Temperatures are rising, the weather is getting better and that usually means it's time for various inspections to hit the streets.
It is not big secret that Croatia isn't exactly the poster country when it comes to helping its small and medium size business owners, and on April 4, 2016, some of those businessmen sat down with a journalist from Slobodna Dalmacija and listed some of the more absurd fines they had to pay on the spot, without warning, every time they got a visit m one of many different inspections that are "operating" in our country and especially on the coast once the weather gets warmer. This was their way of warning other business owners not to repeat their mistakes.
Example 1 – Fatal sticker
One of the business owners in question got a visit from the inspectors. They check everything and ask if he has a fire extinguisher.Regulations clearly state every business must have one, it is both smart and logical. Owner points to the fire extinguisher on the wall, new, shiny, freshly attested, anyone can see that from a mile away.
-And where's the sticker? –inspectors ask.
-What sticker? – the business owner asked, surprised.
-Regulations state that you have to have a fire extinguisher and a sticker that says fire extinguisher or location of a fire extinguisher. You don't have one, so the fine is 5000 kn – inspectors give the business owner a crash course in Croatian bureaucracy.
-I have no idea what you are talking about – naive business owner continued.
- That is a fine you pay here on the spot. Because you don't have the sticker – inspectors are very patient.
What can we say, the business owner paid the fine ad asked himself whether the fine would have been lower if he had the sticker with a drawing of a fire extinguisher and did not have the actual device. The journalist couldn't answer, but apparently, the business owner actually got a good deal since the fine for this „offense“ is from 2000 to 15 000 kunas.
Case No. 2. Another day, another sticker.
Another time, another place, another business owner and...another sticker. This time, inspectors want to see the sticker which says that every seller is obliged to issue a receipt and buyer is obliged to take it.
-Ah, that one, yes I have it, on the cash register – business owner breathed a sigh of relief.
-That one's no good. It's an old sticker. Those stickers were changed four times and you have one of the oldest ones. That's a 30 000 kn fine – inspectors cut the air out of his lungs.
-What? Come on, are you for real? I issue receipts, pay VAT, I haven't done anything wrong. What do these new stickers say? – Business owner cries out in disbelief.
-They say the same thing as the old ones. You have to issue a receipt, buyer has to take it and keep i but they have changed the laws that enforce that rule so they've changed the stickers. You're getting a good deal with the 30 000 kunas fine, for this particular breach we could have given you anything from 5000 to 500 000 – inspectors tried to calm him down.
Case No. 3 – Try closing a company
Every single Business owner that participated in the creation of this article written by Slobodna Dalmacija said that they do not understand why they were t warned, given a deadline to fix the problem and then charged if they failed to comply because these were not exactly serious offences that harmed the business operations or safety.
Next example comes from a man who figured out that he was not exactly cut out for business, he still had a company that hasnp0t been active for years and he still has to pay 1000 kn of taxes, annual membership to the Croatian Chamber of Economy, water and forest taxes...so he decided it was time to finally close the company. He knew it would not come without cost but since he had no debts, no assets, he figured it cannot be much. But, as it turned out, he needed 5-8 000 kn. For levies for the court registry entry, solemnisation of a contract on the closure of a company with the Notary public. In total 2000 kn went to the Notary public, 100 kn to publish the liquidation on the Court registry website, costs of an accountant, publication of final reports. Luckily, he had no debts or outstanding invoices, otherwise, if the had to get the lawyers involved, the final amount would have easily gone up to 20 000 kn.
Missing a locker? That's 2000 kn
According to regulations, every restaurant must have as many lockers as it has employees. During a busy summer season one restaurant owned hired one extra person so 2 waiters were sharing one locker. Inspectors once again issued an instant fine, no warning and no chance to correct the mistake. Total cost – 2000 kn.
A journalist asked a prominent Croatian economist Damir Novotny to comment on this issue. He says that the pressure on small and medium businesses in Croatia is almost unbearable, large corporations can still handle it somehow and similar pressure can be felt in all countries in South East Europe. Reason: pre-transition regulations intertwined with new regulations:
- No one ever tried to clear this forest of regulations in Croatia. We have so many inspections and tax officers following so many different regulations and because the rules are not consistent anyone can find a reason to issue a fine, few thousand here, few thousand there – says Novotny.
-It got worse during Zoran Milanovic's government. They introduced a completely new reporting system which is not sustainable. Tax authority has the right to enforce payment from a business owner automatically if he hasn't paid for 60 days and yet if the State is the one owning money for months, especially in some sectors like health, no one seems to mind. Some businesses have to wait for over a year to get paid by the State and yet they have to pay their VAT even though they didn't receive payment for that particular invoice – Novotny added but he believes things will get better because the European Commission keeps stating that entrepreneurial climate in Croatia is bad so the pressure will grow from the EU to make the life of business owners easier.
Considering that every attempt to make the life of business owners in Croatia ends up complicating it even further, we can't say we're overly optimistic but there's always hope.
