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 2,800 per employee per month.
  • Up to HRK 1,277.5 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 microentrepreneurs for the period October – December 2020

• Incentive criterion:

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

• Business activities in the following sectors:

• Agriculture, forestry and fishing,
• 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, travel agencies, tour operators and other reservation services as well as related activities;
• Arts, entertainment and recreation;
• Repair of computers, personal and household goods and other personal service activities;
• Organization of cultural, business and sports events, fairs and weddings as well as related ancillary service activities; and
• Translation activities and interpreter services.

B) Microentrepreneurs (regardless of sector/ business activity)

• Employers with 9 or less employees.

If active longer than one year

• Revenue drop (based on VAT forms or financial projections):
  • in the period from 1 April 2020 to 30 September 2020 compared to the same period previous year, if established prior to 1 April 2019; or
  • in the month preceding the month for which incentive is requested compared to the same month previous year, if established after 1 April 2019.

If active longer than one year

• Revenue drop (based on VAT forms or financial projections) in the month preceding the month for which incentive is requested compared to June 2020.

• Incentive amount:

• up to HRK 4,000 per full-time employee or pro rata amount per part-time employee in accordance with the percentage of revenue drop:
  • from 40% to 44.99% - HRK 2,000;
  • from 45% to 49.99% - HRK 2,500;
  • from 50% to 54.99% - HRK 3,000;
  • from 55% to 59.99% - HRK 3,500;
  • from 60% and above - HRK 4,000.

• exemption from payment of pension insurance contributions for second pillar (MIO II) proportionate to the incentive amount (up to HRK 250 per employee)

• Deadline for application: until the 25^th of the following 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. 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 and amount:

A) Business activities are suspended

Incentive criterion

• Employers whose business activities are suspended in accordance with the Decisions of the Civil Protection Board do not need to prove revenue decline.
• Incentive is awarded only for the month in which business activities are suspended in accordance with the Decisions of the Civil Protection Board.

Incentive amount

• Business activities limited for a period up to 14 days:
  • HRK 2,000 per full-time employee (or pro rata amount per a part-time employee) increased for pension insurance contributions for second pillar (MIO II) proportionate to the incentive amount (up to HRK 125 per employee).
• Business activities limited for a period longer than 15 days:
  • HRK 4,000 per full-time employee (or pro rata amount per a part-time employee) increased for pension insurance contributions for second pillar (MIO II) proportionate to the incentive amount (up to HRK 250 per employee).

B) Business activities are limited

Incentive criterion

• Incentive is awarded only for the month in which business activities are limited in accordance with the Decisions of the Civil Protection Board, in the amount depending on the percentage of revenue drop.

Incentive amount

• If active longer than one year
  • Revenue drop (based on VAT forms or financial projections):
    • in the month preceding the month for which incentive is requested compared to the same month previous year, or
    • in the period from 1 April 2020 to 30 September 2020 compared to the same period previous year.
• If active less than one year
  • Revenue drop (based on VAT forms or financial projections) in the month preceding the month for which incentive is requested compared to June 2020.

• Deadline for application: until the 25^th of the following 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.

• 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.
• All imported goods required to fight COVID-19 disease (e.g. protection equipment, medical equipment and similar) are exempt from customs duties and VAT until 30 April 2021. The VAT on import of such goods will 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. Vaccination against infectious diseases

• The cost of vaccination against infectious diseases paid by employers for their employees is not considered taxable income of the employee, if vaccination is done by 31 December 2020.

4. Extended deadline for filing financial statements

• The deadline for filing consolidated financial statements along with related audit reports for public announcement for entrepreneurs who have a different business year from the calendar year 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.