Corporate Taxation in Croatia in 2026: Complete Guide for Business Structures
Everything you need to know about Croatian corporate taxes: two-tier rates (10% and 18%), business entity comparison, VAT compliance, employer contributions, and 2026 e-invoicing requirements.
Overview of Corporate Taxation
Key Principles
Corporate taxation in Croatia is administered by the Croatian Tax Administration (Porezna uprava). Croatian companies are taxed on worldwide income, while foreign companies pay tax only on Croatian-source income. The system features a two-tier progressive structure designed to support small businesses.
Two-tier system: 10% for revenues up to €1 million, 18% above
Territorial taxation for non-residents on Croatian-source income only
Double taxation treaties with over 65 countries
EU membership provides access to single market benefits
Special incentives for investment, R&D, and job creation
Corporate Tax Rates
Croatia's two-tier corporate income tax system was designed to support small and medium enterprises while maintaining competitiveness for larger corporations. The reduced 10% rate applies to companies with annual revenues not exceeding €1 million during the tax period.
Important:The revenue threshold is measured for the entire tax period. If revenues exceed €1 million at any point, the 18% rate applies to all taxable profit for that year.
Business Structures and Tax Treatment
Comparison of Business Entities
d.o.o. (Društvo s ograničenom odgovornošću) - Limited Liability Company
Corporate Tax Rate
10-18%
based on revenue threshold
Minimum Capital
€2,500
25% paid before registration
Most popular business structure in Croatia for SMEs and foreign investors
Limited liability protection - shareholders liable only up to capital contributed
Dividends taxed at 15% withholding tax when distributed to individuals
Full deductibility of business expenses including salaries, rent, and depreciation
Suitable for foreign ownership (100% foreign ownership permitted)
Professional image and credibility with banks and business partners
Obrt - Sole Proprietorship
Tax Rate
20-30%
taxed as personal income + surtax
Simplest and least expensive business structure to establish
No minimum capital requirement
Business income taxed through personal income tax system (up to 35.4% with surtax)
No limited liability - owner personally liable for all business debts
Suitable for freelancers, small service providers, and craftsmen
Generally requires EU residency or work permit to register
Filijala (Branch of Foreign Company)
Tax Rate
10-18%
on Croatian-source profits
Extension of foreign parent company in Croatian market
Taxed only on profits from Croatian-source income
No separate legal entity - parent company fully liable
15% withholding tax on profit repatriation to foreign parent
Must appoint resident legal representative
No minimum capital required but parent guarantees obligations
d.d. (Dioničko društvo) - Joint Stock Company
Tax Rate
18%
standard corporate rate
Minimum Capital
€27,000
fully paid at incorporation
Suitable for large companies seeking to raise capital publicly
Can be listed on Zagreb Stock Exchange and other EU exchanges
Requires board of directors with minimum three members
More complex governance and reporting requirements
Annual financial statements must be audited by certified accountant
Shares can be freely issued and transferred
VAT and Indirect Taxes
VAT Rates in Croatia for 2026
| Category | VAT Rate | Examples |
|---|---|---|
| Standard rate | 25% | Most goods and services, professional services, electronics |
| Reduced rate | 13% | Food products, water supply, hotel accommodation, catering services |
| Super-reduced rate | 5% | Bread, milk, books, newspapers, passenger transport |
| Temporary reduced rates (until March 31, 2026) | 5% | Natural gas, heating, firewood, pellets, solar panel installation |
| Zero rate | 0% | Exports of goods and intra-EU supplies |
| Exempt | N/A | Financial services, insurance, healthcare, education |
Important: Temporary 5% rates on energy products were extended to support households during energy price volatility and will expire on March 31, 2026.
VAT Registration and Compliance
Registration Threshold
Mandatory VAT registration required when annual turnover exceeds €60,000 from VAT-able activities. Export transactions and EU acquisitions also trigger registration obligation regardless of turnover. Voluntary registration available below threshold.
Filing Frequency and Deadlines
Monthly filing required for most businesses - returns due by the last day of the month following the reporting period. Quarterly filing available for businesses without EU cross-border transactions and turnover under certain thresholds. Electronic filing mandatory.
Input VAT Deduction
Businesses can deduct VAT paid on purchases used for VAT-able activities. Full documentation required including valid VAT invoices. Where input VAT exceeds output VAT, refund available or can be carried forward as prepayment.
