COVID-19 Countermeasures in Croatia

1. Employment retention incentive for temporary introduction of shortened working hours

• Incentive criterion:
  • Employers with 10 or more full-time employees.
  • Basic eligibility criterion: decrease in monthly working hours fund for all full-time employees for at least 10%.
  • Additional eligibility criterion:
    • Revenue decline of at least 20% in the month of application compared to the same month previous year.
    • Credible documentation proving business related difficulties such as cancelation or amendment of contracts with customers, a written statement of customers on decline of orders for the month for which the incentive is requested, inability of contracting new jobs during the COVID-19 epidemic and similar.
• Incentive amount:
  • Up to HRK 2,000 per employee per month.
  • Up to HRK 912.5 per related social security contributions per employee per month.
• Deadline for application: in the current month for the following month (this incentive applies until 31 December 2020).
• Incentive repayment: employer will be obliged to repay the incentive if in the period from the incentive receipt until 31 December 2021:
  • Pays dividends, profit share and similar receipts;
  • Provides stock options or own stocks or shares, as well as pays bonuses or rewards for work results above the non-taxable amount and other similar receipts to members of the management board, executive directors, procurators and similar;
  • Acquires own stocks or own shares.

2. Employment retention incentive for specific business sectors and employers whose business activities are suspended or limited for the period September – December 2020

• Incentive criterion and amount:

A) Sectoral employers (i.e. employers performing business activities in specific sectors)

Incentive criterion:

• Business activities in the following sectors:
  • Transport and storage - land, air and water passenger transport, and air transport of goods;
  • Services incidental to air transport;
  • Providing accommodation, preparation and serving food and beverages;
  • Administrative and support activities - rent and lease of cars, light motor vehicles, water and air transport vehicles, travel agencies, tour operators and other reservation services as well as related activities;
  • Arts, entertainment and recreation;
  • Organization of cultural, business and sports events, fairs and weddings as well as related ancillary service activities;
  • Translation activities and interpreter services; and
  • Washing and dry cleaning of textiles and fur products.

• Revenue decline of at least 60% in the month preceding the month for which incentive is requested compared to the same month previous year (or February 2020, if active less than one year).

Incentive amount:

• HRK 4,000 per a full-time employee (or pro rata amount per a part-time employee) per month.
• Up to HRK 250 per employee for pension insurance contributions for second pillar (MIO II) per month.

B) Employers whose business activities are suspended or limited in accordance with the Decisions of the Civil Protection Board (regardless of sector/ business activity)

Incentive criterion:

• Business activities are suspended or limited in accordance with the Decisions of the Civil Protection Board. Revenue decline of at least 60% in the month preceding the month for which incentive is requested compared to the same month previous year (or February 2020 if active less than one year). Exceptionally, employers whose business activities are suspended in accordance with the Decisions of the Civil Protection Board do not need to prove revenue decline.

Incentive amount:

• Business activities suspended/ limited up to 14 days:

HRK 2,000 per full-time employee (or pro rata amount per a part-time employee) increased up to HRK 125 per employee for pension insurance contributions for second pillar (MIO II).

• Business activities suspended/ limited for more than 14 days:

HRK 4,000 per full-time employee (or pro rata amount per a part-time employee) increased up to HRK 250 per employee for pension insurance contributions for second pillar (MIO II).

• Deadline for application: until the 15^th of the current month for the previous month.
• Incentive repayment: employer who applied for the incentive for 50 or more employees will be obliged to repay the incentive if in the period from the incentive receipt until 31 December 2021:

• Pays dividends, profit share and similar receipts;
• Provides stock options or own stocks or shares, as well as pays bonuses or rewards for work results above the non-taxable amount and other similar receipts to members of the management board, executive directors, procurators and similar;
• Acquires own stocks or own shares.

3. Employment retention incentive for microentrepreneurs for the period September – December 2020

• Incentive criterion:

• Employers with 9 or less employees (microentrepreneurs).
• Revenue decline of at least 50% in the month preceding the month for which incentive is requested compared to the same month previous year (or February 2020 if active less than one year). Exceptionally, microentrepreneurs whose business activities are suspended in accordance with the Decisions of the Civil Protection Board do not need to prove revenue decline.

• Incentive amount:

• HRK 2,000 per a full-time employee (or pro rata amount per a part-time employee) per month.
• Up to HRK 125 per employee for pension insurance contributions for second pillar (MIO II) per month.

• Deadline for application: until the 15^th of the current month for the previous month.

• The VAT on import of all types of goods imported until 31 December 2020 can be reported based on the reverse-charge mechanism, i.e. input/output VAT will be included and netted off in the same VAT return.

2. Coronavirus test

• The cost of testing for coronavirus or other infectious diseases paid by employers for their employees is not subject to personal income tax and social security contributions.

3. Extended deadline for filing financial statements

• The deadline for filing consolidated financial statements along with related audit reports for public announcement is postponed until 31 October 2020. For those entrepreneurs who have a different business year from the calendar year, deadline is 10 months from business year-end.
• Branch offices of foreign companies from other EU Member States can file annual financial statements for public announcement in line with the deadlines prescribed in these EU Member States applicable during the special Covid-19 circumstances, if these deadlines are longer than the deadlines prescribed in Croatia.