From Changes To Challenges: Croatia's Fiscal Transformation In 2024

• Published date: 21 December 2023
• Subject Matter: Tax, Income Tax
• Law Firm: Eurofast
• Author: Gojko Uzelac

Croatia is set for a transformative fiscal year with sweeping amendments to its tax and social security systems taking effect on January 1, 2024. These changes bring a nuanced blend of challenges and opportunities for taxpayers across the nation, touching upon personal income tax and social security adjustments.

In the realm of personal income tax, several pivotal changes will redefine the landscape. The basic individual tax allowance sees a significant boost to EUR 560, providing relief for individual taxpayers. Furthermore, the tax allowance for dependent family members and individuals with disabilities is enhanced, recognizing, and addressing diverse family needs.

A notable development is the cancellation of the municipality tax/city surtax, simplifying the tax structure for all types of income. Furthermore, the threshold for the higher tax rate has moved to EUR 50,400, from what the majority of the taxpayers will certainly benefit. Additionally, a groundbreaking municipality-based income tax rate system is established, granting municipalities the authority to set rates. This system aims to accommodate the tax losses of municipalities by incorporating the cancelled municipality tax or city surtax directly into the income tax rate.

On the revenue side, the tax on rental income and capital income has increased to...