Mandatory e-Invoicing (2026 Update)
From January 1, 2026: Mandatory e-invoicing for B2B and B2G transactions with fiscalization. From January 1, 2027: Extension to all businesses including non-VAT payers. E-invoices must be issued through approved fiscalization system.
Mandatory E-Invoicing Implementation in 2026
Employer Obligations and Social Contributions
Employer Social Security Contributions
Health Insurance
16.5%
of gross salary (uncapped)
Croatian employers must pay social security contributions for health insurance on employee salaries. These contributions fund the public healthcare system and are calculated on the full gross salary without any upper limit.
Health insurance: 16.5% of gross salary with no cap
Contributions paid on entire salary amount regardless of level
Additional obligations for companies with 20+ employees
Must employ disabled workers (3% of workforce) or pay monthly fee
Monthly fee for non-compliance: 20% of minimum salary per disabled worker not employed
Employee Contributions (Withheld by Employer)
Employers are responsible for withholding and remitting employee social contributions and personal income tax from gross salaries. Employee contributions consist of pension insurance contributions totaling 20% of gross salary.
Pension contributions (first pillar): 15% of gross salary
Pension contributions (second pillar - capitalized savings): 5% of gross salary
Personal income tax: 20-30% progressive rates based on municipality
Total employer cost approximately 16.5-17.5% above gross salary
Monthly payroll reporting through JOPPD system mandatory
Tax Deductions and Incentives
Corporate Tax Deductions
Operating Expenses
All ordinary and necessary business expenses fully deductible including salaries and wages, rent and utilities, office supplies and equipment, marketing and advertising costs, professional services fees, and business insurance premiums.
Depreciation of Assets
Tangible and intangible assets depreciated using straight-line method. Buildings: 5% annual rate. Machinery and equipment: 25% annual rate. Computers and software may be expensed immediately under certain thresholds. Depreciation rates prescribed by regulation.
Interest Deductions
Interest on business loans generally deductible. Thin capitalization rules apply - interest on related party loans limited to prescribed minimum rate (2.65% for 2026) or transfer pricing rates if consistently applied. 15% withholding tax may apply to interest paid to non-residents.
Loss Carry-Forward
Tax losses can be carried forward for 5 consecutive years to offset future profits. No carry-back of losses permitted. Losses must be applied against the same type of income that generated them. Important for startups and cyclical businesses.
R&D Incentives
Enhanced deductions available for qualifying research and development activities. Additional expenses for R&D fully deductible. Government grants and innovation support programs available particularly for technology companies and startups.
Investment Incentives
Investment Promotion Act Benefits
Companies investing in fixed assets and creating new jobs can qualify for significant corporate income tax reductions under the Investment Promotion Act. The reduction rate depends on investment amount and jobs created.
Minimum Requirements:Micro-enterprises: €50,000 investment + 3 new jobs. Small/medium enterprises: €150,000 investment + 5 new jobs. Large enterprises: €150,000 investment + 5 new jobs.
Tax Incentive Tiers
50% Tax Rate Reduction
Available for investments of at least €50,000 with creation of minimum 3-5 new jobs depending on company size. Tax reduction available for up to 10 years. Applicable to micro, small, and medium enterprises meeting investment criteria.
100% Tax Rate Reduction
Available for larger investments meeting enhanced criteria. Significant job creation required. Full exemption from corporate income tax for qualifying period. Particularly beneficial for manufacturing, technology, and export-oriented businesses.
Withholding Taxes
Standard Withholding Tax Rates
| Payment Type | Rate | Notes |
|---|---|---|
| Dividends to non-residents | 15% | May be reduced under tax treaties |
| Interest to non-residents | 15% | Subject to thin capitalization rules |
| Royalties to non-residents | 15% | May be reduced under tax treaties |
| Services to tax havens | 25% | Higher rate for non-cooperative jurisdictions |
| Dividends within EU (participation) | 0% | Subject to EU Parent-Subsidiary Directive conditions |
| Branch profit repatriation | 15% | When remitted to foreign parent |
Important: Croatia has tax treaties with over 65 countries which may provide reduced withholding tax rates. Always verify treaty applicability for specific transactions.
Tax Compliance and Filing
Corporate Tax Return Filing
Filing Deadline
4 months
after end of tax period
Filing Method
Electronic
through Porezna uprava portal
All corporate income tax payers must file annual tax returns (Form PD) electronically with the Tax Administration. The tax period typically corresponds to the calendar year, but companies may choose different fiscal year-ends.
