Once you're here Banking & Finance Important taxes
Important taxes
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- Last Updated on Saturday, 18 February 2012 09:01
According to the Croatian Constitution, everyone has to participate in the settlement of public expenses, in accordance with economic possibility.
The Republic of Croatia shall ensure all entrepreneurs, whether they are domestic or foreign, the same legal position in the market. The Croatian tax system is harmonized with the tax systems of EU member states and is based on a set of direct and indirect taxes. In Croatia, the tax year corresponds in most cases with the calendar year.
Direct taxes are paid in person or are paid by employers, while indirect taxes are not borne by those who pay them to the state budget, but are shifted to another person (the final consumer). Direct taxes are income tax and surtax, while indirect taxes are value added tax, excise tax and property tax. Other tax revenues consist of revenues from local taxes (county, municipal and city), customs and social security contributions.
The main taxes that need to be underlined are:
- Corporation profit tax
- Personal income tax
- Value added tax (VAT)
- Special tax (excise duty)
- Real estate transfer tax
When talking about taxes and the necessary contributions, companies are annually affected by these obligations: Social security contributions, corporate income tax, Forest contribution, Fuel Tax, Tax on company name, value added tax (VAT).
Corporation profit tax
Corporation profit tax must be paid by:
- companies and other legal persons, residents of Croatia who independently and continuously perform an activity for profit
- Non-resident in Croatia, for the profit made during business operations via permanent business unit located on the territory of the Republic of Croatia
- A natural person who derives income under the income tax regulations, if it is stated that he/she wants to pay profit tax instead of income tax;
- An entrepreneur – a natural person who derives income from small business or the activities equalized therewith, if:
- total revenue in the preceding tax period exceeded HRK 2,000,000,00 or
- total income in the preceding tax period exceeded of HRK 400,000,00 or
- the value of long-term assets exceeds HRK 2.000,000,00 or
- employed more than 15 employees on average during the preceding tax period.
- Every entrepreneur that is not classified among the entrepreneurs listed in Items 1 – 5 is not liable to pay income tax according to the provisions of the Personal Income Tax Law and the profit of whom is not taxed elsewhere.
Open-end investment funds established and operating in accordance with the law, pursuant to which they have been established are not liable to pay corporate income tax
Tax rate - The corporate income tax rate in 2011 for legal entities that are registered in Croatia is 20%.
Tax base for non-resident taxpayer is a profit that he / she earned in Croatia. For a resident, the base is calculated on the basis of profit that is earned in Croatia and abroad.
More information could be found on our source web site.
Personal income tax
The tax rate on personal income in Croatia is progressive and goes from 12% to 40%. Taxes are paid by the following categories:
- A natural person who derives income,
- Successor of tax obligations
Sources of income are employment income, income from independent activities, income from property and property rights, investment income, income from insurance, etc.
A non-resident is an individual who has neither a domicile nor habitual residence in the Republic of Croatia and derives income which is taxed under the provisions of the Income Tax Act. The base of income tax for non-resident is the total amount of income from employment, income from independent activities, income from property and property rights, income from capital, income from insurance and other income, which the non-resident derives inland (the principle of domestic income), minus personal allowance for non-residents.
Tax rates:
- 12%, up to HRK 43,200.00 annually. (Up to HRK 3,600.00 per month).
- 25%, between HRK 43,200.00 and HRK 129,600.00 annually, that is - every HRK 86,400.00. (Between HRK 3,600.00 and HRK 10,800.00 per month).
- 40%, for more than HRK 129,600.00 annually. (More than 10,800.00 per month).
More information could be found on our source web site.
