Taxation in Croatia operates on two levels, national and local, with most taxes — including the most significant ones — collected at national level. The most important of these are:
- personal income tax,
- value added tax,
- corporate tax.
Personal Income Tax
The scope of personal income taxation depends on the taxpayer’s status. Croatian residents are taxed on income earned both in Croatia and abroad, whereas non-residents are taxed only on income earned in Croatia. Personal income in Croatia is taxed in three bands, depending on the size of the tax base, as follows:
- income up to HRK 26,400 is taxed at 12%,
- income from HRK 26,400 to HRK 105,600 is taxed at a rate of 25%,
- income exceeding HRK 105,600 is taxed at 40%.
Value Added Tax
Croatia operates a three-rate VAT system. The standard rate is 25%, with two reduced rates applying to selected goods and services. The 13% rate applies to certain foodstuffs, newspapers and periodicals, while the reduced 5% rate applies to certain foods such as bread and milk, as well as to pharmaceutical products, other medical aids and books.
Corporate Tax
Corporate income tax in Croatia is set at a general rate of 18%; however, taxpayers whose income in the tax period did not exceed HRK 3 million benefit from a reduced rate of 12%.