At midnight, many new laws and regulations came into effect in Croatia.
On 1 January, numerous new laws and regulations came into effect in Croatia. Here are some of the more important ones.
Somewhat higher prices of food and drinks in restaurants and cafes will be the first visible sign of the changes in laws which are part of the tax reform. The tax reform itself consists of 16 individual pieces of legislation, and in addition to them many other laws also came into effect today at midnight. Among them is the minimum wage regulation, which has been set for this year at 3,276 kuna gross, which is 156 kuna more than the last year.
Starting from January, workers should get somewhat higher salaries, depending on the amount of their wages and special allowances such as those for children and dependents. The increases will range from a few tens of kuna to a few thousand kuna for those employees with high wages. That is a consequence of the new Law on Income Taxes, which increased the basic personal allowance to 3,800 kuna a month, which is now equal for all taxpayers. Tax brackets of 25 and 40 percent have been lowered to 24 and 36 percent, and tax bands have been changed in favour of workers. Personal allowances for children and dependents have also been increased.
Income from property, capital and insurance will be taxed at the rate of 12 percent.
One of the new provisions is the so-called synthetic taxation of income from employment, self-employment activities and other similar forms of income. Everything earned during one year, for example salaries and fees for occasional jobs, will be added up and taxed at the rate of 24 percent for incomes of up to 210,000 kuna a year, and at the rate of 36 percent for the portion of the income above that threshold.
New laws also mean there are no exceptions regarding the payment of pension and healthcare contributions for authors, journalists, translators, artists and other freelancers working for fees on special contracts. They will also have to pay contributions, although by half the rates of regular employees.
The beginning of 2017 brought us changes to corporate taxes as well, which are lowered from 20 to 18 percent for larger companies, and to 12 percent for businesses with annual incomes under 3 million kuna.
As for the VAT rate, restaurant and catering services will pay VAT at the rate of 25 instead of 13 percent. Rates for some other individual products have also been changed.
Citizens buying real estate will pay tax at a rate of 4 percent, which is one percent lower than earlier. However, young people buying their first property will no longer be exempt from paying this tax. To help them purchase the first property, they should wait for the adoption of the law on subsidized housing loans, which is still in the public consultation phase.
The new law on local taxes brings reduction of the tax rate on inheritance and gifts from 5 to 4 percent, while companies will no longer have to pay the tax on company name.
Another changes for citizens is that the tax on road vehicles will be paid together with the annual registration fee for vehicles. So far, the tax was paid after the owner of a vehicle would receive a decision issued by the Tax Administration which was sent by mail.
The beginning of this year brought us changes to excise duties system, which introduced excise duties for liquids used for consumption in electronic cigarettes, as well as administrative simplification for small producers of alcoholic beverages and small wineries. Amendments also mean that excise duties for motor vehicles imported to Croatia will be calculated according to a new formula.
Amendments to the General Tax Law changed the statue of limitations period for tax evasion to six years, while banks will have to provide the Tax Administration with data about all current and savings accounts of citizens and businesses.
The new law on public procurement also entered into force at midnight, changing the selection principle for winning bids from lowest price to the most economically advantageous offer. The price will remain one of criteria, but there will be additional factors taken into account as well. However, in order to develop procedures for the full implementation of the most economically advantageous offer principle, some of the new provisions will enter into force on 1 July 2017.
Membership fees for local tourist board for companies have been lowered by 5 percent, which should decrease the financial burden for businesses in the total amount of approximately 10 million kuna a year.
There are also several other legislative changes coming into effect this year, including changes to Law on Pension Insurance, which stipulate that pensions earned under special regulations will be adjusted in the same way as those earned by general rules. Also, starting from today, citizens of other EU member states will be able to be appointed as public notaries in Croatia.
