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Tax system in Zagreb


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The government collects tax from the earnings of employed citizens and foreign nationals in Croatia. Generally, employers are responsible for deducting taxes from the salaries of their employees.

The Tax Administration of the Ministry of Finance has compiled a comprehensive guide to the Croatian tax system in English.

Individual Tax

Income Tax

Income tax (Porez na dohodak) is paid on all forms of income acquired by resident and non-resident taxable persons. A resident taxable person is a natural person who has domicile or habitual residence in the Republic of Croatia or has neither domicile nor habitual residence but is employed in the civil service of the Republic of Croatia. A non-resident taxable person has neither domicile nor habitual residence in the Republic of Croatia, but acquires an income in the Republic of Croatia that is subject to taxation according to the Law on Income Tax.

Both residents and non-residents pay taxes on:

  • Income from employment
  • Income from independent personal activities
  • Income from property and property rights
  • Income from capital
  • Income from insurance
  • Other income

Income tax is charged at a rate of 12%, 25%, or 40%, depending on monthly taxable base. The taxable base is calculated by subtracting the amount paid for obligatory social security and any personal allowances from the total income.

Surtax on Income Tax

Taxable residents are also obligated to pay municipal or city taxes. Municipalities can charge up to 10%, cities with under 30,000 residents may charge up to 12%, cities with a population of more than 30,000 may charge up to 15%, and the city of Zagreb can charge up to 30%. Zagreb's current city tax rate it 18%.

Reporting

Every taxpayer must submit a tax return to the Tax Administration at the end of the year. The tax year runs from 1 January to 31 December. The deadline for filing a tax return in Croatia is always the last day of February of the following year.

Tax forms can be obtained from a local tax office. There is also a downloadable tax return form available online at the Tax Administration website.

Reciprocal Tax Agreements

Croatia has double tax treaties with several countries. This provides tax relief for residents also pays income tax in another country. A full list of countries that have reciprocal tax agreements with Croatia is provided by the Tax Administration.

VAT

Value-added tax (porez na dodanu vrijednost or PDV) is usually included in the price of goods and services. The standard rate is 25 percent, but there are discounted rates of 10% and 5% for certain goods. For example, accommodation, meals at restaurants, and newspapers and magazines have a VAT of 10%, while there is a 5% VAT on bread, milk, professional or educational books, medications, and surgical implants.

VAT is charged on commercial imports into Croatia, but exports are exempt from VAT.

Update 14/03/2016



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