On December 11, 2019, the Croatian Government published Law in the Official Gazette to require taxpayers/ intermediaries to report information on certain tax arrangements. Some of the changes are given below:
Corporate income tax/Profit Tax
In the 2019 income tax return, taxpayers who have earned income of up to HRK 7.5 million are subject to corporate tax rate of 12%. Previously, the income threshold is limited to HRK 3 million. The new threshold is applicable for tax periods beginning on January 1, 2020.
Hybrid mismatch rules
The Act aligns with the council directive for introducing hybrid mismatches rules.
Mandatory disclosure rules
This Act implements the European Union (EU) Directive on the mandatory disclosure and exchange of cross-border tax arrangements (DAC6). Under DAC6, taxpayers and intermediaries are required to report cross-border reportable arrangements from 1 July 2020.
Individual income tax
The Act states that a natural taxable person who performs an independent activity becomes a taxpayer of income tax if, in the previous tax period, he has received a total income more than HRK 7.5 million. Income tax for young people who is below 25 are reduced by 100% while income tax for young people aged 25-30 is cut by 50%. The basic monthly personal allowance is increased from HRK 3,800 to HRK 4,000 and applies to the December payroll, which is normally paid in January.
VAT
The Act also keeps the 25% standard VAT rate; in where a 13% VAT rate applies on food and dessert preparation and serving in and outside catering establishments, and a lower VAT rate for holders of phonographic rights.