Annual CIT return (Form PD) due within 4 months after tax period ends
For calendar year companies: deadline is April 30 of following year
No monthly CIT advances required in first year of operation
From second year: monthly advance payments due by month-end for previous month
Advance payments based on previous year's tax liability
Record-Keeping and Documentation
Croatian tax authorities require comprehensive documentation and financial records. Companies must maintain proper accounting books in accordance with Croatian accounting standards and retain records for prescribed periods.
Financial statements prepared by certified accountant required
Records must be maintained in Croatian or with certified translations
Tax authorities may audit within 3 years of filing
Statute of limitations extends to 6 years for serious violations
Proper documentation essential for expense deductions and VAT credits
Penalties and Interest for Non-Compliance
Late Payment Interest
Interest charged on late or unpaid taxes at annual rate of 5.15% (July-December 2025 rate). Rate adjusted periodically. Interest accrues from due date until payment received. Significant cost if taxes remain unpaid for extended periods.
Late Filing Penalties
Fines for late filing range from €260 to €26,540 for first offense. Repeated failure to file increases penalties to €390 to €39,810. Severity depends on company size and degree of non-compliance. Electronic filing helps ensure timely submission.
Incorrect Information Penalties
Penalties apply for submitting incorrect or incomplete tax returns. Additional assessments may include both unpaid tax and penalties. Intentional tax evasion subject to criminal prosecution. Professional accounting services reduce risk of errors.
Company Registration Process
Steps to Register a d.o.o. in Croatia
Establishing a limited liability company (d.o.o.) in Croatia requires several steps involving notaries, courts, banks, and tax authorities. The process typically takes 2-4 weeks when all documentation is properly prepared.
Obtain OIB (Croatian tax identification number) for all founders and directors
Reserve company name with Croatian Company Registry (check availability)
Prepare Articles of Association and Memorandum of Association
Notarize all company documents with certified translations if needed
Open temporary bank account and deposit minimum 25% of share capital (€625 minimum)
Submit registration to Commercial Court through HITRO.HR office
Register with Tax Administration, Statistics Bureau, and social insurance
Open corporate bank account and register for VAT if applicable
Registration Costs and Requirements
Court Registration Fee
Approximately €90-100 for registering a d.o.o. with the Commercial Court Registry. Additional fees for certified copies of registration documents. Fee paid at FINA (Financial Agency) or through HITRO.HR office.
Notarization Costs
Notary fees typically €50-100 depending on complexity of documents and number of founders. All founding documents must be notarized. Certified court interpreter required if founders don't speak Croatian. Translation costs additional.
Minimum Share Capital
d.o.o. requires €2,500 minimum capital with at least 25% (€625) paid before registration. Full capital can be paid in installments after registration. j.d.o.o. (simplified LLC) requires only €1 but has restrictions. d.d. requires €27,000 fully paid.
Professional Services
Legal and accounting setup fees approximately €500-1,000. Ongoing accounting services from €100/month. Professional assistance recommended to ensure compliance and avoid delays. Total initial setup costs typically €1,000-2,000 for d.o.o.
2026 Updates and Changes
Mandatory E-Invoicing Implementation
From January 1, 2026, all VAT-registered businesses must use electronic invoicing with fiscalization for B2B and B2G transactions. From January 1, 2027, requirement extends to all businesses including non-VAT payers. Paper invoices no longer compliant. Businesses must implement compatible software.
VAT Filing Deadline Changes
VAT returns must now be filed by the last day of the month following the reporting period (previously different deadline). Enhanced enforcement and penalties for late filing. Electronic filing remains mandatory through Tax Administration portal.
Temporary Energy VAT Rates Extended
Reduced 5% VAT rate on natural gas, heating, firewood, pellets, and solar panel installations extended until March 31, 2026. After expiration, standard or reduced rates will apply. Measure introduced to support households during energy crisis.
Stable Corporate Tax Rates
Corporate income tax rates remain unchanged at 10% for revenues up to €1 million and 18% above. Two-tier system continues to provide competitive advantage for small businesses while maintaining reasonable rates for larger enterprises.
OECD Pillar Two Implementation
Croatia implemented OECD Global Anti-Base Erosion (GloBE) rules effective from December 31, 2023. Applies to multinational groups with consolidated revenues exceeding €750 million. Qualified Domestic Minimum Top-Up Tax (QDMTT) ensures 15% minimum effective tax rate for large groups.
