NEWS

ESRS Reports 2025.

ESRS standard
PROČITAJ VIŠE The first sustainability reports prepared according to ESRS standards will be published in 2025 for the financial year 2024. The first to report on sustainability according to the European sustainability reporting standards will be those currently subject to the Non-Financial Reporting Directive, namely public interest entities with over 500 employees. A year later, the obligation will come into force for all large companies. And from 2028, all small and medium-sized companies listed on the stock exchange will also report on sustainability. More info:
https://idop.hr/en/home-en/

Fiscalization 2.0

Law on Fiscalization
READ MORE At the government meeting of Republic of Croatia on April 24th, the Proposal of the Law on Fiscalization (Fiscalization 2.0) was adopted, which introduces modernized procedures for issuing e-invoices and the expansion of fiscalization to the B2B segment. The law enters into force on September 1st, 2025, and as already announced, it will be applied from January 1st, 2026. Until then, businesses are provided with a transitional period to adapt to the new operating system. The full application of e-invoices will begin on January 1st, 2027.

S&P index

Inflation rate: below 3%
READ MORE According to the latest inflation data from the Central Bureau of Statistics (CBS), the governor of the Croatian National Bank (CNB), Boris Vujčić, stated on Tuesday that the average inflation rate in Croatia this year could be below 3%, and that it will still be slightly higher than that of the Eurozone, where according to Eurostat data, inflation is around 2.2%.

S&P index

Clean energy index: down
READ MORE The S&P Global Clean Energy Transition Index a key indicator of the performance of leading clean energy companies, has fallen by 16 percent in the last 12 months. Many investors had expected a recovery at the end of last year, especially after interest rates had stabilized, or due to falling interest rates and rising electricity prices.

New accounting law

The new accounting law changes the following criteria for classifying entrepreneurs.
READ MORE MICRO-ENTREPRENEURS:
Total assets: €450.000
Net income: €900.000
Average number of employees: remains 10 units

SMALL-ENTREPRENEURS:
Total assets: €5.000.000
Net income: €10.000.000
Average number of employees: remains 50 units

MEDIUM-ENTREPRENEURS:
Total assets: €25.000.000
Net income: €50.000.000
Average number of employees: remains 250 units

LARGE-ENTREPRENEURS:
Entrepreneurs who meet at least two of the three requirements for medium-sized entrepreneurs.

ENTREPRENEURS REQUIRED FOR STATUTORY AUDIT:
Total assets: € 2.500.000
Net income: € 5.000.000
Average number of employees: at least 25 units

EU Statistics

Economic activity in the EU worsened in the fourth quarter...
READ MORE and employment was also on the verge of stagnation, according to data just released by the European Statistical Office. According to EURO Statistica, in the period from October to December the economy grew by 0.2%. Only the GDP of Portugal and Poland grew by 1.5 and 1.3 percent respectively compared to the previous three months. They are followed by Lithuania and Spain, where the increase was 0.9 and 0.8 percent respectively. In Austria and Italy it stood at the levels of the summer months. In the EU area there was an increase in the number of employees of only 0.1%.

Statement from the President of the ECB

The president of the European Central Bank (ECB)...
READ MORE Christine Lagarde, addressed the European Parliament with an optimistic message about the decline in inflation, but at the same time warned of the challenges arising from global trade tensions. She stressed the need for a prudent monetary policy and reiterated the importance of developing a digital euro for Europe's financial autonomy, Euronews reports. However, could the introduction of a digital euro really help the EU area? The euro currency in cash is the only solution for commission-free payments, while digital ones have them and the costs of electronic transactions would be too high. This means that over time inflation will return again. As for autonomy, one should not believe that this would be real.

Interest rate reduction

The European Central Bank (ECB) has decided...
READ MORE that there will be a further reduction of 0.25 percentage points in the three key interest rates, bringing them down to between 2.75 and 3.15 percent. Interest rates are the tool with which the central banks of the member states (EU) keep track of price trends. This decision comes after a period of almost two years in which it had first raised interest rates very rapidly and then kept them high to stop inflation at the EU level (price growth), triggered by the pandemic and the war in Ukraine. This new reduction will further lower interest rates on mortgages and business loans, as they have been doing for some time now.

