Employment retention incentives for January and February 2021

In order to retain employment within industries affected by the Coronavirus epidemic (COVID-19), employment retention incentives of the Croatian Employment Bureau have been extended through January and February 2021.

Overview of available employment retention incentives and conditions for their application:

1. Employment retention incentive for specific business sectors and microentrepreneurs

Amount of the incentive	Sectoral employers (i.e. employers performing business activities in specific sectors)	Microentrepreneurs (regardless of sector/ business activity)
	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), proportionately to the incentive amount.
Basic eligibility criteria for the incentive	A) For sectoral employers Business activities in the following sectors: Agriculture, forestry, and fishing, Transport and storage, Services incidental to transport, Providing accommodation, preparation, food and beverage service, Rent and lease, travel agencies, tour operators and other reservation services as well as related activities, Arts, entertainment, and recreation, Repair of computers, personal, household goods and other personal service activities, Organization of cultural, business and sports events, fairs and weddings as well as related ancillary service activities; Translation activities and interpreter services; and Publishing of books, periodicals and other publishing activities. B) For microentrepreneurs (regardless of sector/ business activity) Employing 9 or less employees.
	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 in 2019 or in the month for which incentive is requested compared to the same month in 2020, if established prior to 1 July 2019; or in the month for which incentive is requested compared to the same month in 2020, if established after 1 July 2019.	Active less than one year Revenue drop (based on VAT forms or financial projections) in the month for which incentive is requested compared to December 2020.
Target group of employees	Employees: With fixed-term and indefinite employment, Citizens of Croatia, EU or third countries, Employed full-time or part-time, That have one of the following status: assigned employee, single parent, Croatian war veteran, etc., Employees of the branch/ representative offices of foreign companies. EXCLUDING: Employees employed after 31 December 2020 for incentive for January and after 31 January 2021 for incentive for February, Co-owners with more than 25% share and founders (except in the case of employers with up to 10 employees, craft owners, regardless of the number of employees), Pensioners, Foreign employees whose work permit and residence expired.
Who must repay the incentive?	Employers who received incentives for 50 or more employees must repay incentives if in the period from the incentive receipt until 31 December 2021: Pays dividends or profit share or other equivalent receipt that is considered as distribution of profits realised in any tax period, Provides stock options or own stocks or shares to members of the management board, executive directors, procurators, etc., Pays bonuses and rewards for work results above the non-taxable amount (HRK 5,000) and other similar receipts to members of the management board, executive directors, procurators, etc., Acquires own stocks or own shares.
Application deadline	Incentive for January: from 26 January until 25 February 2021 Incentive for February: from 26 February until 25 October 2021

2. Employment retention incentive for employers whose business activities are suspended or limited based on decision of the Civil Protection Board

Amount of the incentive

Employers whose business activities are suspended or limited based on decision of the Civil Protection Board (regardless of sector/ business activity)

Suspended for a period from 1 to 14 days:

HRK 2,000 per full-time employee or pro rata amount per part-time employee.
exemption from payment of pension insurance contributions for second pillar (MIO II), proportionately to the incentive amount.

Suspended for a period longer than 15 days:

HRK 4,000 per full-time employee or pro rata amount per part-time employee.
exemption from payment of pension insurance contributions for second pillar (MIO II), proportionately to the incentive amount.

Limited business activities:

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), proportionately to the incentive amount.

Basic eligibility criteria for the incentive

A) For employers whose business activities are suspended

Business activities are suspended based on decision of the of the Civil Protection Board.
Do not need to prove revenue drop.
Incentive is awarded only for the month in which business activities are suspended based on decision of the Civil Protection Board.
Option to sign an Administrative contract with the Tax Authorities and postpone payments of tax liabilities due for payment during the period of suspension. The payments can be postponed for a maximum period of 24 months. During this period interest will be calculated at the lower interest rate of 2.75% p.a.

B) For employers whose business activities are limited

Business activities are limited based on decision of the Civil Protection Board (e.g. limitation of working hours to part-time work or capacity limitations with regard to number of employees who can work from the business premises, at the event, in transport, etc.) or there is a business relationship with employers whose business activities are suspended.
Incentive is awarded only for the month in which business activities are limited based on decision of the Civil Protection Board.

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 in 2019 or in the month for which incentive is requested compared to the same month in 2020, if established prior to 1 July 2019; or
in the month for which incentive is requested compared to the same month in 2020, if established after 1 July 2019.

Active less than one year

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

Target group of employees

Employees:

With fixed-term and indefinite employment,
Citizens of Croatia, EU or third countries,
Employed full-time or part-time,
That have one of the following status: assigned employee, single parent, Croatian war veteran, etc.,
Employees of the branch/ representative offices of foreign companies.

EXCLUDING:

Employees employed after 31 December 2020 for incentive for January and after 31 January 2021 for incentive for February,
Co-owners with more than 25% share and founders (except in the case of employers with up to 10 employees, craft owners, regardless of the number of employees),
Pensioners,
Foreign employees whose work permit and residence expired.

Who must repay the incentive?

Employers who received incentives for 50 or more employees must repay incentives if in the period from the incentive receipt until 31 December 2021:

Pays dividends or profit share or other equivalent receipt that is considered as distribution of profits realised in any tax period,
Provides stock options or own stocks or shares to members of the management board, executive directors, procurators, etc.,
Pays bonuses and rewards for work results above the non-taxable amount (HRK 5,000) and other similar receipts to members of the management board, executive directors, procurators, etc.,
Acquires own stocks or own shares.

Application deadline

Incentive for January: from 26 January until 25 February 2021
Incentive for February: from 26 February until 25 October 2021

3. Reimbursement of fixed costs for employers whose business activities are suspended

Within the framework of employment retention incentive for employers whose business activities are suspended based on decision of the Civil Protection Board from 27 November 2020, it is possible to apply via separate request form for an additional incentive amount of reimbursement of part or all fixed costs for December 2020, in accordance with the following criteria:
- Revenue drop in December 2020 compared to December 2019 (or November 2020 if active less than 12 months) of at least 60%.
- If revenue drop ranges from 60% to 90% fixed costs are reimbursed proportionately to the revenue drop, while for revenue drop above 90% fixed costs are reimbursed in total amount.
- Fixed costs include, but are not limited to, monthly lease of business premises, overhead costs, the cost of bookkeeping services and similar.
- The deadline for submitting the Request for reimbursement of part or all fixed costs to the Ministry of Finance, Tax Administration is 15 February 2021.