Taxes, Social security, Personal identification number

Taxes, Social security, Personal identification number

Taxes

 

For business operations in Croatia, depending on the circumstances, certain taxes, contributions and other levies have to be paid.

 

After the registration of the head office (establishment), and before the start of the company, or 8 days after the start of the crafts, you are obliged to register your business entity at the Tax Authority. You will need the Decision on registration in the crafts register or the register of companies and for the company the issued Notification on classification according to the NCEA.

 

The request for the PIN/OIB, income tax returns and company tax returns and all forms for payment shall be submitted to the Tax Administration local office.

It is possible to meet the tax obligations electronically through the Tax Administration e-services, using the advanced e-signature.

 

Companies i.e. trading companies as legal persons are obliged to pay income tax and value added tax (VAT). The threshold for entry into the VAT system is HRK 230 thousand. Companies employing workers, or paying receipts to other natural persons, are obliged to calculate and pay for them the prescribed taxes and contributions for mandatory insurance.

 

Craftsmen, free occupations and farmers as natural persons are obliged to pay income tax and local surtax. It is possible to switch to payment of company tax instead of income tax. Contributions for mandatory insurance, value added tax (VAT) and other taxes are also to be paid.

 

If you are corporation tax payer or income tax payer from an individual activity and you operate with cash you are also liable to fiscalization.

 

Trading companies may be county and local tax payers, capital transfer tax payers and special taxes and excise tax payers.

 

PIN (OIB) for foreigners

 

Personal Identification Number (PIN/OIB) is a permanent and obligatory mark for all persons in the Croatian Legal System.

 

PIN/OIB is considered a tax number for taxation purposes.

 

PIN/OIB is determined and assigned, among other things, to foreign natural and legal persons that have some cause to be monitored.

 

A foreign person is considered a natural person not having Croatian citizenship and a legal entity that has its headquarters outside the Croatian territory.

 

It is believed that the cause for monitoring a foreign person has developed:

 

  1. If the foreign person is entered in the official records of residence permits to foreigners in the Ministry of the Interior – foreign natural person then goes to the Ministry of the Interior to register the residence and to be determined and assigned PIN/OIB.
  2. If the foreign person is entered in an official register of persons and property on the Croatian territory and if the foreign person has become a taxpayer under a special regulation. Foreign natural and legal person then comes to the relevant Tax Administration office to be determined and assigned PIN/OIB.

 

For example, reason for monitoring has developed:

  • when a foreign person becomes a taxpayer under a special regulation (accounting for another income, withholding tax calculation, etc.)
  • when a foreign person becomes a taxpayer because acquires assets on which tax shall be paid and shall be entered in the official record in which the ownership of that property is kept (real estate – transfer tax, registration in the land registry, entry in the records of taxpayers utility charges, taxes on vacation homes, cars – a tax on road motor vehicles, entry in the records of the owner of the vehicle at the MoI, etc.)
  • when a foreign person enters the acquisition of rights and obligations in the official records, not becoming a taxpayer (the acquisition of securities, bank accounts opening, the establishment of the company, etc.)
  • when required by a foreign person due to obligations prescribed by laws.

 

For the purpose of determining and assigning the PIN/OIB a foreign person shall submit to the local competent Tax Administration office in person or by proxy a form Request for Determining and Assigning PIN/OIB. Along with the application the person submits valid documents confirming the information specified in the application. In the course of 2017 electronic procedure will be introduced.

Territorially competent Tax Administration office refers to the Tax Administration office according to the place where the cause for monitoring a foreign person developed, depending on where the purchase was made (real estate, car, security, etc.), where a bank account is opened, where the right to retirement from the Republic of Croatia will be enjoyed, etc. If it is not possible to determine locally competent Tax Administration office the foreign person may contact the Regional Office Zagreb, Dubrovnik Avenue 32, 10000 Zagreb.