Inflation rate in Croatia

According to Eurostat, the annual inflation rate in Croatia in December 2024 was...
READ MORE 4.5%. This is the highest officially recorded price increase among EU members, but if we look at it from another angle, 4.5% inflation is nothing special, especially for such a small and newly joined country like the EU. It is slightly higher than a desired price increase, which affects the GDP growth of a country. Who is to blame? First, retail chains have partly overdone the price increases, and secondly, politics is not going to interfere with the decisions and directives of the European Commission that continue to influence the increases in energy prices and taxes.

2025. Introduction of new tax reform

Property tax

READ MORE This tax will apply only to second homes or holiday homes. The tax rates will range between €0.60 and €8 per square metre. However, local authorities will have the discretion to determine the applicable rate. This tax will be payable by both legal entities and individuals for unoccupied properties, including banks, companies, and the state. Of course, this tax will not be payable by owners of properties used as their permanent residence or where a family member resides, nor by those with a long-term rental contract (at least 10 months per year) for residential use. Dilapidated and uninhabitable properties, as well as those used for agriculture and non-residential activities, will also be exempt. Furthermore, exemptions from this tax may be granted based on social criteria. "Hosts", or those managing small-scale tourist rentals as a secondary activity in a property where they have their primary residence, will also be exempt.

Personal income tax

There has been a change in the tax credit calculation for salaries, which has increased from €560 to €600. Additionally, the amounts for dependents and disabled individuals will increase proportionally. Therefore, the monthly tax credit for the 1st child will be €300, for the 2nd child €420, for the 3rd child €600, for the 4th child €840, and so on. For dependents and former spouses for whom maintenance payments are made, the tax credit this year amounts to €300, while the personal tax credit for disability varies from €180 to €600, depending on the degree of disability. The maximum amount has been lowered and the tax rates on income payable to municipalities have been increased, although municipalities will still decide on the specific tax rate. Below is the table:

New municipal income tax rates are defined for 2025.

Size of the municipality	NMinimum rate (%)	Maximum rate (%)
Municipality (small)	min 15% max 20%	min 25% max 30%
Town	min 15% max 21%	min 25% max 31%
Major cities and county seats	min 15% max 22%	min 25% max 32%
City of Zagreb	min 15% max 23%	min 25% max 33%

Additionally, starting this year, a 30% annual income tax rate will apply to income between €50,400 and €60,000. For companies and freelancers, the minimum threshold for entering the VAT contribution system will increase from €40,000 to €60,000 this year. Other changes in 2025 include increases in the non-taxable amounts for employee bonuses such as: productivity bonuses, up to a maximum of €1,200, severance pay, up to a maximum of €1,500, scholarships for students, up to a maximum of €600, and separate living allowance, up to a maximum of €300.

Hiring bonuses for young people

Young people aged 18 to 25 will continue to be eligible for a full reduction in annual income tax, while those aged 26 to 30 will receive a partial reduction (50%). However, the exemption from health insurance payments for young workers for five years will be abolished. Those already benefiting from this exemption may continue to use it until the end of the five-year period.
Minimum salary in 2025: €970.00/gross

Tax-exempt bonuses and other income not considered employment income:

