Amendments to the Croatian Personal Income Tax Legislation from 1 September 2019

The Amendments to the Personal Income Tax Regulations were published in official Gazette no. 80/19 effective from 1 September 2019.

We present a summary of the main amendments below.

The non-taxable full daily allowance for domestic business travel/field work allowance has increased from HRK 170 to HRK 200, while the amount of domestic daily allowance for business trips lasting more than 8 hours and less than 12 hours increased from HRK 85 HRK to HRK 100. Increased daily allowance may be paid for business trips from 1 September 2019 onwards.

New non-taxable compensations and allowances haven been introduced, which can be paid out/reimbursed to employees under certain conditions:

• Lump sum for meal expenses up to HRK 5,000 per year

• Meal expenses for persons with an employment contract of up to HRK 12,000 per year, provided that the expenses are invoiced to the employer and are not paid in cash

• Accommodation expenses for persons with an employment contract up to the actually incurred amounts, provided that accommodation services are invoiced to the employer and are not paid in cash (does not apply to garage rental and utility costs). The employee may also conclude a rental contract with the lessor, whereby they must provide the employer with a copy of the rental contract or a copy of the invoice based on which the employer will reimburse the accommodation cost as non-taxable.

• Hospitality allowance (tourist and other services) intended for employees’ vacation in the amount of up to HRK 2,500 per year in accordance with special regulations of Ministry of Tourism (this provision will come into force when the special regulations are voted on)

• Reimbursement of regular childcare services cost, based on the preschool institution documentation up to the actually incurred costs. Additional programs are not considered as regular childcare services (e.g. language lessons, etc.).

Lump sum for meal expenses (up to HRK 5,000 per year) and meal allowance (up to HRK 12,000 per year) are mutually exclusive for the same period. If the employer provides its own meals and/or accommodation services to employees, credible documentation must be kept.