Croatia Personal Income Tax

Residents are subject to income tax in Croatia on their worldwide income. Nonresidents are subject to income tax on their Croatian-source income only.

A resident taxpayer is an individual who has a permanent or temporary place of residence in Croatia. A nonresident taxpayer is an individual who does not have a permanent or temporary place of residence in Croatia but derives Croatian-source income that is subject to tax in Croatia.

An individual is considered to have a place of permanent resi­dency if he or she owns a place of abode or has one at his or her disposal for an uninterrupted period of 183 days. An individual does not need to stay in the place of abode to meet the 183-day threshold. If an individual stays in Croatia for at least 183 days, he or she is considered to have a temporary place of residence in Croatia. In both cases, the 183-day period may span more than one calendar year.

Income subject to tax. Residents are subject to income tax on the following types of income:

  • Income from employment
  • Income from self-employment
  • Income from capital
  • Income from property and property rights
  • Income from insurance
  • Other income

Nonresidents are subject to tax on the same types of income as residents. However, they are taxed only on income sourced in Croatia.

The taxation of various types of income is described below.

Employment income. Employment income includes receipts in cash or in kind provided by employers under current, past and future employment relationships. Employers may make certain types of payments that are free of tax to employees. These in­clude voluntary pension insurance premiums, reimbursements of business trip expenses, daily allowances, Christmas bonuses, severance payments and similar payments, all up to certain pre­scribed amounts. Employment income is subject to tax at the rates set forth in Rates.

Self-employment and business income. Individuals performing small business activities (sole trader activities) in their own name and at their own risk are subject to income tax on income derived from these activities, which is known as income from self-employment. Busi ness income is subject to tax at the rates set forth in Rates.

Under certain conditions, self-employment and business income can be taxed under the rules applicable for corporate taxation (at the corporate tax rate of 20%).

In principle, all income attributable to business, including gains from the sale of property used in a business, is subject to income tax.

Capital income. Interest income received from bank savings, securities, investment funds and loans is subject to a 12% with­holding tax (plus city tax). The following types of interest are exempt from tax:

  • Penalty interest
  • Interest based on court rulings
  • Bank interest up to 0.5% per year
  • Bond interest
  • Yields from life insurance and voluntary pension funds

Dividends (and profit shares) are subject to a 12% withholding tax (plus city tax). Dividends paid out from profits earned between 2005 and 2012 are not taxable. Dividends that are used to increase share capital are also not taxable.

Income from property and property rights. Income from leasing of immovable and movable property is taxed at a prepayment rate of 12% (plus city tax), after a deduction of 30%, representing notional expenses.

Income from property rights is taxed at a prepayment rate of 25% (plus city tax). The actual expenses incurred are deductible for tax purposes. They are recognized based on the documentation sup­porting the expense and may be claimed in the annual tax return only (not at the prepayment stage). In general, income from the disposal of property and property rights is taxed at a prepayment rate of 25% (plus city tax). However, capital gains derived from the sale of real estate are not taxable if the real estate meets either of the following conditions:

  • It was held more than three years.
  • It was used by the owner or dependent family members for lodging.

If a person sells more than three real estate or property rights in a five-year period, income from sale of real estate or property rights is taxed at a prepayment rate of 25% (plus city tax). The expenses incurred are deductible for tax purposes, and they are recognized at the prepayment stage based on supporting docu­mentation.

Income from insurance. Income from insurance is generally not taxable. However, if life insurance premiums are considered tax-deductible expenses in the determination of taxable income, the insurance income equal to the amount of such premiums is taxed at a prepayment rate of 12% (plus city tax). In addition, payments made out of voluntary pension insurance schemes, which are based on tax-free premiums made by employers on behalf of employees, are also taxed as insurance income at the prepayment rate of 12% (plus city tax).

Other income. Other income includes all types of income that cannot be included in one of the above categories, such as direc­tors’ fees. Other income is taxed at a prepayment rate of 25% (plus city tax), without the right to deduct personal allowances. Exceptionally, other income is taxed at a rate of 40% (plus city tax) in the event of tax audit findings of unreported income and in the event of the claiming back of pension contributions paid in excess of the annual limit.

Capital gains and losses. Capital gains derived from the sale of financial property acquired in or after 2016 are subject to tax. Realized capital gains are taxed at a prepayment rate of 12% (plus city tax). Realized capital losses may offset realized capital gains in the same year. Certain exceptions apply (for example, capital gains are not subject to tax if the financial property is held for at least three years).


Deductible expenses. Compulsory social contributions payable by an individual on a specified type of income are de ductible in determining taxable income. Personal expenses incurred to pro­duce income from employment are not deductible.