 

Documentation required for the determination and assignment of PIN/OIB:

 

Foreign natural person

  1. An application for determining and assigning PIN/OIB
  2. Passport – original of the document shall be submitted to inspection, a copy shall be attached to the application

 

Exceptionally, if a foreign person does not have a passport the application must be accompanied by:

  1. European ID card (for EU citizens) or
  2. identification document from the country with the proof of belonging to its citizenship

 

Foreign legal person

  1. An application for determining and assigning the PIN/OIB
  2. Memorandum of association (Decision or an extract from the relevant register, in Croatian or translated into Croatian by a certified court interpreter)

 

Authorization

  • If the application on behalf of the foreign person (natural and legal) is submitted by an attorney, with the pre-mentioned documents (copies of documents) the attorney must submit the authorization as well.
  • The power of attorney must be issued for the process of determining and assigning PIN/OIB. The power of attorney must be written in Croatian or translated into Croatian. It is retained in the competent Tax Administration office and must be certified by a notary public only exceptionally if there is suspicion of its credibility. If the power of attorney is issued to the notary public, lawyer, public authority, or to the bank the certification of authorization is not required. If the application is submitted by a natural person for a foreign person the certification of authorization is required.

 

Documentation required for the determination and assignment of PIN/OIB, as well as the Request for Determining and Assigning of PIN/OIB in addition to Croatian are also available in English and German.

 

Issues related to the process of determining and assigning of PIN/OIB can be addressed to oib@porezna-uprava.hr

 

Regulations on PIN/OIB:

Personal Identification Number Act (OG 60/08)

 

Rules on Personal Identification Number (OG 1/09, 117/10, 125/13 and 31/15)

 

General Tax Act (NN 147/08, 18/11, 78/12, 136/12, 136/12, 73/13, 26/15 and 44/16)

 

Value Added Tax

 

Taxpayers in Croatia: The taxpayer shall be registered in the VAT register if the value of his supplies of goods or services in the previous calendar year exceeded HRK 230 thousand. The taxpayer may be entered in the register of VAT payers at his own request and in this case is obliged to apply regular system of taxation in the next 5 calendar years. The taxpayer is also any person who occasionally delivers new means of transportation (cars, boats and aircrafts) in another Member State.

 

Foreign taxpayers: The taxpayer who has not an establishment, business unit, domicile or habitual residence on the Croatian territory, but supplies in Croatia goods or services with the place of taxation in Croatia (except if VAT is payable by a Croatian recipient of goods or services) is required to register for the purposes of VAT in Croatia and becomes obliged to submit VAT returns in Croatia from the moment of issuing the VAT identification number.

 

Taxpayers with headquarters in another EU Member State may appoint a tax representative in Croatia.

 

The tax authorities of each EU Member State and the Croatia Tax Administration as well, allow their VAT taxpayers to check VAT identification numbers of customers from other EU Member States. The verification is now possible through the European Commission. Basic information on the application of VAT in other EU Member States can be found through the European Commission. More information can be found in the Guide on VAT.

 

Taxpayers with headquarters outside the EU must appoint a tax representative as the person liable to pay VAT. The exception relates to the provision of services under a special procedure of taxation for services in the field of telecommunications, radio and television broadcasting and electronically provided services – the so called MOSS), and in the case of an exclusively occasional international road transport of passengers on the Croatian territory.

 

The subject of VAT: the delivery of goods or the provision of services in the country for a fee, the acquisition of goods within the EU and import of goods.

 

Tax base for VAT: Tax base in the supply of goods and services is the fee comprising everything that the supplier received or should receive for such supplies, including the amounts of subsidies directly linked to the price of delivered goods or services. The tax base in acquisition of goods within the EU shall be determined on the basis of the same elements that are used to determine the tax base for the delivery of the same goods in Croatia. The tax base for imported goods is customs value.

 

VAT rates: The general VAT rate is 25%, but the reduced rates of 13% and 5% are also applied.

