December is approaching, and the payments of Christmas bonuses, awards and gifts to workers begin. These payments belong to the category of occasional rewards. As with all other payments, some rules must follow. Below, CONFIDA Croatia provides an overview of the most important rules and the amounts employers can pay out the rewards tax-free.
What are the amounts?
According to the Amendments Ordinance to the Ordinance on Income Tax, occasional awards like Christmas bonuses and vacation allowances are tax-free to HRK 5,000.00 per year. Namely, the tax-free amounts have increased, and we informed you about it recently.
Also, workers can be paid rewards for work results of up to HRK 7,500.00 per year. Up to HRK 12,500.00 can be paid tax-free annually.
Who is entitled to the prize?
The worker has the right to an appropriate reward if prescribed by the collective agreement, work regulations, employment contract or internal act. If not, the employer can decide whether to reward employees and how.
It does not matter if the worker works for a fixed or indefinite time and full or part-time he is entitled to a prescribed reward. It also refers to workers who use sick leave, maternity and parental leave, and annual vacation.
Child gift
According to the same rulebook, a child’s gift is paid tax-free up to HRK 1,000.00 per year. The gift will pay off if the child has turned 15 by the end of the current year. If the parents work for the same employer, he can pay both parents.
What prizes can business owners pay?
Business owners and other self-employed income taxpayers are entitled to:
- special awards expenses(Christmas, vacation and similar)
- paid rewards for work results and other forms of additional remuneration expenses
- gifts to children up to 15 years of age.
