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Croatia

Law and regulation of Covid-19 tax relief in Croatia

Table of contents
  1. Value Added Tax
  2. Corporate Income Tax
  3. Personal Income Tax 
  4. Non-refundable cash aid for protection of workplaces up to HRK 4,000 (app. EUR 530) per employee per month  
  5. Six-month extension of deadlines for reporting of potentially aggressive cross-border arrangements under the EU Directive 2018/822 (DAC 6)
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Value Added Tax

  • Postponed accounting of import VAT for imports until 31 December 2020. This applies to importers registered as Croatian VAT payers.  
  • Import of goods required to mitigate effects of COVID-19 epidemic in 2020 is exempt from customs duty and VAT (only for specific goods and organizations, in line with the EU Commission Decision 2020/491).

Corporate Income Tax

  • Government aid received by corporate income taxpayers to mitigate effects of coronavirus is not taxable.

Personal Income Tax 

  • Government aid received by sole entrepreneurs to mitigate effects of coronavirus is not taxable.

Non-refundable cash aid for protection of workplaces up to HRK 4,000 (app. EUR 530) per employee per month  

  • Eligible employers: small businesses with less than 10 employees, employers from selected industries (agriculture, transport, tourism, art and creative industry, organization of cultural and sport events and others) and all businesses whose activities are limited by an order of the Civil Guard. 
  • Cash aid can be requested for period October – December 2020.
  • Amount of the cash aid depends on the size of the revenue drop in Q2 and Q3 2020 compared to the same period of 2019 or on the duration of period in which the business was not allowed to operate. Higher revenue drop implies possibility of higher cash aid. For example, in case of revenue drop of more than 60%, maximal aid of HRK 4,000 per employee can be obtained. On the other end of the spectrum, aid of HRK 2,000 per employee will be obtained if revenue drop is between 40% and 44.99%. 
  • The employer is not liable to pay mandatory social contributions arising on the aid (co-financed part of the salary).

Six-month extension of deadlines for reporting of potentially aggressive cross-border arrangements under the EU Directive 2018/822 (DAC 6)

  • For reportable cross-border arrangements the first step of which was implemented between 25 June 2018 and 30 June 2020, the reporting deadline is extended to 28 February 2021;
  • For cross-border arrangements made available for implementation, ready for implementation or the first stage of which was implemented between 1 July and 31 December 2020, as well as for the provision of aid, assistance or advice by an intermediary during this same period, thirty-day period for reporting starts on 1 January 2021;
  • For arrangements designed, marketed, ready to be implemented or made available for implementation without the need for significant customisation, the deadline for communication of the first quarterly update relating to these arrangements is extended to 30 April 2021.