The Government of Republic of Croatia brought measures to support companies during COVID-19 epidemic in Croatia. The goal of these measures is to provide incentives for preserving jobs, but also to mitigate liquidity risks for those businesses whose activities were reduced due to the epidemic.
Introduced were 63 measures, and new measures are expected on a weekly basis.
Main measures finalized (i.e. can be used by companies) are as follows:
1. Employment preserving measures
a) Salary compensation in the amount of 3.250 HRK (amount of minimum nett wage) – per permanently employed employee – for full working hours (in case of non-full working hours amount will be proportional). This means that Government is going to pay for the minimum net salary, while the Company still needs to pay for taxes and contributions (but those can be also delayed for payment) on the payroll!
This measure is approved for a period of 3 months starting from March (so it will include salary for March, April, May)
If it will be necessary this measure could be prolonged for another period of 3 months.
To participate in this measure it is necessary to submit the application to the Croatian Employment Institute.
This incentive would be available only to employers who will not terminate employment contracts, and who are not recipients of other incentives provided by Croatian Employment Service.
This measure is primarily focused on the following activities:
- the activity of providing accommodation and the preparation and serving of food and drink;
- transportation and storage;
- labor-intensive activities within the manufacturing industry – textiles, clothing, footwear, leather, wood and furniture;
- activities that make it impossible to operate in accordance with the decisions of the Civil Protection Headquarter
- other companies who can demonstrate the impact of special circumstances. This includes a drop in revenue of more than 20%.
For owners / co-owners / founders / board members / directors / procurators, etc. (with the exception of micro-enterprises, which employ up to 10 employees) is not possible to participate in this measure.
It is not clear what happens in situations where an employee has a director’s function, which is not registered in the Commercial Register but it is expected that such employees will not be able to involve in reimbursement of this support.
It is also important that employers who are to be granted preservation support should not import or hire new employees.
To participate in this measure, the employer must not reduce the number of employees by more than:
– 40% for micro-entrepreneurs employing up to 10 employees;
– 20% for small businesses;
– 15% for medium-sized enterprises;
– 10% for large entrepreneurs.
in the period from 20th March up to submitting the application.
This calculation does not include the expiry of a fixed-term employment contract, retirement and dismissal concealed by employee behaviour. Also, this situation does not include situations of staff reduction in the period 01.03.-20.03.2020. years.
Please note that employer may not be granted with support if there was a decrease in a number of employees from 20.03. until the date of submitting documents.
Necessary documentation for submitting request please find on this link.
2. Tax measures
The Ministry of Finance has adopted a measure for postponement of paying taxes such as:
– income tax,
– profit tax
– contributions to the health and pension.
Any company affected by the coronavirus epidemic may submit a request to the tax administration for postponement of paying taxes, provided that:
a) does not have debts to tax administration in the amount over 200 HRK and
b) has a decrease in income / receipts in the month preceding the month in which the request was submitted by at least 20% compared to the same month of the previous year, or
b) if it makes it probable that its revenue will decrease by at least 20% over the same period of the previous year, starting with the month of the submission of the Request.
Postponement of paying taxes relates to personal income tax, contributions for health and pension, advances on profit tax.
Delaying of paying VAT is only possible for companies which, in 2019, had a value of VAT deliveries of up to HRK 7.5 million.
Delaying paying VAT is not possible for February (i.e. VAT for February that is obliged to be paid until 31.03.2020 still needs to be paid).
Monthly VAT taxpayers may apply a deferral of payment beginning in March and quarterly beginning in the first quarter (VAT forms due April 20, 2020).
After expiring 3 months of postponement (and additional 3 months) it will be possible to pay postponed tax obligation in 24 monthly installments without calculating interests.
3. Suspending parafiscal levy
The following payment obligations have been suspended:
- Membership fees in the Croatian Chamber of Commerce have been suspended for the period of 01 March 2020 – 31 May 2020.
- Contribution to the employment of disabled persons.
- Monument annuity
We will be sure to keep you updated on the latest COVID-19 news in Croatia in the next weeks.
Kopun Group team wishes you and your families the very best for the coming weeks.
Stay healthy, stay safe, and let’s keep in touch.