Employer Contributions in Croatia
Employers contribute to social security through 16.5% health insurance. The social security contributions also cover work accident insurance, pension, family and maternity benefits.
Companies employing workers with no work experience or under the age of 30 with a permanent employment contract do not need to make health insurance contributions for one to five years, depending on the case.
Companies with more than 20 employees must employ disabled individuals. The number of disabled employees depends on the number of employees, but it cannot be lower than 3% of the total number of employees.
Companies that do not comply with this requirement must pay a monthly fee amounting to 20% of the minimum salary for each disabled employee they are not employing.
Chamber of commerce contribution
Employers must pay a monthly fee to the chamber of commerce, which ranges from HRK 42 to HRK 3,973, depending on the company size.
Employee Contributions in Croatia
Residents of Croatia are subject to tax on their worldwide income (except if exempt under a double taxation agreement). In contrast, non-residents are subject to tax on the income generated only within the country. To be considered a resident, the person must spend more than 183 days in one or two calendar years in Croatia, own real estate, or have one at their disposal for more than 183 days in one or two years.
Staying in the real estate is not a determining factor. If the individual has real estate both in Croatia and abroad, they will be considered resident taxpayers in the country in which their family resides or, in case of no family, the country the person usually goes to work or is physically present. If the other country does not consider the person a resident taxpayer, they are seen as a Croatian resident taxpayer.
Croatian income tax 2021
|Gross Income||Progressive Tax Rate (%)|
|Up to HRK 360,000||20|
|Over HRK 360,000||30|
Couples cannot file taxes jointly and are treated as separate individuals for tax purposes.
Personal allowances are non-taxable portions of income. Employees are entitled to a monthly allowance of HRK 4,000, which increases by HRK 1,750 if they have one child, HRK 2,500 for two and HRK 3,500 for three.
The government also provides income tax relief for specific age groups.
Certain cities and municipalities in Croatia levy a municipal tax, which can be up to 18% high. It’s levied as surtax to the individual’s personal income tax liability as follows:
- Zagreb 18%
- Split 15%
- Rijeka 15%
- Osijek 13%
- Pula 12%
- Zadar 12%
- Varaždin 10%
- Dubrovnik 10%
Social security contributions consist of pension contributions, which are withheld by the employer during payroll, at a rate of 20% of the employee’s gross income, capped at HRK 55,086 monthly and HRK 661,032 annually.
Tax-Free Allowance in Croatia
Personal monthly allowance
Monthly allowance for a dependent family member
Monthly allowance for dependent children
First: HRK 1,750; second: HRK 2,500; third: HRK 3,500
Monthly amounts for a disability of taxpayer, dependent family member or dependent child
Monthly amounts for a taxpayer, a dependent family member, or a dependent child if such individual (1) has 100% disability on one basis and/or (2) due to disability, is entitled to the assistance and care of others has 100% disability on one basis
Benefit in Kind
Benefits in kind are seen as employment income and are taxed accordingly with the exception of the following:
- Commute-to-work expenses as they would be if public transportation were used
- National business trip allowance per diems (up to HRK 200) as well as travel and accommodation costs
- International business trip allowance per diems (depending on a country) as well as travel and accommodation costs
- A one-off HRK 10,000 payment for a newborn baby
- Reimbursement of personal car use for business purposes (up to HRK 2 per kilometre)
- Work performance rewards of up to HRK 5,000
- One-off cash payments upon retirement (up to HRK 8,000)
- Disability grant (up to HRK 2,500)
- Cash benefit upon the death of an employee (up to HRK 7,500) or a close family member (up to HRK 3,000)
- Occasional cash payments for (1) paid at holidays such as Christmas and Easter or (2) vacation (up to HRK 3,000)
- Cash payments for children until they turn 15 (up to HRK 600)
- Bonuses to employees for work anniversaries (caps apply)
- Certain severance payments (caps apply)
- Voluntary pension premiums covered by the employer (up to HRK 500 a month / HRK 6,000 a year)
- Meal expense reimbursement up to HRK 12,000 a year (with invoices provided by an employee) and up to HRK 5,000 (without invoices)
- Accommodation expenses reimbursement
- Children’s pre-school education expenses reimbursement
- Supplementary and additional health insurance premiums covered by the employer (up to HRK 2,500 a year)
If any of these benefits exceed the outlined limits, the difference is considered income and is subject to personal income tax, municipal tax, and employer’s and employee’s social security contributions.
Personal tax relief
Taxpayers up to 25 years old
Do not pay 100% of their annual tax liability arising in connection with the portion of their income from employment in the 24% tax band.
Taxpayers between 26 and 30 years old
Do not pay 50% of their annual tax liability arising in connection with the portion of their income from employment in the 24% tax band.
Do not pay 50% of their annual tax liability arising in connection with the pension benefit.