New employment retention incentives in activities affected by coronavirus and the consequences of the disaster caused by earthquake in Sisak-Moslavina, Zagreb and Karlovac counties for March 2021 have been announced.
Below you can find a brief overview of employment retention incentives.
Target group of employers
a) Employers whose business activities are not suspended or limited based on decision of the Civil Protection Board, the employment retention incentives can receive if they operate within permitted activities:
- Agriculture, forestry and fishing;
- Transport and storage;
- Services incidental to transport;
- Providing accommodation, preparation, food and beverage service;
- Rent and lease, travel agencies, tour operators and other reservation services as well as related activities;
- Arts, entertainment and recreation;
- Repair of computers, personal, household goods and other personal service activities;
- Organization of cultural, business and sports events, fairs and weddings as well as related acvillary service activities;
- Translation activities and interpreter services; and
- Publishing of books, periodicals and other publishing activities.
b) Employers whose business activities are suspended or limited based on decision of the Civil Protection Board or employers with less than 10 employees, can receive the employment retention incentives regardless of sector/business activity.
Suppliers who are business-related with employers whose business activities are suspended or limited based on decision of the Civil Protection Board has the right for employment retention incentives also.
c) Employers who had suffer consequences caused by the earthquake in Sisak-Moslavina, Zagreb and Karlovac counties.
Employers from the above stated area whose business and production processes have been significantly reduced or suspended due to objective reasons will be entitled to retention incentive in the amount of HRK 4000 per employee working full time, i.e., proportional part per employee working part time, regardless of business activity and revenue drop.
Objective reasons for receiving employment retention incentive are: significant damage caused by earthquake on business or production facilities and/or employee inability to come to work based on which normal business or production cannot be established.
d) The right to receive the employment retention incentives for March have also legal entities in the sport system:
- Sport association referred to in Article 14 of the Sport Law;
- Sport club – a sport joint stock company referred to in Article 28 of the Sport Law.
It is important to note that right to use the retention incentive, regardless of the base on which they apply, have employers who have registered the activity and registered in the HZMO system by 31 December 2020.
Target group of employees
It is possible to use the employment retention incentive for all employees employed by 28 February 2021.
The employment retention incentive can be obtained for all employees from target group of employers (regardless of whether the employee is hired fixed-term or indefinite, whether they are Croatian, EU or third country citizens, are they hired full time or part time, or have some of the status like single parent, Croatian war veteran or seconded employee) and employees hired in branch offices of foreign companies in Republic of Croatia.
Target group of employees does not include:
- Pensioners;
- Foreign employees from third countries whose licence for stay and work has expired.
Criteria
In order to determine the fulfilment of the criteria for obtaining employment retention incentive, employers whose activities are not suspended or limited based on decision from Civil Protection Board have the possibility to choose between the following two options:
OPTION 1
Cumulative revenues/receipts for period from 1 April do 30 September 2020, in comparison to cumulative for the same period in year 2019. For quarterly taxpayers, cumulative for II and III quarter of year 2020 is compared with the same period in year 2019.
OPTION 2
Month for which the employment retention incentive is requested (March 2021) is compared to the same month in year 2020.
Exceptions:
- If the employer has been operating for less than 12 months: month for which the employment retention incentive is requested is compared to September of year 2020.
Exceptionally, comparable month is January 2021 if the employer is founded after 1 October 2020.
The amount of incentive
The amount of employment retention incentive is HRK 4000 per month per full-time employee or pro rata amount per part-time employee in accordance with the percentage of revenue/receipts drop:
- drop in revenues/receipts from 40,00% to 44,99% – HRK 2.000,00;
- drop in revenues/receipts from 45,00% to 49,99% – HRK 2.500,00;
- drop in revenues/receipts from 50,00% to 54,99% – HRK 3.000,00;
- drop in revenues/receipts from 55,00% to 59,99% – HRK 3.500,00;
- drop in revenues/receipts from 60,00% and more – HRK 4.000,00.
The employment retention incentive includes pension insurance contribution for second pillar (MIO II), proportional to the incentive amount.
Employers whose business activities are suspended or limited based on decision of Civil Protection Board or epidemiology have the right for the incentive in the following amount:
- a. HRK 2.000,00 per full-time employee or pro-rata amount per part-time employee if the employer’s activities are suspended or limited based on decision of Civil Protection Board or epidemiology from 1 to 14 days; and
- b. HRK 4.000,00 per full-time employee or pro-rata amount per part-time employee if the employer’s activities are suspended or limited based on decision of Civil Protection Board or epidemiology from 15 days onwards.
Employers who had suffer consequences caused by the earthquake in Sisak-Moslavina, Zagreb and Karlovac counties can receive the incentive in the amount of HRK 4.000,00 per full-time employee or pro-rata amount per part-time employee (increased for the pension insurance contribution for second pillar), regardless on the sector and revenue drop only in cases when due to objective reasons their business-production processes are significantly decreased or suspended.
Additionally, legal entities in sport system have the right to receive employment retention incentive in the amount of HRK 4.000,00 per full-time employee or pro-rata amount per part-time employee (increased for the pension insurance contribution for second pillar), regardless on the revenue drop.
Application deadline
In order to obtain the employment retention incentive, a new application must be submitted regardless of the fact whether the employer is currently using some of the incentives.
Applications for payment of March 2021 monthly salary costs can be submitted from 1 April until 23 April 2021.
Reimbursement of fixed costs for employers whose business activities are suspended
Employers who had submitted an application for employment retention incentive in accordance with decisions of Civil Protection Board have the possibility to apply for the additional incentive of reimbursement of part or all fixed costs in the amount which will be determined by Ministry of Finance, The Tax Authorities.
