Investing in Central Europe


Deferral of tax liabilities

COVID-19 | Economic aid measures

Tax News, March 2020

Amendments to the General Tax Act Implementing Regulations (Amendments) were published in the Official Gazette of 23 March 2020, and enter into force on 24 March 2020, enabling implementation of COVID-19 tax measures to support the economy. Below we provide overview of relevant stipulations governing deferral of tax liabilities and installment payment.

Taxes in scope?

  • Taxes (Personal Income Tax, Corporate Income Tax, VAT (under certain conditions stated below) and other taxes such as Real Estate Transfer Tax, Tax on Slot Machine Games, etc.)
  • Contributions
  • Other public charges (fees, concession fees, fines for tax offenses and any charges that are determined and / or collected and / or supervised under special regulations within the jurisdiction of the tax authority

Exception! Customs duty and excise duty fall out of scope of this measure, i.e. the settlement may not be deferred under the Amendments.

Which tax liability can be deferred?

  • All previously mentioned public charges (tax liabilities) due within 3 months from 20 March 2020.

Exception! Taxpayers which are entitled to deferral related to VAT can request it for VAT due within 3 months from the VAT liability due date in April 2020.

Who can request tax payment deferral?

  • All taxpayers who will probably not be able to settle tax liabilities in the future and have no recorded unsettled tax liabilities at the moment of filing the request.

Exception! VAT deferral can be requested by taxpayers which determine its VAT liability per invoiced supplies and which have not recorded more than HRK 7,500,000 (excluding VAT) of supplies in previous year.

Indicators showing potential inability to settle due tax liabilities

  • if taxpayer has a decrease of revenues/income of at least 20% in a month preceding the month in which the request is filed compared to the same month of a previous year or
  • if the taxpayer makes probable the decrease of at least 20% in revenues/income in a 3-month period following the filing, compared to the same period of a previous year

Additionally! When submitting a deferral request relating to VAT, the taxpayer, in addition to the above, should prove that the due liability is a result of non-collected issued invoices and/or other factors that influence liquidity (there are no further details).

How to file a deferral request?

  • Electronically, in ePorezna system (the decision on the filed request will be delivered in the same way).

Exception! Tax Administration will provide another way of filing the request for taxpayers that do not use the ePorezna system – details will be published on the Tax Administration web site.

What is deferral period?

  • 3 months from the due date of every single tax liability.

Tax Administration can approve additional deferral period of 3 months for already deferred liabilities and expand the scope of the deferral to the tax liabilities due during the additional 3-month time, for which new request should be filed.

Installment payment of deferred tax liabilities

  • Taxpayers who are unable to settle the deferred tax liability at maturity can request installment payment without any interest.
  • Installment payment is approved in monthly installments – maximum for 24 months. Deadline for filing of the request for installment payment is five days from the liabilities due date. The request could be filed in one of the following ways:
    • Installment payment only related to due deferred tax liability, whereby the approval of the request excludes the possibility of applying for the installment payment of the deferred tax liabilities which will be due in the future or
    • Installment payment for all deferred tax liabilities, booth due and not yet due in the moment of filing the request, whereby all not yet due liabilities become due and installment payment is approved, instead of further deferral.

In case of not complying with payment due dates, installment payment will be abolished.

Subsequent assessment by the Tax Authorities

  • Tax Authorities can make subsequent assessment of the facts provided in the request related to the approval of this measure.

If the Tax Authorities subsequently determine that conditions for the approval of the measure were not adequate, abolishment of the measure will be declared, whereby tax liabilities become due in line with the specific regulations.

Amendments to the General Tax Act Implementing Regulations

(Official Gazette of 23 March 2020)


How can Deloitte help?

Please feel free to contact us if you require assistance in preparation and filing of the request or have any other questions related to this measure.

Please contact the following contact for more detailed information: