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Any item taken from the Croatian entity to which the assignee was assigned for the personal use of the assignee should be treated as a benefit-in-kind for the assignee. Withdrawals of assets and usage of services for personal use of an entrepreneur or the shareholders of companies are taxed at the rate of 36 percent, plus city surtax if applicable. Employees of Croatian companies may receive gifts or services tax free in the equivalent amount of HRK annually. Amounts above this annual limit are considered to be a benefit-in-kind.
Are there additional capital gains tax CGT issues in Croatia? If so, please discuss? In calculating taxable income, every resident taxpayer is entitled to deduct the following from their monthly gross salary. If both spouses pay personal income tax, it is possible to share additional allowances for children and other dependents of the immediate family. Croatian domestic tax law indicates that foreign earned income, which is taxed abroad, is also taxable in Croatia but a tax credit for taxes paid abroad may be applied to reduce tax otherwise payable in Croatia; however, the amount of tax credit may not exceed the amount of Croatian tax payable on that foreign income.
A similar principle is used in the case of assignees. Assignees must report the receipt of income and they are liable to pay tax within 30 days from the date the income was received. For example: monthly, annually, both, and so on. In the case of individuals employed by Croatian employers, tax is due monthly or more often if payments are made more frequently. In the case of assignees, tax is due monthly or more often if payments are received more frequently.
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Is there any Relief for Foreign Taxes in Croatia? For example, a foreign tax credit FTC system, double taxation treaties, and so on? If the credit system applies, the credit for tax paid abroad may not exceed the amount of taxes due in Croatia on that foreign income. This calculation 3 assumes a married taxpayer resident in Croatia with supported family member spouse and two children whose 3-year assignment begins 1 January and ends 31 December This amount is grossed up by 36 percent of Croatian personal income tax and 18 percent of Zagreb city surtax.
A global survey of income tax, social security tax rates and tax legislation impacting expatriate employees. All rights reserved. KPMG International provides no client services.
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Tax returns and compliance When are tax returns due? That is, what is the tax return due date? What is the tax year-end? What are the compliance requirements for tax returns in Croatia? The annual INO-DOH form, to be submitted by 31 January of a current year for the previous year: to report income received from abroad which was exempted from the taxation in Croatia during the tax year as it was subject to foreign personal income tax on a prepayment basis; to request a right to a credit for tax paid abroad it is not obligatory to request that right — a tax paid certificate issued by foreign tax authorities is required for that purpose.
The annual ZPP-DOH form, to be submitted by the end of February of a current year for the previous year: to request a right for personal allowances for supported family members if not utilized during the previous year and for other prescribed increments of personal allowances; to request a right to a credit for tax paid abroad only for employment income, self-employment income and other income, if this request was not submitted through the INO-DOH form.
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The annual tax return DOH form, to be submitted by the end of February of a current year for the previous year, if: the taxpayer has realized income from self-employment or other activities for which income tax is determined according to business books; the taxpayer has earned income as a crew member of a vessel in international navigation; the Croatian Tax Authorities have required that the taxpayer should pay income tax subsequently.
Non-residents Non-resident taxpayers may be required to submit an annual personal income tax return. Tax rates What are the current income tax rates for resident taxpayers and non-resident taxpayers in Croatia? Residence rules For the purposes of taxation, how is an individual defined as a resident of Croatia?
There is no de minimus number of days rule. Termination of residence Are there any tax compliance requirements when leaving Croatia? There is no need to submit a departure tax return form at the time of departure. What if the assignee comes back for a trip after residency has terminated? Any post-assignment days are included in the number of days when determining tax residence. Communication between immigration and taxation authorities Do the immigration authorities in Croatia provide information to the local taxation authorities regarding when a person enters or leaves Croatia?
Economic employer approach Do the taxation authorities in Croatia adopt the economic employer approach 1 to interpreting Article 15 of the Organisation for Economic Co-operation and Development OECD treaty? De minimus number of days Are there a de minimus number of days 2 before the local taxation authorities will apply the economic employer approach? Not applicable. Types of taxable compensation What categories are subject to income tax in general situations? Under certain circumstances reimbursement of the accommodation costs can be exempted from the taxation.
For more information, please see the section on Tax exempt income; and private use of a company car. All benefits-in-kind are deemed taxable income. The fair market value is chargeable to tax. Intra-group statutory directors Will a non-resident taxpayer of Croatia who, as part of their employment within a group company, is also appointed as a statutory director i. If a tax liability is triggered, how will taxable income be determined? Tax-exempt income Are there any areas of income that are exempt from taxation in Croatia? In addition, income tax is not paid on the following items: interest on positive balance on giro accounts, current accounts, and foreign currency accounts up to 0.
Partially tax-exempt income A range of payments, benefits, and allowances are not taxable, up to prescribed amounts, when paid to individuals employed by a Croatian legal entity and up to a certain scale when paid to expatriates. Expatriate concessions Are there any concessions made for expatriates in Croatia? There is no special tax regime for expatriates.
Salary earned from working abroad Is salary earned from working abroad taxed in Croatia?
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If so, how? No, in the case of Croatian non-tax resident taxpayers. Taxation of investment income and capital gains Are investment income and capital gains taxed in Croatia? Capital income includes the following: Interest income on loans provided by physical persons taxed at the rate of 12 percent, plus city surtax if applicable ; Interest on savings accounts taxed at the rate of 12 percent, plus city surtax if applicable ; Withdrawals of assets and usage of services by an entrepreneur taxed at the rate of 36 percent, plus city surtax if applicable ; Shares granted to or purchased by management board members and employees of a joint stock company via a stock option scheme are considered capital income taxed at the rate of 24 percent, plus city surtax if applicable, with a gross up requirement; Dividends and profit shares taxed at the rate of 12 percent, plus city surtax if applicable.
Interest and rental income Interest on saving accounts is treated as income from capital, subject to income tax at the rate of 12 percent, plus city surtax if applicable. Foreign exchange gains and losses Foreign exchange gains are not taxable nor are foreign exchange losses taken into account at the individual level. Principal residence gains and losses Gains on the disposal of a principal residence are not taxable nor are losses taken into account at the individual level. Capital losses Capital losses arise from the disposal of financial assets are taken into consideration.
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