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Croatia

Government and institution measures in response to COVID-19.

Government and institution measures in response to COVID-19.

Return to homepage  |  Last updated: 30 September, 2020

Tax measures – Direct and Indirect

(e.g. payment deferrals, rate reductions…)

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

Employment-related measures

(e.g. state compensation schemes, training…)

The Croatian Government introduced new measures for preserving jobs in COVID 19 affected sectors. There are currently 3 measures that are available to employers

1. Grant to support reduced working hours during June to December 2020

Eligible employers may receive a grant to offset an eligible employee’s potential loss of employment income if such an employee’s working hours are temporarily reduced in one or more months in the period June to December 2020.

Eligible employers

  • Employers with between 10 to 50 employees must submit a grant request for at least 20% of all employees;
  • Employers with 51 or more employees must submit a grant request for at least 10% of all employees

Value of the grant:

  • An eligible employer may receive a grant of up to HRK 2,000 per month per eligible employee
  • An eligible employee is an employee whose working hours have been temporarily reduced by no more than 50% of her/his contracted monthly working hours.

Eligibility period of the grant

  • Between 1 June and 31 December 2020.

Eligibility criteria for receipt of the grant

Eligible employers must:

  • Expect a decrease of at least 10% in the total monthly working hours of all eligible employees, during the month for which the grant is sought.
  • Prove that the covid-19 epidemic has had a negative effect on its business thereby justifying the need for the expected decrease in total monthly working hours by:
  • Proving a decrease in turnover of at least 20% in the month for which the grant is sought, compared to the same month of the previous year (to be determined based on VAT returns submitted to the tax authority), and
  • Providing a reason for the decrease, such as decrease in orders, inability to deliver finished products etc.

Restrictions and limitations

An eligible employer receiving the grant undertakes to abide by certain restrictions and requirements, for example, payment of the agreed or prescribed salary, no distribution of profits, shares, stock options or management bonuses with a certain period

2. Grant for the preservation of jobs in sheltered workshops, integrative workshops and employment units for people with disabilities during July to December 2020

Eligible employers

  • eligible employers in this case are sheltered workshops, integrative workshops and work units for the employment of people with disabilities, regardless of the sector in which they operate.
  • Value of the grant:
    • an eligible employer may receive a grant in the amount up to HRK 4,000 per month per eligible employee.
    • Eligibility criteria for receipt of the grant
  • Eligible employers must:
    • prove a decrease in turnover of at least 50% in the month preceding the month for which the grant is sought, compared to the same month of the previous year (to be determined based on VAT returns submitted to the Tax Authority).

3. Job preservation grant for certain sectors affected by COVID 19 – during October to December 2020

Eligible employers

Eligible employers are those operating in the following sectors:

  • transport and storage, accommodation services, food and drink preparation and service,
  • administrative and auxiliary services industry, arts, entertainment and recreation,
  • organizers of cultural, business and sporting events etc.
  • employers who employ less than 10 employees (micro-entrepreneurs) regardless of the sector
  • all employers, regardless of the sector, that cannot perform the activity in accordance with the Decisions of the Civil Protection Headquarters or whose work is restricted in any way by the Decisions of the Civil Protection Headquarters.

Eligibility criteria for receipt of the grant

  • an eligible employer must experience a decrease in revenue due to COVID-19 between 40% and 60% in the period from 1 April 2020 to 30 September 2020, compared to the same period in 2019

Value of the grant:

  • The amount of maximum HRK 4,000 monthly for full time employee or a proportional amount  for each part-time employee according to the percentage of decrease in revenue:
  • from 40.00% to 44.99% - HRK 2,000.00
  • from 45.00% to 49.99% - HRK 2,500.00
  • from 50.00% to 54.99% - HRK 3,000.00
  • from 55.00% to 59.99% - HRK 3,500.00
  • 60% and more - HRK 4,000.00
  • Contributions toward pension insurance based on individual capitalized savings.

Restrictions and limitations

An eligible employer receiving the grant undertakes to abide by certain restrictions and requirements, for example, payment of the agreed or prescribed salary, no distribution of profits, shares, stock options or management bonuses with a certain period.

Economic stimulus measures

(e.g. loans, moratorium …)

  • Measures for financial liquidity including a three-month moratorium on liabilities to the Croatian Bank for Reconstruction and Development (HBOR) and commercial banks (moratorium subject to further extensions), as well as the approval of loans for cash flow in order to pay wages, suppliers and to reschedule other liabilities;
  • The approval of new loans for liquidity by HBOR and commercial banks for enterprises to finance wages, utility costs and other basic business operating costs (working capital) under favorable terms (interest starting at 0% for HBOR’s loan portion);
  • Increasing of the allocation for the 'ESIF micro loans" for working capital for micro and small enterprises implemented by the Agency for SMEs, Innovation and Investments (HAMAG-BICRO);
  • A new financial instrument "COVID-19 loans" for working capital for small and medium-sized;
  • The Croatian National Bank has reduced the bank statutory reserve requirement rate from 12% to 9%.

Start-ups:

  • The approval of loans for cash flow in order to pay wages, suppliers and to reschedule other liabilities.
  • Increasing of the allocation for the "ESIF micro loans" for working capital for micro and small enterprises
  • A new financial instrument "COVID-19 loans" for working capital for SMEs. 

Contact us

Tax & legal: Paul Suchar – psuchar@kpmg.com
Restructuring: Goran Horvat – ghorvat@kpmg.com