison to the year 2019;
• a statement of revenues decrease in the first quarter of the year 2020 in comparison to the year 2019; and
• the estimated amount of loan required.

In the next few days, the portal will provide the possibility to enter other necessary data for the banks in order to evaluate applications for all three measures.

The new package of government measures due to COVID-19 Pandemic

Croatian Prime Minister Mr. Andrej Plenković announced today a new package of measures to support the economy due to COVID-19 epidemic. The announced measures are expected to be adopted in tomorrow’s Government session. It is not expected that the proposed measures will be substantially changed in the process. CONFIDA has prepared a brief overview of the most significant measures which we would like to share with you.

Grants for preserving workplaces

The measure proposed by the Government is to increase the support of HRK 3.250 for March to HRK 4.000 for April and May. In addition, the state will take over the burden of social security contributions for the previously stated amount. Accordingly, the total support would amount to HRK 5.460 per employee, provided that the employer retains his employees.

Tax measures

The second measure is for closed companies or companies which business is affected

• Companies with revenues less than HRK 7,5 mil

Those with a drop in income between 20% – 50% are entitled to a payment delay as well as payments in instalments, interest free. Those with a drop in income more than 50% will be completely exempted from tax obligations.

• Companies with revenues more than HRK 7,5 mil

Those with a drop in income between 20% – 50% are entitled to a payment delay as well as payments in instalments, interest-free. Those with a drop in income more than 50% will be exempted from tax obligations in the proportion of the fall in income for April, May and June.

Example: Company that has a 75% drop in income will pay tax obligations only for 25% of their income.

Value-added tax (VAT)

The obligation to pay VAT will be delayed until invoices have been paid. This measure will now apply to all entrepreneurs.

Among other measures, the Prime Minister pointed out that the deadline for submission of 2019 financial statements is postponed to 30 June 2020.

Delay in payment taxes, contributions and memberships during the special circumstances

(Addition to point 1 in the table below)

Starting today, entrepreneurs whose economic activities are disturbed due to the state of emergency may file a Request for delay of payment taxes to the Croatian Tax Authorities.

The Request shall be submitted through ePorezna system or through the web form. On the date of submission, the taxpayer must have:

• all tax returns filed; and
• all liabilities settled.

Together with the Request, the taxpayer must prove the inability to pay taxes. Namely, the taxpayer must enclose the data related to the decrease in the turnover of the previous month for at least 20% in comparison to the same month last year or explain why the decline in turnover is expected in the following three months for at least 20%.

Following the submission of the Request, the Tax Authorities will inform the taxpayer if their Request was accepted. By accepting the Request, the taxpayer is still obliged to submit all tax returns within the legal deadline, however, Tax Authorities will delay the taxpayer´ payments for three months.

One Request shall be submitted for the delay of payment of all tax liabilities (contributions, memberships etc.)

The right to delay tax liability cannot be achieved for the February VAT liability, which is due on 31 March 2020. Only entrepreneurs who have revenues up to 7,5 million HRK have the right to delay VAT, provided they calculate taxes according to issued invoices.

If upon maturity of the first delayed liability, the taxpayer is still not able to settle the tax liabilities, he can submit an additional Request for payment in installments.

Implementation of measures by Croatian Agency for SMEs, Innovations and Investments (HAMAG-BICRO) 

(Addition to points 12 and 30 in the table below)

Following the epidemic caused by virus COVID-19, HAMAG-BICRO is introducing their first measure of suspension of loan payments for rural development until 31 December 2020 without penalty interest. Suspension of payments applies to both principal and interest, while previous debts still need to be settled. Beneficiaries of ESIF and loans for rural development will be notified with an e-mail regarding payment delay and will be provided with a form “Pristanak na odgodu plaćanja“. All beneficiaries who agree to the proposed payment delay should fill out the form, sign/stamp and photograph/scan it to the following e-mail address zajmovi@hamagbicro.hr  in order to record their consent in the system.

A second HAMAG-BICRO measure has been activated yesterday and is related to enabling small and micro economic entities to apply for an ESIF working capital loan which allows financing of:

• preparation of production,
• raw materials,
• other productions costs,
• staff costs,
• employment costs,
• rental space,
• utility costs and
• overheads

The maximum amount of ESIF loan can be EUR 25 000 with a 12 month of grace period, repayment period of 3 years with an interest rate of 0,5% – 1,0% (depending on the development index).

A list of documentation as well as a standardized loan application form is available on the HAMAG-BICRO official website https://hamagbicro.hr/financijski-instrumenti/kako-do-zajma/dokumentacija/.

Overview of Government measures in order to assist the economy during coronavirus epidemic

The Government of the Republic of Croatia has adopted 63 measures to mitigate the effects of the coronavirus epidemic. These measures are defined as the first phase of this process.