Significant changes will take effect regarding Croatia’s minimum salary for directors (employed members of management boards) starting January 1, 2025. According to the Contributions Act, the minimum wage will increase again, reflecting the average gross salary from the first eight months 2024.
Minimum Director’s Salary for 2025
From the beginning of 2025, directors’ minimum gross monthly salary cannot be lower than €1,168.70, representing an increase of €154.70 compared to 2024, when the minimum wage was €1,014.00, marking a 15.3% rise. This continues the trend of substantial increases in directors’ salaries. For instance, in 2024, the gross minimum wage increased by 14.1% or €125.33.
Net Salary and Impact on Directors
The net salary directors receive depends on available tax reliefs and local income tax rates. For example, a single director residing in Zagreb will receive a minimum monthly salary of € 853.99, potentially rising to €867.84 depending on personal deductions and the local tax rate.
Employers will apply the new minimum salary to January 2025 payrolls, which they will typically pay in February.
Directors Employed Part-Time
To calculate part-time directors’ minimum annual contribution base, multiply the minimum monthly base (€1,168.70) by the number of months they hold the position. For the entire year of 2025, the annual base will amount to €14,024.40. Including contributions such as health insurance, the yearly total cost rises to €16,338.48.
Contributions for Lower Bases
The company must cover the difference if the contribution base for part-time work is lower than the minimum monthly base. The Tax Administration determines these differences through an annual calculation and issues resolutions for payment.
Exemptions and Reliefs
Specific categories of employees are eligible for contribution exemptions:
• Individuals under 30 years old (valid until January 1, 2025, but applicable for five years if hired before this date).
• First-time employees.
• Children of Croatian war veterans over the age of 29.
Minimum Salary and Retired Directors
Retired directors insured through employment are not required to pay contributions based on the minimum annual base. However, directors receiving disability pensions due to partial work capacity loss are subject to the same rules for minimum contribution bases as other directors.
Increased Costs for Companies
The rise in the minimum gross salary will directly impact the taxes and contributions businesses must pay. For 2025, directors’ monthly tax and contribution costs will range from €493.70 (in areas with the lowest income tax rates) to €507.55 (for individuals in Zagreb without additional tax reliefs).
Companies can reduce costs by taking advantage of various reliefs, such as increased personal allowances for dependent family members.
Conclusion
The minimum directors’ salary increase for 2025 brings significant changes for businesses and self-employed directors. Companies should plan costs and explore available exemptions and incentives to optimise business expenses. For tailored advice and business adjustments, contact the experts at Confida Croatia.
