Tax Minimization in Croatia

Tax minimization in Croatia is used as a financial planning solution for avoiding certain taxes. Both Croatian companies and foreign ones, doing business in this country, turn to tax minimization when they want to reduce their taxes. Our experts in company formation in Croatia can provide a wide range of solutions for tax minimization to their interested clients.

Tax deductions in Croatia

The Croatian taxation system allows a series of deductions which help lower the taxes levied on income. The tax minimization measures render Croatia an attractive country for foreign investments. Several types of income are tax free:

•    pensions received from abroad;
•   interest payments on loans, investments, securities and deposits with financial institutions;
•    capital gains from trading securities and financial assets;
•   inheritance and gifts are exempt from taxation in the first line of succession.

Other general deductions from income include:

•    a monthly basic allowance of 2,600 HRK;
•  additional allowance, if the taxpayer supports qualifying family members;
•  the compulsory social security contributions for the Croatian employees.

Additional deductions are available to those taxpayers who bring proof of donating up to 2% of their previous year income. Our specialists in company registration in Croatia can give you more details about the tax deductions and reimbursement methods available to tax payers.
 

Tax minimization for Croatian companies

The Croatian government has recently implemented a set of fiscal measures aimed at reforming the tax system. The incorporation of new companies, start-ups and small entrepreneurship are strongly encouraged through tax incentives. The corporate income tax has been lowered from 20% to 18%. Croatian companies whose income is lower than 3 million HRK are levied a rate of 12%. Other measures of tax minimization for Croatian companies include:

•  Representation expenses – 50% of their total amount can be deducted;
•    Personal transportation expenses – 30% can be deducted;
•   Agreements on interest rates between affiliated companies by using a transfer pricing method or an interest rate prescribed by the Ministry of Finaces;
•    Treaties for the avoidance of double taxation.

If you want to start a company in this country and need to know more about tax minimization instruments, feel free to contact our agents in company incorporation in Croatia.