Croatia: Living There - Tax Issues
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Living There
INDIVIDUAL TAXATION
Residents are taxed on their worldwide income. Married couples are taxed separately.
INCOME TAX
There are several categories of income in Croatia:
- Employment income,
- Self-employment income,
- Income from property and property rights (i.e. leasing immovable property) and capital gains from immovable property and rights in such property,
- Income from capital,
- Income from insurance,
- Other income
Taxable income for each category is calculated as gross income less allowable deductions. Income tax is levied at progressive rates.
INCOME TAX |
|
| TAXABLE INCOME, HRK () | |
| Up to 43,200 (5,973) | 15% |
| 43,200 108,000 (14,932) | 25% on band over 5,973 |
| 108,000 - 302,400 (41,808) | 35% on band over 14,932 |
| Over 302,400 (41,808) | 45% on all income over 41,808 |
| Source: Global Property Guide | |
Municipalities are authorized to introduce a surcharge on the income tax at rates between 10% and 30%, depending on the number of inhabitants. The actual highest rate of the surcharge is currently 18% (e.g. in Zagreb), which means that the highest total tax rate is 53.1%.
Residents are entitled to the following deductions:
- Up to HRK12,000 (1,659) annually for various expenses
- Insurance premiums
- Donations for cultural, educational, scientific, healthcare, humanitarian, sport and religious purposes; up to 2% of the taxpayer's income reported in the preceding year
In addition, residents can avail of the following monthly allowances:
- Basic personal allowance of HRK1,800 (249) for each resident taxpayer
- Personal allowance of HRK3,200 (US$442) for each retired individual
- 50% of the basic personal allowance for a dependent spouse or other close family member
- For dependent children:
CHILDREN |
|
RENTAL INCOME
Rental income is taxed at the progressive income tax rates. Taxable rental income is computed by deducting income-generating expenses from the gross rent.
Taxpayers may choose to have their rental income taxed as business income, subject to certain qualifications.
CAPITAL GAINS TAX
Capital gains from the sale of immovable property are subject to a flat withholding tax rate of 25%. Allowable deductions are the acquisition cost of the property as adjusted by inflation and the fees incurred in the transfer.
The sale of real estate is exempt from capital gains tax if (1) the sale took place more than three years from the date of purchase, or (2) if the property was used as the residence of the taxpayer and/or dependent members of the taxpayers family, (3) or the sale was directly connected with a divorce or an inheritance.
VALUE ADDED TAX (VAT)
VAT is waived on the leasing of housing premises.
PROPERTY TAX
Tax on Holiday Homes
Tax on holiday homes are payable by owners of holiday homes in Croatia. The tax is levied on the useful area of the property. The tax is HRK5 (0.70) to HRK15 (2) per square meter, depending on the municipality or town where the property is located.
Croatia - more data and information
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