Personal allowances. Resident and nonresident taxpayers may claim a basic personal allowance of HRK2,600 per month. Retir ed persons may claim a personal allowance of HRK3,800 per month. Resident taxpayers may also increase personal allowances by the following:

  • 50% of the basic personal allowance for a dependent spouse and ascendants
  • 50% of the basic personal allowance for the first dependent child, 70% for the second, 100% for the third, 140% for the fourth and increasing percentages for each additional child
  • 30% of the basic personal allowance for a dependent invalid child or other family member or for an invalid taxpayer

Nonresident taxpayers who are residents of the European Union (EU) can claim increased personal allowances in the same man­ner as residents if their total Croatian-source income accounts for at least 90% of their total annual income.

To be considered a dependent family member, the individual’s annual earnings may not exceed HRK13,000. A dependent fam­ily member is not required to live in the same household as the taxpayer.

Resident and nonresident taxpayers may also claim deductions for donations made in Croatia up to the amount of 2% of income earned in the preceding year.

Business deductions. All business-related expenses are deduct­ible from gross income for taxpayers who keep business books. Living or personal expenses are not deductible. Seventy percent of business entertainment costs and 30% of business car costs are not deductible. Per diem allowances and travel costs are not taxable up to certain amounts specified by the tax regulations.

Rates. Personal income tax on employment income is levied at the following progressive rates (however, see the next paragraph).

Taxable income Tax rate Tax due Cumulative tax due
First 26,400 12 3,168 3,168
Next 132,000 25 33,000 36,168
Above 158,400 40


The above rates apply also to any type of income (regardless of the tax prepayment rate) that is declared in the annual tax return. An annual tax return can be filed voluntarily to claim certain tax deductions. In certain circumstances, the filing of an annual tax return is required by law, such as for taxpayers receiving employ­ment income simultaneously from two employers.

Income tax is increased by municipal surcharges (city taxes) ranging from 0% to 18%, which are levied on personal income tax by local governments. The highest rate of 18% applies in Zagreb.

Relief for losses. Tax losses may be carried forward for five years. Nonresidents may carry forward only losses incurred in Croatia. Losses may not be carried back.

Other taxes

Wealth tax. Croatia does not levy wealth tax on net property. However, tax is levied on certain types of property, including vaca­tion houses (up to a maximum tax of HRK15 per square meter per year), cars (up to a maximum tax of HRK1,500 per year), motor­bikes (up to a maximum tax of HRK1,200 per year), and boats and yachts (up to a maximum tax of HRK5,000 per year).

Estate and gift taxes. A tax is imposed on movable and immov­able property, including cash, monetary claims and securities received by inheritance or donation at a rate of 5% on the fair market value of the property transferred. Certain transfers of property are tax-exempt, depending on the relationship between the transferee and the transferor and on the type of property. In addition, transfers of movable property are exempt if the fair market value of the property is less than HRK50,000 or if the transfer is subject to VAT.

Social security

Contributions. Employment income is subject to health and social security contributions at rates of 17.2% for employers (uncapped) and 20% for employees (partially capped).

Social security contributions consist of the following elements.

Employer rate Employee rate
% %
Old-age pension 20
Health insurance 15 ­
Accident insurance 0.5 ­
Unemployment insurance 1.7 ­

Other income is subject to a health care contribution at a rate of 15% for payers and 20% for recipients.

Capital income, income from insurance and income from prop­erty and property rights are generally not subject to health and social security contributions.

Coverage. An employee who pays social security contributions in Croatia is entitled to benefits, such as health insurance for the employee and dependent family members, disability and profes­sional illness insurance, unemployment allowances, retirement benefits and other benefits.

Totalization agreements. To provide relief from double social security taxes and to assure benefit coverage, Croatia has entered into totalization agreements with the following jurisdictions.

Australia                     Macedonia                       Serbia

Bosnia and                 Montenegro                     Switzerland

Herzegovina               Quebec                            Turkey


In the EU, special rules contained in the regulation on the coor­dination of social security systems apply.

Tax filing and payment procedures

Personal income taxes are generally payable through withhold­ing. However, for income received directly from abroad, the tax reporting and tax payment obligation arises within eight days of receiving the income and rests with the individual taxpayer.

Croatian annual tax returns generally must be filed by the end of February of the year following the year in which the income is earned. Under new rules introduced in 2016 (applicable for the 2015 tax year and future years), for certain categories of taxpay­ers, annual taxes are assessed by the tax authorities based on the data in their IT tool. This simplified procedure does not usually apply to individuals in a complex tax position or in cross-border arrangements.

Individuals who earn self-employment income from ongoing business activities must pay advance tax monthly in an amount determined by the tax authorities. The balance of tax due is pay­able or refundable after the official assessment of annual per­sonal in come tax. The payer of self-employment income must withhold and pay personal income tax and contributions with respect to such income.