The rate of 13% is applied to accommodation in hotels or premises for similar use, catering services, newspapers and magazines appearing periodically, edible oils and fats of vegetable and animal origin, baby food, supplies of water, sugar, tickets for concerts.

The rate of 5% is applied to bread, milk, books, medicines and medical equipment, cinema tickets, daily newspaper as well as scientific journals.

 

Exemption from VAT: Certain supplies of goods are exempt from VAT. Thus, the exemption from VAT without the right to pre-paid tax deduction, among other things, is applied to the universal postal, cultural, educational, insurance and certain financial services, medical services and rental payments. Export deliveries and deliveries of goods within the EU made to another taxpayer or legal person acting as such in that Member State are also VAT exempt. However, the right to deduct pre-paid tax is not excluded for that exemption. Taxpayers operating in the EU internal market must have a Tax Identification number (HR + PIN/OIB) that must be indicated on the invoice. Thus the supplier may check the tax status of the buyer (acquirer) from another Member State.

 

Pre-paid tax deduction: The taxpayer is entitled to deduct pre-paid tax charged for received goods and services, pre-paid tax charged for the acquisition of goods and receipt of services from the EU and third countries and for the import of goods to be used for the purposes of his taxable transactions.

 

VAT returns and payment of VAT: For a period of taxation the taxpayer must establish VAT obligation and express it in the VAT declaration (monthly, quarterly). In the case of shipments to the EU internal market the taxpayer must submit a Summary declaration in respect of goods or services in another EU Member State (ZP form), or Application for the acquisition of goods and services received from other EU Member States (PDV-S form) if has acquired goods or services received from the EU. These applications are to be submitted by the 20th day of the month for the previous month and the taxpayer has to pay the accounted for and declared VAT for monthly tax period by the last day of the month for the previous month. In the case of delivery or acquisition of new means of transportation Declaration for the delivery and acquisition of new means of transport (NPS Delivery Form or NPS Acquisition Form) is to be submitted no later than 10 days from the date of delivery or acquisition.

 

All VAT forms are available here.

 

VAT regulations:

 

Value Added Tax Act (OG 73/13, 148/13, 143/14); Decision USRH 99/13, 153/13

 

Ordinance on Value Added Tax (OG 79/13, 85/13-correction, 160/13, 35/14, 157/14, 130/15

 

Double Taxation

 

The Republic of Croatia has concluded agreements on avoidance of double taxation with many countries.

 

Tax guides

The Tax Administration issues tax manuals and brochures in which the rights and obligations of taxpayers in respect of taxation are explained in a simple and understandable way. In particular, it should be pointed Tax Guide for Companies and Tax Guide for Craftsmen.

 

Social insurance

After registering a business entity, and within 15 days after the commencement of the activity, if you want to hire workers, you have to register your business entity to any office of compulsory pension and health insurance. You need to take the Decision on registration in the crafts register, proof of residence (certificate of the police or identity card or passport), a seal, a work permit (for foreign nationals, except for nationals of EEA for which is not required), and for companies additionally, the Notification on the Classification of Activities, issued by State Statistical Office, work contract and signature card. More information can be found in the brochure on the application for the pension insurance.

 

After the registration, all employees must be reported no later than on the date of entry into employment. You can apply advanced e-signatures for e-pension and e-health.

 

Non-residents are legal and natural persons to whom the seat is not registered with the court, crafts or some other register or any register in Croatia and are not domiciled in the Republic of Croatia, but they generate their income there. Non-residents may have tax liabilities. Information about the process of determining the residency of natural persons can be found here.

 

Customs

All information on customs duties and relevant legislation may be found at the Customs Administration web sites.

 

There are no tariff and quantitative restrictions on free trade in goods in the internal market of the European Economic Area and Switzerland, Monaco and San Marino, as well as Turkey (which has a customs union with the EU).

 

As all the EU Member States, Croatia has taken a common customs tariff of the EU to third countries (except Switzerland and Turkey), including the CEFTA countries.