Last reviewed - 20 February 2020

Croatia, a parliamentary republic in Central Europe that sits along the Adriatic Sea, is bordered by Slovenia to the north, Hungary and Serbia to the east, and Bosnia and Herzegovina and Montenegro to the south. Croatia is divided into 20 counties and the city of Zagreb, which is also the capital of Croatia. The official language of Croatia is Croatian, and the currency is the kuna (HRK).

Croatia was part of the Austro-Hungarian Empire until the end of World War I. In 1918, the Croats, Serbs, and Slovenes formed a kingdom known after 1929 as Yugoslavia. Following World War II, Yugoslavia became a federal social independent state. Croatia declared its independence from Yugoslavia in 1991.

On 1 July 2013, Croatia became the 28th European Union (EU) member state.

According to the first estimate for the third quarter of 2019 the gross domestic product (hereinafter: “GDP”) is 2.9% larger than in the same quarter of the year 2018. The largest positive contribution to the GDP volume change in the third quarter of 2019 was realised by an increase in export of goods and services and household’s consumption expenditure.

Economic growth accelerated in the third quarter of 2019, with real gross domestic product increasing by 0.8% compared to the period from April to June, when growth of 0.5% was recorded. The available monthly data indicate that economic growth will continue in the last three months, so that in 2019 the GDP growth rate could be 3.0%. The expected intensification of economic growth mainly reflects stronger growth in domestic demand, and the contribution of total exports has increased. Real exports of goods and services continued to grow for the third quarter in a row in the third quarter of 2019, increasing by 1.2% compared to the previous three months. If seen on an annual basis, export growth accelerated in the third quarter to 4.7%, from 3.3% in the second quarter of this year. In the third quarter of 2019, personal consumption increased by 0.8% compared to the previous three months.

Following very strong growth at the beginning of the year, investment activity continued to decline in the third quarter of 2019 for the second quarter in a row. As a result, capital investments increased by 5.0% annually. The monthly indicators on construction works on buildings and other construction objects, whose annual growth rate was about 7.0%, indicate that not only the private sector but also the general government achieved growth in investment activity.

Imports of goods and services decreased by 3.7% in the third quarter of 2019 compared to the previous three months, the largest decrease recorded at the quarterly level since 2009. The slowdown in total imports, while intensifying exports of goods and services, resulted in a positive contribution from net foreign demand.

Furthermore, in the third quarter of 2019, relatively favourable developments in the labour market prevailed. Employment growth slowed in the third quarter. The number of employees increased the most in construction, transport and storage, as well as information and communication. On the other hand, in the industry the number of employees decreased for the second quarter in a row. The fall in unemployment continued in the third quarter of 2019, after stagnation in the previous three months. The fall in unemployment resulted in a 7.8% decrease in the administrative unemployment rate, from 8% in the second quarter. In the third quarter, nominal gross wage growth accelerated slightly (by 1.1% versus 0.9% in the second quarter), with wages rising in the public and private sectors. At the same time, real wage growth was somewhat less pronounced (0.9%) due to the rise in consumer prices. The annual consumer price inflation rate remained at 0.8% in September, the same as in August.

Prices of goods and services for personal consumption, as measured by the Consumer Price Index, increased by 0.4% on average in October 2019, as compared to September 2019. Compared to October 2018, i.e. on an annual level, they are up 0.6%, while on an annual average they are up 0.8%. According to the Consumer Price Index, in October 2019, as compared to September 2019, the prices of goods increased on average by 0.6%, while the prices of services remained on average at the level of prices in September 2019.

Foreign exchange interventions of the Croatian National Bank were mitigated by the appreciation pressures on the exchange rate as a result of the surplus in the current account in the balance of payments, capital inflows from EU funds and reduction of euroization. At the end of November 2019, the kuna / euro exchange rate was 7.44 EUR / HRK, which is 0.3% more than at the end of the same month in 2018, while the average exchange rate in the first eleven months of 2019 was 7.41 EUR / HRK and was almost equal to the exchange rate achieved in the same period of the previous year. The exchange rate of the kuna against the US dollar and the Swiss franc at the end of November 2019 was higher than at the end of the same month in 2018, reflecting the weakening of the euro against these currencies in the global financial markets.

The client base of PwC Croatia includes some of the largest Croatian and multinational companies in Croatia. We have more than 200 professionals in Croatia who are focused on providing innovative advice and solutions. Our teams of local and expatriate professionals have the skills and the experience in all areas of taxation, corporate and personal, direct and indirect, to help clients grow and develop.

Quick rates and dates

Corporate income tax (CIT) rates
Headline CIT rate (%) 18 (12% for companies realising less than HRK 7.5 million in revenues)
Corporate income tax (CIT) due dates
CIT return due date Within four months of company's year end.
CIT final payment due date Within four months of company's year end.
CIT estimated payment due dates Monthly instalments paid by the end of the month for the previous month.
Personal income tax (PIT) rates
Headline PIT rate (%) 36% increased for municipal tax (levied at the rates ranging from 0% to 18%, depending on taxpayer's place of residence).
Personal income tax (PIT) due dates
PIT return due date End of January or end of February, depending on taxpayer's circumstances.
PIT final payment due date Generally, 15 days from the day of tax assessment receipt.
PIT estimated payment due dates Dependent on the income type and taxpayer's circumstances.
Value-added tax (VAT) rates
Standard VAT rate (%) 25
Withholding tax (WHT) rates
WHT rates (%) (Div/Int/Roy) Resident: 0 / 0 / 0 (corporate);
12 / 12 / 24 (individuals);
Non-resident: 12 / 15 / 15 (corporate);
12 / 12 / 24 (individuals);
For further information, see the Income determination section in the Individual summary and the Withholding taxes section in the Corporate summary.
Capital gains tax (CGT) rates
Corporate capital gains tax rate (%) Capital gains are subject to the normal CIT rate.
Individual capital gains tax rate (%) 12% increased for municipal tax (levied at the rates ranging from 0% to 18%, depending on taxpayer's place of residence).
Net wealth/worth tax rates
Headline net wealth/worth tax rate (%) NA
Inheritance and gift tax rates
Inheritance tax rate (%) 4
Gift tax rate (%) 4

NA stands for Not Applicable (i.e. the territory does not have the indicated tax or requirement)

NP stands for Not Provided (i.e. the information is not currently provided in this chart)

All information in this chart is up to date as of the 'Last reviewed' date on the corresponding territory Overview page. This chart has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this chart, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.