Nonresidents receiving Croatian-source income may need to regis­ter with the tax office. For nonresidents employed by resident employers, the employer is responsible for tax withholding and reporting re quirements. Residents and nonresidents who work in Croatia for a nonresident employer and are being paid from abroad must file monthly tax returns and pay advances of per­sonal income tax within eight days after the income is received. The same rule applies to any other income received directly from abroad (dividends, foreign pensions and other income).

Tax treaties

Croatia has entered into double tax treaties with the following countries.

Albania                          Iceland                         Netherlands

Armenia                         India                             Oman

Austria                           Indonesia                     Poland

Azerbaijan                     Iran                              Portugal

Belarus                          Ireland                          Qatar

Belgium                         Israel                            Romania

Bosnia and                     Italy                              Russian

Herzegovina                  Jordan                          Federation

Bulgaria                         Korea (South)              San Marino

Canada                           Kuwait                         Serbia

Chile                              Latvia                           Slovak Republic

China                             Lithuania                      Slovenia

Czech Republic              Macedonia                   South Africa

Denmark                        Malaysia                      Spain

Estonia                           Malta                            Switzerland

France                            Mauritius                     Syria

Georgia                          Moldova                      Turkey

Germany                        Montenegro                 Ukraine

Greece                           Morocco                      United Kingdom


Croatia has adopted double tax treaties entered into by the former Yugoslavia with the following countries.

Finland                          Norway                        Sweden

Travel visas

Whether a foreign national must have a travel visa to enter Croatia depends on the individual’s country of origin. Travel visas are issued for tourist, business, personal or other purposes. The period of the stay of a foreign national with a travel visa varies according to the type of visa.

Permits for stay and work

Under the Act on Foreign Nationals, a foreign national must obtain a permit for stay and work if he or she enters into an employment relationship with a Croatian employer or if he or she is assigned to a Croatian company that is related to the individu­al’s foreign employer.

In general, permits for stay and work for employment with Croatian employers are subject to annual quotas. Quotas are deter­mined by the Croatian government on the basis of the opinion of the Croatian Institute of Employment. Intercompany transfers or employment of “key personnel” are not subject to quotas. Specific requirements are prescribed for employment of non-EU citizens under a “key personnel” function (share capital exceeding HRK100,000, employment of at least three Croatian citizens and gross salary above the average).

The Ministry of Internal Affairs issues permits for stay and work, which are usually granted for a period of one or two years. However, foreigners who have obtained permanent residence in Croatia do not need to obtain a permit for work. Employers are fined if their foreign employees do not possess valid permits for stay and work.

Because Croatia joined the EU on 1 July 2013, EU nationals and individuals with permanent stay in EU countries are no longer required to obtain a work permit in Croatia. They are required only to register their stay in Croatia. However, for citizens of EU countries that introduced transitional measures regarding Croatia, because of reciprocity applied by Croatia, immigration require­ments remain the same as those for non-EU nationals. The fol­lowing are the EU countries with which Croatia applies transi­tional measures.

Austria                         Netherlands                        United Kingdom

Malta                            Slovenia

Residence permits

Under the Act on Foreign Nationals, foreign nationals may obtain residence permits for temporary residence or permanent residence.

Registration. Foreign nationals who stay in Croatia up to 90 days (with a travel visa, or without one if not required) must register at the local police station within 48 hours after their arrival in Croatia. This period is increased to eight days for EU nationals. If the foreign national stays in a hotel, the hotel must complete the registration. Each change of residence must also be registered.

Foreign nationals with temporary residence in Croatia must register their place of residence or change of address at the local police station within three days after their arrival in Croatia or their change of address.

Foreign nationals with permanent residence in Croatia must reg­ister their place of residence or their change of address at the local police station within eight days.

Temporary residence. The temporary residence permit is issued for purposes of work, education, joining the family or other pur­poses determined by law. It must be obtained if the foreign nation­al intends to stay in Croatia for a period longer than 90 days or for the purposes mentioned above.

Temporary residence is limited to stays of up to one or two years, with the possibility of extension, depending on special circum­stances.

Temporary residence permits are issued by Croatian diplomatic missions or consulates or by the Croatian Ministry of Internal Affairs for foreign nationals who do not need a travel visa to enter Croatia.

Permanent residence. Permanent residence is granted to foreign­ers who held temporary residence permits for five years without interruption before filing the request for permanent residence.

Knowledge of the Croatian language is one of the requirements for non-EU nationals.

The Ministry of Internal Affairs must approve permanent residence.

Family and personal considerations

Family members of foreign nationals working in Croatia must apply separately for permits for stay and work (if they intend to work in Croatia). If they are EU citizens from a country with which Croatia does not apply transitional measures, only a stay permit needs to be obtained. A temporary residence permit for the purpose of joining the family is approved for a foreign national who is a close family member with respect to the follow­ing individuals:

  • A Croatian national
  • A foreign national who has been granted permanent residency
  • A foreign national who has a temporary residence permit