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Overview of Government measures to mitigate the effects of special circumstances caused by the coronavirus epidemic

Overview of Government measures to mitigate the effects

At its session on Tuesday, March 17th 2020, the Croatian Government proposed certain measures to mitigate the effects of the special circumstances caused by the coronavirus epidemic.

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The proposed amendments have been put into parliamentary procedure for final confirmation. However, it is not expected that the proposed amendments will be substantially changed in the process.

Tax measures

  • it will be possible to defer payment and/or arrange payment in instalments of tax liabilities, social security contributions and certain non-tax levies, whereby no penalty interest will be charged during the period of deferral of payment / payments in installments and the statute of limitations will not commence;\
  • receipts received by individuals and companies on the basis of grants received to mitigate the special circumstances caused by the coronavirus will not be considered taxable for personal income tax / corporate profit tax purposes;
  • any assessed personal income tax and city surtax refund will be repaid to the person upon issuance of the relevant tax assessment (with no change of the deadline for the right of objection), while the deadline for payment of any assessed personal income tax and city surtax liabilities remains unchanged.

There is currently no extension of the deadlines for filing of tax and other returns.

However, the implementation of the proposed measures, i.e. the manner, tax payment deferral deadlines, conditions of repayment in installments, etc. are not yet known and will be prescribed by the relevant regulations (bylaws) and decisions in the coming days.

Other measures of the Ministry of Finance

Croatian Bank for Reconstruction and Development (CBRD)

  • introducing a moratorium on clients' credit obligations under existing CBRD credit placements;
  • reprogramming of existing loans to CBRD clients with the introduction of a delay in repayment of the loan principal;
  • approval of new liquidity loans for financing salaries, overheads and other basic operating expenses (excluding credit obligations to commercial banks and other financial institutions) in cooperation with commercial banks;
  • approval of guarantees (insurance policies) to exporters’ commercial banks and the CBRD within the framework of the export guarantee fund in order to approve new working capital (liquidity) loans;
  • increasing the scope of the export guarantee fund by including the tourism sector as eligible beneficiaries, with the aim of enabling the issuance of loan guarantees (insurance policies) to banks and the CBRD, to enable additional liquidity to exporters and the tourism sector;
  • increasing the scope of the export guarantee fund by further extending the range of eligible beneficiaries of insurance policies to include intermediary exporters and the suppliers of direct exporters.

Commercial banks - support measures

  • introduction of the “Stand-still” arrangement, i.e., suspension of execution of all measures of enforced collection against all debtors (companies or individuals) for a period of three months;
  • loans for liquidity and working capital (salaries and working capital, excluding liabilities to financial institutions) with a repayment period of up to three years;
  • reprogramming of credit liabilities of designated customers in an expedited manner, without reclassification to default status.

If you have any question, please contact us:

Paul Suchar             
Partner                     
Tel. +385 1 5390 032
psuchar@kpmg.com

Maja Maksimović
Director
Tel. +385 1 5390 147
mmaksimovic@kpmg.com

Tomislav Borošak
Director
Tel. +385 1 5390 171
tborosak@kpmg.com

Kristina Grbavac
Director
Tel. +385 1 5390 069
kgrbavac@kpmg.com

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