Croatia Income Tax Rates 2025

Individual Income Tax:

• Tax Rates: Croatia's individual income tax rates are progressive.
  The specific tax brackets and rates should be verified with the tax authorities, as they have likely changed since 2018.
• Personal Allowance: A basic personal allowance is available to Croatian residents.
  The specific amount should be verified with the tax authorities, as it has increased since 2018.
  Additional allowances are available for dependent spouses and children.
  The amounts for dependents should also be verified.

Corporate Income Tax:

• Tax Rate: The standard corporate income tax rate has changed.
  The current rate should be verified with the tax authorities.
  There may be a reduced rate for certain small companies.
  The criteria for qualifying for the reduced rate and the rate itself should be confirmed.

Capital Gains:

• Individuals: Capital gains are taxed.
  The specific rate should be verified with the tax authorities.
• Corporations: Capital gains are generally included in the corporate income and taxed at the corporate income tax rate.

Tax Residency:

• Corporations: A foreign company is considered resident if it is incorporated in Croatia or has its place of effective management in Croatia.
• Individuals: An individual is considered a tax resident if they have a permanent residence in Croatia or have a place of abode and stay in Croatia for more than 183 days in a tax year.
  Residents are taxed on their worldwide income, while non-residents are taxed only on Croatian-source income.

Tax Deductions (Verify with Tax Authorities):

• Loss Carryforward: Losses can be carried forward for a specific number of years.
  The exact number of years should be verified with the tax authorities.
  There is no carryback of losses.
• Depreciation: Depreciation is generally deducted using the straight-line method for tangible and intangible assets.
  The specific depreciation rates for different asset classes should be verified with the tax authorities, as they have likely changed since 2018.
• Consolidated Returns: Consolidated financial statements are not allowed for tax purposes in Croatia.
  Each company must file separately.
• Thin Capitalization: Thin capitalization rules apply to interest expenses.
  The specific debt-to-equity ratio and other rules related to thin capitalization should be verified with the tax authorities.
• Transfer Pricing: Transfer pricing rules are in accordance with OECD guidelines.
• Entertainment Expenses: Deductibility of entertainment expenses may be limited.
  The specific rules and any limitations should be verified.
• Donations: Donations to certain organizations may be deductible up to a certain limit.
  The specific rules and limitations should be verified.

Personal Credits and Deductions (Verify with Tax Authorities):

• Basic Deduction: As mentioned earlier, there is a basic personal deduction for residents.
  The current amount should be verified.
• Dependent Allowances: Additional allowances are available for dependent spouses and children.
  The amounts should be verified.
• Pension and Insurance Payments: Deductions may be allowed for contributions to pension plans and certain types of insurance.
  The specific rules and limitations should be verified.
• First Residence Purchase: There may be deductions related to the purchase of a first residence.
  The specific rules and any limitations should be verified.

Deduction of Tax at Source (Withholding Tax):

• Dividends: The withholding tax rate should be verified with the tax authorities.
• Interest: The withholding tax rate should be verified with the tax authorities.
• Royalties: The withholding tax rate should be verified with the tax authorities.

Social Security:

• Contributions: Both employers and employees are required to make social security contributions.
  The specific rates and contribution bases should be verified with the relevant authorities.

Key Updates and Considerations:

• Tax Laws are Subject to Change: Croatian tax laws and regulations are subject to frequent updates and amendments. It is crucial to verify the latest information with a qualified tax advisor or by consulting official Croatian tax sources.
• Professional Advice: Tax regulations in Croatia can be complex.
  It is highly recommended to seek professional advice from a tax specialist experienced in Croatian tax law for specific guidance on your situation.