Businesses that operate in Croatia must be aware of the new tax reform changes that have increased allowances for business expenses.
Name
Tax reform of allowances for business expenses
Jurisdiction
Croatia
Why now?
Daily allowance rates have increased for domestic business trips and new non-taxable allowances for employees have been introduced, starting 1 September 2019.
What’s the business impact?
Businesses must be aware of these changes and how the rate increases could affect their books.
What to do now?
Employees must be notified of these changes by HR departments and the relevant policy documents must be updated.
Specifics
a). Daily allowance for domestic business trips
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Duration
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Daily allowance – valid for all trips until 31.08.2019.
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Daily allowance – valid for all trips from 01.09.2019.
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More than 12 hours
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170 HRK
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200 HRK
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More than 8 and less than 12 hours
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85 HRK
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100 HRK
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b). New non-taxable allowances
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Type of allowance
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Non-taxable amount
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Fees to cover the costs of catering, tourism and other services intended for employees’ vacation in accordance with the regulations of the Ministry of Tourism
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Up to 2.500 HRK per year
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Fees to cover the cost of accommodation and meals for employees
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Up to 5.000 HRK per year
(no additional documentation needed)
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Fees to cover meal costs incurred by employees during work with employer based on documentation
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Up to 1.000 HRK monthly provided that the invoices are issued to the employer and are paid on non-cash basis. Non-taxable receipts are recognized for the month in which the meal is provided.
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Fees to cover accommodation costs incurred by employees during work with employer based on documentation*
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Up to the amount of actual costs, provided that the invoices for the accommodation services are issued to the employer and are paid on non-cash basis. Non-taxable receipts are recognized for the month in which the accommodation service was provided.
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Compensation to cover the employee’s costs for regular child care paid to the employee’s account based on documentation of preschool institutions and other legal or natural persons who, based on special regulations and decisions of the competent authority, provide care of a preschool child
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Up to the amount of actual costs.
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*The accommodations costs are considered non-taxable when employee concludes a lease contract with the service provider himself or finds accommodation under the condition that he provides the employer with a copy of the concluded contract. The employer pays the accommodation costs to the employee’s bank account while retaining a copy of the contract in his business records. If the employee no longer has accommodation costs, he is obligated to inform the employer accordingly.
Accommodation costs do not include costs for garage usage, telephone, internet, electricity, heating, water supply etc.
We can help
TMF Croatia provides a full range of HR and accounting and tax services and our experts can help your business understand and stay compliant with these new tax rules. Talk to us.
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