State Aid: Croatian Companies That Don't Follow Rules Must Return Money

As Poslovni Dnevnik writes on the 7th of May, 2020, the Republic of Croatia currently has 25,000 fewer employees than it did at the beginning of May 2019, and the total number of insured persons stands at 1,520,000. Croatian companies have been given some breathing room by the state via economic measures, but the rules are not there to be toyed with...

As part of measures to help the domestic economy, the state has so far provided 1.6 billion kuna to Croatian companies for the payment of the minimum wage to their staff for March for half a million (500,070) employees in the private sector. The monthly fund for regular gross salaries of employees is around 15 billion kuna, meaning that the state aid being paid out covers one tenth of regular salary expenditures.

The payment of this state aid is planned for another two months, and today is the last day for applications submitted by new Croatian companies and employers to be looked at, which in April alone recorded a worrying drop in revenue of more than 20 percent.

Croatian companies already on the list for March don't have to renew their applications, but are required to attach a supplement to it. By April, about 13,000 new applications had arrived for an additional 95,000 workers. If the number doesn't change significantly, it means that at least 595,000 workers will be paid 4,000 kuna in state aid this month. Keeping jobs during April could cost the state about 2.5 billion kuna, with 1.6 billion kuna having already been paid out for March, according to a report from Vecernji list.

All of the Croatian companies who received money for March had to submit proof that they had paid their staff their salaries by Tuesday, May the 5th, and the competent Ministry of Labour states that 477,000 JOPPD forms were submitted to the Croatian Employment Service (CES). The first checks carried out by the Tax Administration indicated that every fourth company reduced their salaries when compared to the previous month.

The unions, on the other hand, have repeated that everything that one might imagine is happening, is happening, from those Croatian companies who duly forwarded the money they received to their workers, to employers who have been demanding that the money paid back into their workers' accounts be returned to their hands and the like. Employers who, for various reasons, failed to submit proof of having paid salaries with the money provided by the state will be additionally controlled, according to Josip Aladrovic.

Wherever irregularities are detected, a refund will be requested. At yesterday's session, the Governing Board of the Employment Service decided to extend the right to state aid to Croatian companies/employers who operate seasonally only, or have a secondary occupation, and to certain artistic organisations and independent professions. So far, 3,500 applications that didn't meet the criteria have been rejected. In addition to 4,000 kuna in support, the state will pay 250 kuna in contributions for second-pillar insured persons.

According to the number of employees, the majority of state aid from March (more than one billion kuna) ended up in the accounts of micro and small Croatian companies, but state aid for the payment of salaries was also requested by many larger enterprises, starting with hoteliers who were not allowed to work to stores who could work, as well as bookmakers, oilmen, and even large bakery chains.

The number of unemployed persons in Croatia is also growing and is now edging close to 160,000, but if the situation with the coronavirus pandemic normalises quickly, there is a good chance that it will not exceed that number.

For more, follow our business page.