Croatia

Individual - Deductions

Last reviewed - 30 July 2020

The Croatian PIT Act prescribes the following personal allowances (i.e. non-taxable portions of income), special reliefs, exemptions, and incentives.

Personal allowance, special reliefs, exemptions, and incentives Tax resident Tax non-resident
Personal allowances (i.e. non-taxable portions of income):
Personal monthly allowance:
HRK 4,000 Yes Yes
Monthly allowance for a dependent family member:
HRK 1,750 Yes (1)
Monthly allowance for dependent children:
First: HRK 1,750; second: HRK 2,500; third: HRK 3,500; etc. Yes (1)
Monthly amounts for a disability of taxpayer/dependent family member/dependent child:
HRK 1,000 Yes (1)
Monthly amounts for a taxpayer/dependent family member/dependent child if such individual has 100% disability on one basis and/or due to disability is entitled to the assistance and care of others:
Has 100% disability on one basis: HRK 3,750 Yes (1)
Amounts of mandatory health insurance contributions up to the amount of prescribed mandatory health insurance contribution, in case where taxpayer is not insured on a different basis. Yes Yes (limited to contributions paid in Croatia)
Donations made in Croatia for prescribed purposes up to prescribed level. Yes Yes
Relief for taxpayers in specific age groups:    
Taxpayers up to 25 years of age do not pay 100% of their annual tax liability arising in connection with the portion of their income from employment in the 24% tax band. Yes Yes
Taxpayers between 26 to 30 years of age do not pay 50% of their annual tax liability arising in connection with the portion of their income from employment in the 24% tax band. Yes Yes
Relief for pension benefit recipients:    
This category of taxpayers does not pay 50% of their annual tax liability arising in connection with the pension benefit. Yes Yes
Relief for taxpayers that have residence and reside on the territory of local self-government units classified in group I according to the development level as per the special regulation on the regional development of the Republic of Croatia and on the territory of the City of Vukovar established according to a special regulation on the renovation and development of the City of Vukovar:    
This category of taxpayers does not pay 50% of their annual tax liability arising in connection the income from employment (other than pension benefit). Yes Yes
Exemptions for Croatian disabled war veterans and family members of killed, captured, or missing Croatian Homeland War veterans:
Individuals that have status of disabled Croatian Homeland War veterans do not pay income tax on employment income and pensions, in proportion to their established disability degree. Yes Yes
Members of the family of a killed, captured, or missing Croatian Homeland War veteran do not pay income tax on their family pensions or cash compensations up to the amount of the family pension. Yes Yes
Relief for supported areas and the City of Vukovar:
For taxpayers carrying out self-employment activities in the City of Vukovar area established according to a special regulation on the renovation and development of the City of Vukovar, employing more than two employees on indefinite-term basis where more than 50% of employees have residence and reside on the territory of local self-government units classified in group I according to the development level as per the special regulation on the regional development of the Republic of Croatia and on the territory of the City of Vukovar established according to a special regulation on the renovation and development of the City of Vukovar are relieved from taxation in respect to income realised from these activities. Yes Yes
For taxpayers carrying out self-employment activities in the territory of local self-government units classified in group I according to the development level as per the special regulation on the regional development of the Republic of Croatia, employing more than two employees on indefinite-term basis where more than 50% of employees have residence and reside on the territory of local self-government units classified in group I according to the development level as per the special regulation on the regional development of the Republic of Croatia and on the territory of the City of Vukovar established according to a special regulation on the renovation and development of the City of Vukovar, assessed tax in respect to income realised from activities carried out in those areas is 50% reduced. Yes Yes
Employment incentives:
Taxpayers who carry out self-employed activities may have their income from the self-employment activities realised in the tax period additionally reduced by the amount of:
Wages and social contributions paid on wages of certain categories of new employees for a full year as of the start of their employment. Yes Yes
Wages and social contributions paid on wages of certain categories of new employees who are disabled, for a period of three years as of the start of their employment. Yes Yes
State grants for education and training as well as grants for practical classes and apprenticeship for crafts. Yes Yes
Incentives to research and development (R&D):
Taxpayers carrying out self-employment activities may have their income from the self-employment activities in the tax period additionally reduced by the expenses for R&D, in accordance with a special regulation that regulates state aid for R&D projects. Yes Yes

Notes

  1. European Union (EU)/European Economic Area (EEA) member state tax resident can increase one's basic personal allowance on the basis of dependent family members. However, for this increase to be available, income included in the process of annual assessment of tax liability needs to:
    • represent at least 90% of the taxpayer’s total (worldwide) income realised in the given tax period, and
    • be exempt from taxation or tax-free in the country of tax residence that is different from Croatia.

Some of the outlined items can be used only via the process of annual assessment of tax liability while others can be used for calculating income tax prepayments as indicated in the Income determination section.