Increase of non-taxable payments to employees from 1 October 2022

On 28 September 2022, Bylaw amending the current Personal Income Tax Bylaw was published in the Official Gazette.

The new Bylaw prescribes an increase of certain payments that can be made to employees tax free, which will enter into force 1 October 2022 and new rules regarding the settlement of employee meal costs which will enter into force on 1 January 2023.

More details can be found below:

1) New amounts of non-taxable payments

Non-taxable payment	Until 30/9/2022 (HRK)	As of 1/10/2022 (HRK)
Christmas bonus, holiday allowance	up to 3,000.00 per year	up to 5,000.00 per year
Reward for working results and other forms of additional remuneration for employees	up to 5,000.00 per year	up to 7,500.00 per year
Gift for a child up to the age of 15	up to 600.00 per year	up to 1,000.00 per year
Gift in kind	up to 600.00 per year	up to 1,000.00 per year
Cash lump-sum allowances for employee meal costs	up to 5,000.00 per year	up to 6,000.00 per year
Compensation for the use of a private car for business purposes	2.00/ kilometre	3.00/ kilometre
Severance pay in case of retirement	up to 8,000.00 one-off	up to 10,000.00 one-off

2) New rules regarding settlement of employee meal costs

As of 1 January 2023 employers will be able to combine the methods of settlement of employee meal costs during a year. This means that each month employers will be able to choose one of the two following methods for settlement of employee meal costs:

By giving a lump-sum allowance (maximum non-taxable amount up to HRK 500.00 per month); or
By settling food costs based on trustworthy documentation (maximum non-taxable amount up to HRK 1,000.00 per month).