Croatia

Corporate Income Tax Rate:
The standard CIT rate is 18%. Taxpayers with revenues below EUR 1 million are subject to a reduced rate of 10%.

Pillar Two – Global Minimum Tax:
Croatia enacted the Global Minimum Tax Act (Pillar Two) effective 31 December 2023, applicable to fiscal years commencing after 31 December 2023. The Act introduces IIR, UTPR, and QDMTT for multinational and large-scale domestic groups with consolidated revenue exceeding EUR 750 million (in any two of the previous four years). QDMTT requires Pillar Two assessment for any domestic entity within a large group, regardless of parent entity-level calculation.

Personal income tax (PIT) in Croatia is calculated at progressive rates ranging from 25% to 35.40%, depending on the taxpayer's income level and place of residence. Individuals with higher income or who live in wealthier regions may fall under higher tax brackets. This progressive system aims to ensure that taxation is fair and proportional to the taxpayer’s ability to pay.

Croatia imposes a capital gains tax (CGT) of 12% on individual gains, while corporate capital gains are taxed according to the CIT rates. This means that any profits made from the sale of assets such as shares or real estate are subject to taxation. The aim of the CGT is to ensure that both corporations and individuals contribute to the economy when they realize gains from investments.

Croatia’s VAT system aligns with EU VAT regulations and mandates VAT on the sale of goods, the provision of services, and the importation of goods. The general VAT rate is 25%, one of the highest in the EU, but certain services and goods, such as accommodation and printed media, are taxed at a reduced rate of 13%. The VAT system also has specific exemptions for goods like menstrual products, water supply, and children’s car seats.

In Croatia, employers are responsible for withholding payroll taxes from their employees' salaries. These withholdings are applied as a pre-payment towards the employee’s personal income tax obligations. The withholding rate ranges from 15% to 35.4%, depending on the employee's personal circumstances and income levels. The aim of payroll taxes is to ensure that employees contribute fairly to the tax system based on their earnings.