{"id":895,"date":"2019-01-18T13:02:45","date_gmt":"2019-01-18T13:02:45","guid":{"rendered":"https:\/\/kopun.hr\/?p=895"},"modified":"2020-10-23T08:30:30","modified_gmt":"2020-10-23T08:30:30","slug":"tax-reform-croatia-2019","status":"publish","type":"post","link":"https:\/\/kopun.hr\/en\/tax-reform-croatia-2019\/","title":{"rendered":"Tax reform Croatia 2019"},"content":{"rendered":"\n<p>The third phase of the tax reform in the Republic of Croatia was\nimplemented on 1 January 2019. The basic task of the reform was to reduce the\ntax burden on natural persons and to partially reduce the burden on legal\nentities. The key changes according to individual tax laws are given below: <\/p>\n\n\n\n<p>&nbsp;<br>\n<strong>VALUE ADDED TAX<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>As of 2019, the number goods (previously taxed at a\nrate of 25%) for which a lower VAT rate (5% or 13%) will apply has been\nexpanded to include the following: <\/strong>medicines that\nhave been approved by a competent body for medicines and medical products\n(whether or not they are issued on prescription), fresh meat, fish, fruit,\nvegetables, eggs and baby diapers (nappies). As a result of this, the price of some\neveryday products will be reduced significantly. <\/li><li><strong>The standard VAT rate&nbsp;<\/strong>is going to be lowered to 24% as of&nbsp;<strong>1 January\n2020<\/strong>. <\/li><li><strong>From 1 January 2019, foreign taxpayers who are\nregistered for VAT purposes in the Republic of Croatia will be treated as\ntaxpayers in the Republic of Croatia.<\/strong>&nbsp;VAT\nreverse charge will not apply if the foreign taxpayer has been assigned a\nCroatian VAT ID number. Thus, for transactions for which the place of taxation\nis the Republic of Croatia, it is no longer possible for a taxpayer from the\nEU, who has a VAT number in the Republic of Croatia, to charge VAT using a Croatian\nVAT ID number when delivering goods or services to natural persons and to charge\nVAT using an EU VAT number when delivering to legal entities .<\/li><\/ul>\n\n\n\n<p><br>\n<strong>INCOME AND CONTRIBUTIONS<\/strong><br>\nThe biggest amendments to the Income Tax and\nContributions Acts relate to salary calculations from 1 January 2019, namely:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The lower tax bracket has\nbeen expanded to include <strong>monthly salaries up to 30,000 kuna<\/strong> (approx. EUR\n4,000) which will be taxed at a rate of 24%. Income tax\non salaries over 30,000 kuna, will be calculated at a rate of 36%. Although the\nlower tax bracket has been expanded, the change will not affect a significant\nnumber of employees in Croatia.<\/li><li>The interest rate that is to be used to determine taxable\nbenefit in kind in the case of preferential loans to employees <strong>has been decreased from 3% to 2% per annum <\/strong>(i.e.\nif an employer grants a preferential loan to his employee with an interest rate\nlower than 2%, he is obliged to calculate benefit in kind).<\/li><li>Amendments to the Contributions Act prescribe <strong>a minimal annual base for the calculation\nof contributions<\/strong> for members of management boards who are not otherwise insured\nunder the national insurance scheme. Thus management board members, managing\ndirectors (CEOs) or liquidators who have not been insured in the amount of this\nminimal annual base (i.e. 5,491.20 kuna or approx, EUR 730) must pay the\ndifference between this amount and the amount in which they are insured and\nthey must pay the amount themselves.<\/li><\/ul>\n\n\n\n<p><br>\n<strong>REAL ESTATE<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>The property sales tax rate has been reduced<\/strong>&nbsp;from 4% to 3% as of 1 January 2019 and will\napply to all contracts signed after 1 January 2019. This change is a\ncontinuation of the reduction of this rate; (for contracts concluded on or\nbefore 31 December 2016, the rate was 5%, and for contracts concluded between 1\nJanuary 2017 and 31 December 2018 the rate was 4%).<\/li><\/ul>\n\n\n\n<p><br>\n<strong>GENERAL TAX ACT<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Restrictions on the scope of binding opinions have\nbeen deleted<\/strong>. This means that, upon a taxpayer&#8217;s\nwritten request, the tax authority is authorized to give a binding opinion\nregarding the tax treatment of future and intended transactions (i.e. business\nevents and the activities of the taxpayer, irrespective of their subject matter).<\/li><\/ul>\n\n\n\n<p><br>\n<strong>CORPORATION TAX<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The biggest change relates to the&nbsp;<strong>harmonization\nof the law with the OECD base erosion and profit shifting project (BEPS).<\/strong>&nbsp;According\nto the amended act, cross-border borrowing costs for business entities from\nrelated parties will not be tax deductible if the borrowing costs exceed:<\/li><\/ul>\n\n\n\n<ol class=\"wp-block-list\"><li>30% of EBITDA or<\/li><li>EUR 3 million, whichever\n     is higher.<\/li><\/ol>\n\n\n\n<p>This provision applies exclusively to foreign borrowings approved by\nrelated parties. The aforementioned will come into effect on 1 January 2019, i.e.\nfrom the filing of tax returns for 2019.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The third phase of the tax reform in the Republic of Croatia was implemented on 1 January 2019. The basic task of the reform was to reduce the tax burden&#8230;<\/p>\n","protected":false},"author":1,"featured_media":3402,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"mc4wp_mailchimp_campaign":[],"footnotes":""},"categories":[11],"tags":[],"class_list":{"0":"post-895","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-knowledge-base"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.0 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Tax reform Croatia 2019 - Kopun Group<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/kopun.hr\/en\/tax-reform-croatia-2019\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tax reform Croatia 2019\" \/>\n<meta property=\"og:description\" content=\"The third phase of the tax reform in the Republic of Croatia was implemented on 1 January 2019. 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