Mazars Tax News - January 2022

News from Republic of Croatia

The Tax Authority has sent an invitation to Croatian residents to voluntarily report receipts earned abroad in this or previous years (salaries, pensions, other income, interest on savings, dividends, etc.) before receiving official call.

The Tax Authority stated that it has been noticed that a numerous Croatian residents did not fulfil their obligation of reporting foreign receipts via the exchange of information with the Tax Authorities of other countries. It is important to note that reporting of foreign receipts to the Croatian Tax Authority is obligatory regardless of whether the tax has already been paid abroad and whether any tax obligation arises in Croatia. The exception to the reporting obligation applies only to the pension receipts from following countries: Canada, China, Luxembourg, Northern Macedonia, Morocco, Mauritius, Germany, Oman, Poland and San Marino.

Individuals can report foreign receipts earned in previous periods on the form "Voluntary declaration of foreign receipts" through the ePorezna system, by mail or in person at the competent branch office of the Tax Administration according to their residence.

In addition, invitation mentioned that voluntarily declared foreign receipts will be conducted in accordance with the regulations in force on the day of voluntary declaration, without calculation of late payment interest and imposition of a fine for late declaration of foreign receipts.

Amendments to the General Tax Rulebook

The recently adopted changes to the General Tax Rulebook extended the application of favourable tax treatment to donations made with the aim of reducing the negative impact of the catastrophe caused by the earthquake.

Namely, for all donations (in cash and / or in kind and / or food) given directly to legal persons and individual or humanitarian associations:

• CIT taxpayers can determine tax-deductible expenses regardless of the amount of income generated in the previous year, i.e.
• PIT taxpayers, i.e. self-employed, can determine tax-deductible expenses regardless of the amount of generated receipts.

It is important to note that taxpayers must keep records of the necessary information on donations and documentation that will be considered credible based on acts issued by the competent headquarters or other available documentation that they can obtain.

It should be noted that taxpayers who apply the VAT exemption have the right to deduct input VAT for donated goods, i.e. services provided without compensation or consideration.

The VAT exemption applies to all donations made from December 2020 and up until the end of 2022 and it is reported in VAT return.

Proposal for the abolishment of the Rulebook on the deadlines for submission of financial statements in special circumstances

Through platform e-savjetovanje a proposal to abolish the Rulebook on the deadlines for submission of financial statements in special circumstances was recently presented.

Mazars comment: In case of adoption of the said proposal, we expect that in addition to the deadlines for submission of financial statements, deadlines for submission of income tax returns (and other accompanying forms) will return to standard deadlines as well.

Other news

Changes to the Croatian Chamber of Commerce membership fee

Recently, a new Act on the Croatian Chamber of Commerce came into force. It changed the method of determining membership fees for taxpayers in Category I. (i.e. companies that do not exceed two of the following three criteria: assets up to HRK 7.5 million total annual revenues up to HRK 15 million and number of employees up to 50).

Under the new Act, companies that fall into category I. are no longer obliged to pay membership fees but can opt for voluntary payment. Voluntary monthly membership fee amounts to HRK 150.00 for companies that generate income up to HRK  7,500,000.00, or HRK 300.00 for companies that generate income higher than HRK 7,500,000.00 and up to HRK 15,000,000.

On the other hand, companies belonging to II. and III. categories are still subject to membership fees while the amount of the monthly membership fee remained unchanged.

The Croatian Chamber of Commerce membership fee – temporary abolition

The Croatian Chamber of Commerce passed a Decision on the temporary abolition of the obligation to pay membership fees for taxpayers which had their registered office or residence in Sisak Moslavina County and which are unable to regularly conduct their activity. The decision is valid from January 1 to June 30, 2021.

Also, temporary abolition from the membership fee will be provided to other taxpayers based in Karlovac and Zagreb counties, which were prevented from doing business due to the damage caused by the earthquake, based on the previously approved request.