The Croatian Government proposes measures to manage COVID-19 implications

Tax News, March 2020.

During the session of 17 March 2020 the Croatian Government proposed numerous measures to stimulate the economy during COVID-19 pandemic. The measures concern a total of 8 ministries, majority of which relate to the preservation of the liquidity and jobs.

The proposed tax measures include:

  • Deferral of payment of corporate income tax and personal income tax liabilities and social security contributions. The measure would be implemented by the amendment of the General Tax Act that would allow to the Minister of Finance to issue special regulations governing this area. Late penalty interest would not be charged during the deferral period and statute of limitation would not run. Per information provided during the Government session, the intended deferral in settlement would be 3 months with potential extension to additional 3 months, and taxpayers could also request settlement in instalments under certain conditions, however, further details, including the first period subject to deferral are yet to be confirmed; 
  • Individuals will be entitled to an early personal income tax refund. Under the present legislation, a personal income tax refund based on an annual tax assessment is made upon expiry of the deadline for objection to the provisional notice of assessment issued in June, which was usually during August of the current year. The tax refund procedure has been changed so that the refund will be made at the time of delivery of the provisional assessment notice to the individual, who remains entitled to the objection rights. Based on this new measure, the individuals will receive their personal income tax refund for 2019 during June 2020;
  • Grants to self-employed individuals used to alleviate the effect of the current crisis would not be regarded as taxable receipts (i.e. they will not be subject to personal income tax from self-employed activity);
  • Companies receiving grants to alleviate the effect of the current crisis will be exempt from paying corporate income tax on such grants.

The Government also proposed financial and other measures outlined below.

  • Granting interest free loans to municipalities, cities and counties, Croatian Health Insurance Fund and Croatian Pension Insurance Institute up to the amount of personal income tax, surtax and contributions payments which has been deferred and/or payment in instalments was granted; 
  • Reprogramming of existing loans (with the introduction of a grace period in repayment of the loan principal) and introduction of a moratorium on credit obligations of Croatian Bank for Reconstruction and Development (HBOR) clients and commercial banks under existing placements;
  • Approval of new liquidity loans to economic operators for financing salaries and other basic operating expenses, in cooperation with commercial banks;
  • Granting guarantees (insurance policies) to commercial banks of exporters and to HBOR under the export guarantee fund with the aim of granting new loans for working capital – liquidity;
  • Increasing the scope of the export guarantee fund by including the tourism sector with the aim of enabling the issuance of guarantees (insurance policies) for loans to banks and HBOR, for additional liquidity funds to exporters and the tourism sector;
  • Introduction of the Stand still, i.e. suspension of execution of all enforcement against all debtors (legal or natural persons) for a period of three months;
  • Loans for liquidity and working capital (salaries and working capital excluding liabilities towards financial institutions) with maturity of up to three years;
  • Conducting reprogramming by credit institutions to designated clients in an expedited manner without reclassification to default; 
  • Introducing through the Amendments to the Investment Encouraging Act, the extension of deadlines for the implementation of investment projects and the introduction of an additional grace period of three years for preserving jobs;
  • Introduction of special loans, moratorium on loan instalments, extension of guarantees and lower interest rates for SMEs; 
  • Intervention purchase of surpluses in livestock and crop production, fruit and vegetables, and other products from potentially endangered industrial and agricultural producers;
  • Interventional procurement of disinfectants, soaps and detergents, indoor disinfectants, disinfectants for hospitals and other facilities, and protective equipment to combat coronavirus, other products from potentially vulnerable industrial and agricultural producers, and their inclusion in the Balance Sheet of Strategic Commodities;
  • Aid for preserving jobs in coronavirus affected sectors;
  • Interim measure of suspension of self-employment and employment grants with aim of securing additional funding for job retention in coronavirus-affected sectors; 
  • Extension of duration of permanent season worker measure; 
  • Ensuring payment of minimum wages for persons with disabilities with aim of employment retention, and deferral of payment of financial compensation for all employers of the quota for employment of persons with disabilities; 
  • Deferral of payment of tourist membership fees for business entities and private renters; 
  • Deferral of payment of sojourn fee for private renters (flat rate); 
  • Aid for programs of financing working capital and improving the liquidity of affected entrepreneurs in tourism sector; 
  • Deferral of payment of the concession fee on tourist land in camps; 
  • The possibility of mobilizing part of the budget as a contribution to sectoral intervention grants to entrepreneurs (national grant);
  • Other measures in agricultural, cultural, sea and transport sectors.

The acts prescribing the above measures still have to go through the parliamentary procedure so they could be amended during the process. We will inform you once the legislation has been adopted by the Parliament and published in the Official Gazette.

The Government also launched central Internet website covering all COVID-19 developments in Croatia that can be accessed through the following link: The content is currently available only in Croatian language. 

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