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Croatia: Tax relief includes payment deferrals, exemptions and filing extensions (COVID-19)

Croatia: Tax relief includes payment deferrals

New provisions, effective 9 April 2020, include tax relief in response to the coronavirus (COVID-19) pandemic.

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  • Implementation of measures for deferral of tax payments and exemption procedures in special circumstances
  • Postponement of deadlines for filing annual corporate tax returns, financial statements, and accounting records for 2019


Value added tax (VAT)

There are measures providing VAT relief—such as deferral of payments of VAT for those entrepreneurs that report VAT on an accrual basis, regardless of the value of supplies of goods and services in the previous year (limit of HRK 7.5 million is repealed) if the entrepreneurs satisfy indicators of (1) an inability to settle tax liabilities due (20% revenue decrease); and (2) the VAT liability arises from invoices that have been issued or are incoming but not yet settled.

The deferral can be applied with regard to a VAT liability arising from the VAT return due for March 2020 (due by 30 April 2020), and the VAT liability arising from the VAT return for April 2020 (due by 31 May 2020).


Tax liabilities and exemption

An exemption is available for entrepreneurs with business activities that, during special circumstances, were banned, disabled or significantly impeded by decisions of the competent authority; and that have a decrease in income of at least 50% in the period from 20 March 2020 to 20 June 2020 comparing to the same period for the prior year.

  • The exemption is available for a taxpayer with income/receipts less than HRK 7.5 million in 2019—a full exemption is available for tax payments due.
  • There is a partial exemption for a taxpayer with income/receipts greater than HRK 7.5 million in 2019—the partial exemption applies with regard to tax payments due is to be proportionate to the decline in income compared to the same period of the prior year.

Exemption is applicable for all taxes and public charges due in the period from 1 April 2020 to 30 June 2020.

However, the exemption is not available with regard to VAT, excise duties, custom duties, contributions for pillar II of mandatory pension insurance, taxes and surtax on final income, fees and charges on games of chance, liabilities based on previously concluded administrative agreements, and rescheduled liabilities from pre-bankruptcy and bankruptcy proceedings. In addition, there are certain other exceptions.


Other exemption from contribution liabilities for co-financed net salaries

Employers using a grant provided by the Croatian Employment Fund to support job preservation are exempt from paying contributions for supported net salaries. Such exemptions will be determined ex officio by the tax authorities.


VAT on donations of goods and services, on imports

  • Donations of goods and services for the purpose of mitigation of adverse COVID-19 effects will be VAT-exempt.
  • Imports of goods for the purpose of mitigation of adverse COVID-19 effects will be exempt from customs and import VAT.
  • Import VAT does not need to be paid in order to be recoverable—that is, the reverse charge mechanism applies.
  • The exemptions apply to goods imported or donated by 20 June 2020, and the first exemption applies to the VAT liability due in April 2020.


Read an April 2020 report prepared by the KPMG member firm in Croatia  

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

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