Croatia

CIT is generally paid at a rate of 18 %. For taxpayers with revenues in the tax period lower than EUR 1 million, the rate of 10 % is applied. The CIT payers are domestic enterprises engaged in independent activities on a long-term basis for the purpose of deriving profit, busines units (Pes) of foreign enterprises, and individuals (natural persons) performing a business activity who choose to pay CIT instead of PIT.

The CIT base is the accounting profit adjusted for deductions and disallowed items. Croatian residents pay CIT on profit derived in Croatia and abroad, and non-residents pay CIT only on profits derived in Croatia. The tax base also includes gains arising from liquidation, sale, change of legal form, and division of the taxpayer if it is determined at the market values.

Payments into voluntarily pension funds paid by an employer for an employee under certain conditions prescribed by the CIT Act are also considered as deductible expenditures.

Expenditures are not considered to be deductible expenditures if they are not related to the taxpayer's business activity.

Taxpayers who realise less than EUR 1 million in revenues can determine the tax base according to the cash principle.

The CIT base can be reduced by the following items:

• Income from value adjustments of financial assets
• Income from reserves
• Income from unrealized foreign exchange rate gains
• Income from other non-cash transactions
• Increase in receivables from business operations
• Increase in short-term receivables from interest recognized as income
• Increase in inventory
• Decrease in short-term liabilities from business operations
• Decrease in short-term liabilities from interest recognized as expenses
• Other corrections decreasing profit.

The CIT base can be increased by the following items:

• Expenses (losses) from value adjustments of fixed tangible and intangible assets
• Expenses (losses) from value adjustments of financial assets
• Expenses from value adjustments of accounts receivable for delivered goods and performed services
• Provision expenses
• Expenses from non-realised exchange rate differences
• Expenses from other non-monetary transactions
• Reduced claims from business activities
• Reduced short-term claims on the basis of interest deducted as income
• Destocking
• Increase in short-term liabilities from business activities
• Increase in short-term liabilities on the basis of interest deducted as expense
• Other corrections increasing profit.

Local income taxes

There are no significant county or local taxes on income.