New Rules and Regulations Coming into Effect Today in Croatia

By 1 January 2019

The year which began a few hours ago will bring us at least two elections (European and parliamentary), which means there will be no painful cuts or reforms. However, there will be many new rules and regulations which will in some ways significantly change how people in Croatia live their lives, reports Večernji List on January 1, 2019.

The new year has brought us a lower VAT rate on a variety of foods and non-prescription drugs. Although there was initially much doubt whether lower VAT on fresh meat and fish, fruit and vegetables would bring lower prices for consumers, some retail chains have already lowered the prices of these products. It can be expected that they will be soon be followed by their competition. The average Croatian family should have around 1,000 kuna more in its budget due to the lower VAT rate.

The new year also brings a higher minimum wage (3,000 kuna instead of 2,751 kuna). Also, parents of university and high school students who receive scholarships or receive prizes will not have to fear that they will have to pay a higher income tax in the future due to the success of their children. Certain provisions of the new Law on the Rights of Croatian Veterans and Their Family Members also come into force.

Another major novelty is the pension reform, bringing a quicker harmonisation of the retirement age for women and men. Full equality when it comes to the retirement age will be achieved in 2027 when both women and men will retire at age 65. “Emancipation” will be confirmed in 2033, through an increase in retirement age for everybody. Both women and men will then retire at age 67.

There is good news for people wanting to buy expensive cars. They will be able to write off 50 per cent of the VAT even for vehicles costing more than 400,000 kuna, which used to be the upper limit for VAT deduction. According to the EU rules, the government had to expand the measure to include more expensive vehicles.

As of 1 January, the property transfer tax will be cut. Last year, this tax which is paid when you buy or sell real estate was reduced from five to four per cent, and this year it will be just three per cent. Also, there is a lower income tax on higher salaries. Income between 17,500 kuna and 30,000 kuna a month will be taxed at the rate of 24 per cent, instead of 36 per cent. The higher tax bracket will cover income over 30,000 kuna. Two salary contributions have been abolished, but there is now a higher contribution for health insurance.

Starting from January, owners of private rentals will have to pay a tax between 150 and 1,500 kuna, which will be determined by towns and municipalities. In local authority units which do not make their decision by 15 January, the tax will be 750 kuna.

Changes are coming to students as well, whose minimum wage will be increased from 21.50 kuna to 23.44 kuna.

A new health care act is also in force, which means that all health centres will have to have at least one physician on call on weekends and holidays. The law also introduces changes in the organisation of emergency medical assistance through the integration of unified emergency hospital admissions.

Most misdemeanour courts in Croatia are abolished as of today. They have been merged with municipal courts. The only two misdemeanour courts that remain are those in Split and Zagreb. Also, judges at the same court level will receive equal pay, and all of them, as well as state attorneys, will receive six per cent higher salaries.

Fostering will become a profession. Allowance paid to foster parents, who have so far received between 300 and 500 kuna per month, will increase to 2,500 kuna. For foster parents of children and adults with special needs, the amount will reach between 5,000 and 6,000 kuna. Foster parents will also continue to receive a supply allowance, which is now between 1,800 and 2,200 kuna.

More news on Croatia’s tax system can be found in our Business section.

Translated from Večernji List (reported by Iva Boban Valečić).