Tax treatment of Cryptocurrency in the Republic of Croatia

Cryptocurrencies have been present on the market for more than a decade, but their implementations, opinions, and proposals for regulation are still not globally harmonized. Consequently, that tax liability is a major concern for cryptocurrency investors due to the most obscure and complex tax laws. The Republic of Croatia still does not have the Law on Cryptocurrencies but trading in cryptocurrencies is regulated as a form of investment through Personal Income Tax Act.


Virtual money, by definition, must meet the following conditions:

  • must be a means of exchange,
  • must be a unit of measure of value,
  • must be used to store values.

Therefore, virtual money as such differs from the term electronic money because electronic money is by definition a legal means of payment, as opposed to virtual money (except for the Republic of El Salvador where bitcoin has recently been listed as an official means of payment). For example, the European Banking Authority defines it as a digital display of value that is not linked to a conventional currency but is accepted by natural and legal persons as a means of exchange. They can be transferred, stored, and traded electronically, and the value of units is measured based on supply and demand.

Bitcoin, as well as Ethereum, Ripple XRP, etc., are virtual currencies that are created and stored digitally only. They do not exist in the printed version, nor are they subject to institutional controls.


Virtual transactions are usually recorded chronologically in a public decentralized book, often referred to as a “blockchain.” The book consists of “blocks” that contain algorithmic records of past transactions. It is maintained by the so-called miners’ community who process transactions and maintain the system. They also create new units of cryptocurrencies whose procurement is kept under control due to the use of cryptographic algorithms. Thus, cryptocurrencies can be acquired in three ways:

  • sales contract,
  • contract of exchange, inheritance, etc. and
  • mining.

As the very definition of cryptocurrency is not yet globally defined, the fiscal profession is trying to find answers on how to tax it. For example, in Singapore, they are defined as a service, in the US as a capital good, and in Germany as private money.

The stand of the Republic of Croatia on cryptocurrencies, according to the Personal Income Tax Act, is such that cryptocurrencies are defined as capital income and are classified as income from other financial assets. Therefore, the possession of cryptocurrencies as financial assets is not taxed, but the earnings from the alienation of those assets will be taxed. Accordingly, cryptocurrencies do not fall under any legally regulated category of means of payment and according to Croatian National Bank Act and the Foreign Exchange Act, cryptocurrencies do not represent money or means of payment in the Republic of Croatia. Cryptocurrencies can be considered a transferable instrument in terms of the VAT Act, so the transactions themselves are exempt from VAT.

Considering the obligation to pay personal income tax based on cryptocurrency earnings, it is due once a year, by the end of February, for earnings earned in the previous calendar year. Not all individual earnings from the transactions are taxed, but the total earnings on an annual basis.

The tax base is the total annual earnings determined as the difference between the purchase price of the cryptocurrency and the value for which it is exchanged in the monetary amount of any recognized legal tender and is taxed at a rate of 10% + surtax – if the cryptocurrency is exchanged for “classic money” within two years of purchase (for instruments purchased after January 2016). If the exchange is made more than two years from the date of acquisition, earnings are not subject to taxation regardless of the economic benefit.

If a taxpayer earns income from trading in certain securities or financial instruments in a tax year and records a loss on other instruments, income from capital gains is determined on an annual basis, as the difference between total earnings and losses incurred in that tax year.


Every natural and/or legal person who trades in any cryptocurrency is obliged to keep records on the acquisition and disposal of cryptocurrencies according to the date of trading. Records are kept according to the method of consecutive prices or FIFO “First In – First Out”, and must contain:

  • information on the type of financial instrument,
  • date of purchase,
  • quantity and number,
  • the purchase price per unit of each type of digital money, and
  • the total price for each transaction.

In addition to keeping records, the taxpayer is obliged to submit a JOPPD form with data on income from capital gains to the Tax Administration by the end of February and pay personal income tax at the rate of 10%, increased by the city surtax.

Also, for the realized capital gain from abroad, a resident of the Republic of Croatia, if his income tax has been withheld in the country of payment, is obliged to register into the Taxpayers’ Register of (in case of the first receipt) and submit an INO statement on payment of personal income tax abroad to a competent branch office of the Tax Administration. If the taxpayer does not submit the INO statement, he is obliged to declare the income on the JOPPD form by the end of February and, if he wants to utilize the right to include the tax paid abroad in the total tax liability, he should submit the INO-DOH form.

When the income from capital is realized in foreign currency, when calculating the tax, it is necessary to perform the conversion into kuna according to the middle exchange rate of the Croatian National Bank on 31 December of the previous year.

The taxpayer is not obliged to submit the JOPPD form to the Tax Administration if the total loss was realized on an annual basis, based on trading in all securities and financial instruments traded by the taxpayer, or the realized capital gain is less than HRK 112,00. Likewise, it is not possible to carry forward a loss to the next tax year and as such cannot be used to reduce income based on capital gains earned in the same state, and in the same tax year.


When a sale is made as an activity of a company, taxation can function in such a way that the difference between the sale price and the purchase price is considered as an income from the sale of cryptocurrencies. Therefore, income from the sale of cryptocurrencies can be subject to profit tax at the rate of 10%, i.e., 18%.


If an employer wishes to pay its employees a salary in cryptocurrencies, according to Personal Income Tax Act, such payment would be considered as a benefit in kind. Personal income tax and social security contributions should be calculated on this type of receipt according to the market price of a certain cryptocurrency on the day of salary payment. However, the Tax Administration issued an opinion clearly stating that cryptocurrencies are still virtual currencies, decentralized, not under the jurisdiction of monetary authorities, and anonymous, and as such cannot be used as a means of paying salaries.


How is a mining activity of a natural person who is not an employee of a cryptocurrency payer taxed? There is still no clearly defined rule, however, the profession agrees that the mining activity should be considered as other income and taxed accordingly.

If a natural person actively acquires cryptocurrencies through mining activities and does not perform this activity based on an employment contract, the profession declares that such activity could be considered as income from self-employment. It is determined as the difference between operating receipts and operating expenses incurred in the tax period.

Contact Confida’s expert team today and resolve any business concerns.

Note: The article is written according to the current legal regulations of the Republic of Croatia, so please take into consideration while reading about potential subsequent changes in legislation after the article is published.

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