Disability reimbursements for employees up to a maximum of €600 per year.
Reimbursements in case of the employee's death up to a maximum of €1,200.
One-off reimbursements in case of the death of a direct family member of the employee (spouse, parent, children, other direct ascendants and descendants, adopted children, foster children, and an adult for whom the taxpayer has been appointed guardian pursuant to a special law) up to a maximum of €600.
Support for continuous sick leave of employees for more than 90 days. A period of sick leave exceeding 90 days does not necessarily refer to a calendar year; up to a maximum of €600 per year.
Employee bonus for completing 10 years of service up to a maximum of €300.
Employee bonus for completing 15 years of service up to a maximum of €360.
Employee bonus for completing 20 years of service up to a maximum of €420.
Employee bonus for completing 25 years of service up to a maximum of €480.
Employee bonus for completing 30 years of service up to a maximum of €540.
Employee bonus for completing 35 years of service up to a maximum of €600.
Employee bonus for completing 40 years of service and for every subsequent 5 years of service up to a maximum of €720.
Travel allowances up to a maximum of €300 per month.
Severance pay up to €1,500.
Severance pay for company and personal redundancies, in accordance with the law governing employment, up to a maximum of €960 for each year of service with that employer.
Severance pay for work-related accidents or occupational diseases up to a maximum of €1,200 for each year of service with that employer.
Support for the child of a deceased or former employee who has completely lost their ability to work for educational purposes until the age of fifteen, or until the completion of primary education will be a maximum of €600 per month.
Baby bonus up to a maximum of €1,500.
Productivity bonuses and other forms of additional bonuses for employees (in addition to salary, salary supplement, etc.) up to a maximum of €1,200 per year.

Tax-exempt income from scholarships, awards, and other compensation with other income. Income whose value is not considered taxable by law:

Bonuses for students during internships and apprenticeships, as well as allowances during "dual" training (Article 9, paragraph 1, point 4 of the law) up to a maximum of €300.00 per month.
Income for the training of pupils and students for work through student associations (Article 9, paragraph 1, point 6 of the law) up to a maximum of €3,600.00 per year.
Scholarships for full-time students, including those studying abroad at secondary, upper secondary, and university level (Article 9, paragraph 1, point 14 of the law) up to a maximum of €600.00 per month.
Scholarships for students of national and foreign universities, awarded to students with excellent academic results and who have been selected for scholarships through public competitions accessible to all students on an equal basis (Article 9, paragraph 1, point 14 of the law) up to a maximum of €900.00 per month.
Sports scholarships paid to athletes for their sports training according to special regulations (Article 9, paragraph 1, point 16 of the law) up to a maximum of €600.00 per month
Prizes for sporting merit (Article 9, paragraph 1, point 17 of the law) up to a maximum of €3,000.00 per year.
Remuneration paid to amateur athletes according to special regulations (Article 9, paragraph 1, point 17 of the law) up to a maximum of €600.00 per month.

Here are the laws that have changed since 1.1.2025 (source: Porezna uprava):
www.porezna-uprava.hr/Stranice/Vijest.aspx?NewsID=3813&List=Vijesti
www.porezna-uprava.hr/Stranice/Porezna_Reforma
www.porezna-uprava.hr/Stranice/Vijest.aspx?NewsID=3831&List=Vijesti

HZZ (Employment Office) New employment measures

The Croatian Employment Service offers substantial financial support to employers who hire individuals with disabilities or those lacking formal education.
READ MORE This support can cover up to 100% of the new employee's salary. For businesses looking to take on young interns, the service provides co-funding of up to 60% towards the intern's salary and associated transportation costs, aiding in their transition to the workforce.Additionally, the service offers financial incentives for employers investing in the further training of their employees. Aligned with the Croatian Qualifications Framework, businesses can receive up to 70% co-funding on eligible training costs.

For more details, please visit the following link:
mjere.hzz.hr/?utm_source=newsletter&utm_medium=weblink&utm_campaign=era-mjera-2025

NEW MEASURES AGAINST RISING ENERGY PRICES

The law is amended, definitively reducing the VAT on heating gas from 25% to 13%...
READ MORE

VAT on food is also reduced from 13% to 5% on fresh meat and fish, eggs, fruit, vegetables, edible oils and fats, baby food, agricultural costs, seedlings, fertilizers and pesticides, while VAT it is further lowered from 25% to 5%. on butter and margarine. The VAT on sanitary pads and tampons is also reduced from 25% to 13%. The VAT on tickets for sporting, cultural and other events is also reduced by 25 and 13 to 5 percent.