Foreign Investment Screening
Frequently Asked Questions
What is the corporate tax rate in Croatia in 2026?
Croatia has a two-tier corporate income tax system: 10% for companies with annual revenues up to €1 million, and 18% for companies with revenues exceeding €1 million. The rate is applied to taxable profits after deductions. This two-tier system was designed to support small and medium enterprises while remaining competitive for larger businesses.
What is the difference between d.o.o. and obrt in Croatia?
A d.o.o. (limited liability company) offers limited liability protection, requires €2,500 minimum capital, and is taxed at corporate rates (10-18%). An obrt (sole proprietorship) has no minimum capital but provides no liability protection, and income is taxed as personal income (20-30% plus surtax, up to 35.4%). D.o.o. is generally preferred for serious businesses and foreign investors, while obrt suits small freelancers and craftsmen.
What are the VAT rates in Croatia for 2026?
Croatia has multiple VAT (PDV) rates: 25% standard rate for most goods and services, 13% reduced rate for food and hotel accommodation, 5% super-reduced rate for bread, milk, books, and passenger transport. Temporary 5% rates on natural gas, heating, and solar panels are extended until March 31, 2026. Exports are zero-rated, and financial/healthcare services are exempt.
What social contributions do employers pay in Croatia?
Croatian employers pay 16.5% health insurance contributions on employee gross salaries with no upper limit - the contribution applies to the entire salary amount. Additionally, companies with 20 or more employees must employ disabled workers (3% of workforce) or pay a monthly fee of 20% of minimum salary per disabled worker not employed. Employers also withhold employee pension contributions (20%) and personal income tax from salaries.
What is the minimum capital required to start a company in Croatia?
For a d.o.o. (limited liability company), the minimum share capital is €2,500, of which at least 25% (€625) must be paid before registration. For a j.d.o.o. (simplified LLC), only €1 is required but it has restrictions. For a d.d. (joint stock company), €27,000 minimum capital is required and must be fully paid at incorporation. Branches and sole proprietorships have no minimum capital requirements.
What is mandatory e-invoicing in Croatia?
From January 1, 2026, all VAT-registered businesses must use electronic invoicing with fiscalization for B2B (business-to-business) and B2G (business-to-government) transactions. From January 1, 2027, this requirement extends to all companies including non-VAT payers. E-invoices must be issued through approved fiscalization systems, and paper invoices are no longer compliant for most business transactions.
What tax incentives are available for investment in Croatia?
Under the Investment Promotion Act, companies investing in fixed assets and creating new jobs can receive 50-100% reduction in corporate income tax for 5-10 years. Minimum requirements: €50,000 investment + 3 new jobs for micro-enterprises, or €150,000 + 5 new jobs for SMEs and large enterprises. Enhanced deductions are also available for R&D activities. These incentives make Croatia attractive for manufacturing, technology, and export-oriented businesses.
When are corporate tax returns due in Croatia?
Corporate tax returns (Form PD) must be filed within 4 months after the end of the tax period. For companies using calendar year accounting, the deadline is April 30 of the following year. No monthly advance payments are required in the first year of operation, but from the second year onwards, monthly advance payments are due by the end of each month based on the previous year's tax liability.
What are the withholding tax rates in Croatia?
Standard withholding tax rates are 15% on dividends, interest, and royalties paid to non-residents. A higher rate of 25% applies to services paid to entities in non-cooperative tax jurisdictions. Rates may be reduced under double taxation treaties - Croatia has treaties with over 65 countries. Within the EU, dividends may qualify for 0% withholding under the Parent-Subsidiary Directive. Branch profit repatriation is subject to 15% withholding tax.
Can foreigners own 100% of a Croatian company?
Yes, foreign investors can own 100% of Croatian companies including d.o.o. (LLC) and d.d. (joint stock company) structures. There are no restrictions on foreign ownership for most business sectors. However, Croatia has introduced foreign investment screening for certain non-EU investments in strategic sectors, which may require prior approval. EU citizens generally have the same rights as Croatian nationals for business establishment.
Calculate Your Business Tax in Croatia
Use our comprehensive calculator to estimate your corporate income tax, VAT obligations, and employer contributions. Compare d.o.o. vs obrt structures and see your total tax burden including social contributions.