Croatia

Taxable period

The CIT shall be assessed for a period that is normally a calendar year. The tax authorities may agree, at the request of a taxpayer, that the tax period should not correspond with the calendar year, where the tax period may not exceed 12 months. The chosen tax period cannot be changed for three years.

Tax returns

All CIT payers are obligated to submit an annual CIT return to the tax authorities no later than four months after the end of the tax period for which CIT is assessed.

The Ministry of Finance administers taxation matters through the tax administration. These organisations have responsibilities and powers defined by law.

Payment of tax

Every taxpayer is required to pay monthly CIT advances (by the end of the month for the previous month) on the basis of the previous year’s tax return.

In the first year of operation, taxpayers are not obligated to pay any CIT advances.

CIT is assessed at the end of the tax period, and the assessed amount, less any instalments made, is payable by the day of submission of the tax return.

Tax audit process

The Inspection Sector of the Croatian tax authority performs a tax audit of a taxpayer.

The tax audit process is usually performed as follows:

• Notification of a tax audit is sent to the taxpayer.
• Tax audit is conducted.
• Minutes of the tax audit are issued.
• Taxpayer can object to the minutes within a prescribed filing deadline. If objection shows new facts and evidence, the tax inspector will prepare supplementary minutes.
• Resolution of the tax audit is issued within 60 days as of the day (supplementary) minutes have been provided to the taxpayer.
• Appeal against the resolution can be filed within 30 days as of the day the taxpayer received the resolution. It needs to be replied to within two months as of the day the appeal has been filed.
• After a rejected appeal, the taxpayer can initiate court litigation procedures.

Statute of limitations

The tax authorities’ right to assess tax liabilities and interest; the tax authorities' right to collect taxes, interest, and execution costs; and the taxpayer’s right to a refund of tax, interest, and execution costs is subject to a statute of limitations that becomes effective in six years, counted from the day statute of limitations commences, which is 1 January of the year following the year in which the tax return is submitted. However, tax authorities may initiate a tax audit only within three years counted from the day statute of limitations commences.

Topic of focus for tax authorities

Tax authorities are focusing on business relations with related parties. Also, after the accession of Croatia to the European Union, transactions between member states within the European Union are of focus for the tax authorities. In this regard, the tax authority stipulated the obligation of preparation of a report on transactions with related parties (PD-IPO form) in case the taxpayer recorded transactions with related parties in its business ledgers during the tax period, and to deliver that report along with the CIT return (PD form).

Binding opinions

Opinions and instructions issued by tax authority central offices are binding for all tax authority regional offices, and the goal is to ensure uniformity of the tax authority representatives’ treatment of taxpayers.