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new incentive

New incentives for employees

11/2/2020
new incentive

In order to retain employment within industries affected by the Coronavirus epidemic (COVID-19) provisions regarding employment retention incentives issued by the Croatian Employment Bureau for the period from October to December 2020 have been amended.

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 air transport,
    • Providing accommodation, preparation and serving food and beverages,
    • 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) 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 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.

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.
 Target group of employees

Employees:

  • With limited and permanent 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 30 September 2020,
  • Co-owners with more than 25% share, founders, board members, directors, procurators, etc. (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 October: from 26 October until 25 November 2020
  • Incentive for November: from 26 November until 25 December 2020
  • Incentive for December: from 26 December until 25 January 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 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.

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.
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.

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.).
  • 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 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.

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.
Target group of employees

Employees:

  • With limited and permanent 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 30 September 2020,
  • Co-owners with more than 25% share, founders, board members, directors, procurators, etc. (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 October: from 26 October until 25 November 2020
  • Incentive for November: from 26 November until 25 December 2020
  • Incentive for December: from 26 December until 25 January 2021 

 

3. Employment retention incentive - shortened working hours

Amount of the incentive 
  • The incentive is awarded for temporary introduction of full-time work which lasts shorter than the monthly working hours fund, but not shorter than 70% of monthly working hours fund, in the amount up to HRK 2,800 per month net per employee.
  • The employer is obliged to calculate and pay compulsory social security contributions, which will be refunded in accordance with the approved incentive.
  • Payment by the 30th of the month for the previous month. 
 Basic eligibility criteria for the incentive
  • Basic eligibility criterion: expected shortened monthly working hours fund for all employees employed by the employer on a full-time basis in the month for which the incentive is requested of at least 10%.
  • Revenue drop (based on VAT forms or financial projections) of at least 20% in the month for which the incentive is requested compared to the same month previous year (or February 2020 if active less than one year).
  • The employer must provide credible documentation proving business difficulties such as:
    • cancelation of or amendment of the contracts with customers, 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;
    • inability of supply of finished products or contracted and paid raw and production materials, machines, tools;
    • inability of purchase of new raw and production materials, machines and tools necessary for business activities.

Target group of employers

Employers with 10 or more employees.

  • From 10 to 50 employees if the application for the incentive is submitted for at least 20% of employees,
  • 51 or more employees if the application for the incentive is submitted for at least 10% of employees.

    EXCLUDING:

  • Employers who registered their business activity and applied to the HZMO insurance system after 29 February 2020,
  • Employers who have not paid salaries for the previous month,
  • Associations and institutions that are not Corporate Profit taxpayers,
  • Employers who already receive employment retention incentives from the Croatian Employment Bureau on another basis.
 Target group of employees

Employees:

  • With limited and permanent employment,
  • Employed full-time,
  • Employed as of 31 May 2020 or earlier.

EXCLUDING:

  • Owners and co-owners with more than 25% share, founders, board members, directors, procurators, etc.,
  • Employees whose notice period is running,
  • Employees working from home office.
Who must repay the incentive?

Employers who received incentives 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
  • By the end of the current month for the following month.