COVID-19: Croatia – Second set of tax measures to help the economy


New measures to help economy during the COVID-19 epidemic were introduced on 9 April 2020.

A. Exemption from payment of tax liabilities arising between 1 April and 20 June

The exemption primarily applies (with certain exceptions) to personal income tax, city tax, mandatory contributions and corporate income tax. The exemption however does not apply to: VAT, customs and excise duties, contributions to II. Pillar pension insurance, tax and city tax on final income, fees for lottery games, liabilities based on ongoing administrative contracts and already re-scheduled liabilities in bankruptcy and prebankruptcy procedures.

Full exemption of mentioned tax liabilities can be claimed by taxpayers whose activities were banned, disabled or significantly impeded and have at least a 50% revenue drop between 20 March and 20 June compared to the same period of the previous year.

Partial exemption (proportionally to the percentage of revenue drop) of mentioned tax liabilities can be claimed by taxpayers with total supplies in previous year above HRK 7.5 million (app. EUR 1 million) excluding VAT.

The exemption may also be granted to the following categories of taxpayers:

  • Individuals who rent accommodation to tourists and pay tax on a lump sum basis
  • Other taxpayers who experience negative effects (drop of more than 50%). 

B. VAT Treatment of Donations

Taxpayers are exempt from payment of VAT when donating goods and services needed to mitigate effects of the COVID-19 epidemic. The exemption relates to donations made between 1 March and 20 June 2020.

C. VAT on Imports

As an exception to the rule that import VAT has to be actually paid, postponed accounting of import VAT applies until 20 June 2020 on all imports of goods. This means that import VAT will be considered paid when the taxpayer declares it in the VAT return.

Imports of goods required to mitigate effects of the COVID-19 epidemic is exempt from customs duty and VAT. This applies only to imports by certain state organizations (including State bodies, public bodies and other bodies governed by public law) and goods in question are customs-exempt under customs regulations and Commission Decision (EU) 2020/491.

D. Administrative Contract in Special Circumstances

For tax liabilities (arising between 20 March and 20 June) that are not subject to deferral or cannot be exempted, “Administrative Contract in special circumstances” could be concluded. The Tax Authorities offer payment in 24 monthly instalments at reduced interest of 3.11%.

E. Extension of deadline for filing Corporate Income Tax Return

The deadline for filing corporate profit tax return (and all enclosures) is extended to 30 June. The deadline for payment of the tax liability is 31 July 2020.

F. Modification of conditions for deferred payment of VAT

Deferred payment of tax liabilities (except customs and excise duty) may be granted to the taxpayer without any overdue tax liabilities and with a revenue drop of at least 20% in the last month or according to the revenue projection for the next three months. 

Based on the most recent changes to the General Tax Bylaw, VAT deferral may be granted to VAT payers who calculate and pay VAT based on issued invoices (i.e. not applying the cash accounting scheme). Provision allowing the deferral only to taxpayers with total supplies in previous year below HRK 7.5 million (approximately EUR 1 million) excluding VAT) has been deleted.

In practice, deferral of VAT means that eligible taxpayers will pay VAT only upon collection of issued invoices.

G. New deadlines for submitting financial statements

Due to the special circumstances defined in the Accounting Act, deadlines to submit financial statements and other accounting documents for statistical and other purposes have been extended to 30 June. The annual financial statements for public announcement purposes should be submitted within 8 months from the last day of the business year and consolidated within 10 months from the last day of the business year.

Entrepreneurs are exempt from paying fees to FINA (Croatian Financial Agency) for publishing financial statements.

H. Aid to preserve jobs

Monthly aid to preserve jobs has been increased from HRK 3,250 (app. EUR 430) for each full-time employee (amount paid for the March) to max. HRK 4,000 (app. EUR 530) for April and May. 

Also, employers will not have to pay mandatory contributions arising on this amount, therefore decreasing the cost of salary for additional 1,825 (app. EUR 240). The respective contributions will be paid by the state.

For more information on Croatian COVID-19 response or any other issue, please contact your regular CMS advisor or local CMS experts Tamara Jelić Kazić, Marko Starčević and Maja Marcelić.