Personal Taxation in Croatia in 2026: Complete Guide to Income Tax and Deductions
Everything you need to know about Croatian personal income tax: progressive rates, social security contributions, personal allowances up to €600/month, and special benefits for returning emigrants and young workers.
Overview of Personal Income Taxation
Key Principles
Personal income taxation in Croatia is administered by Porezna uprava (Tax Administration). Croatian tax residents are taxed on worldwide income, while non-residents pay tax only on income sourced in Croatia.
Progressive two-tier tax system with rates set by local municipalities
Personal allowance of €600 per month (€7,200 annually) for basic deduction
Additional allowances for dependents, children, and disability
Extensive double taxation treaty network with over 65 countries
Special five-year tax exemption for returning Croatian emigrants
Residency Status
Tax residency determines whether you're taxed on worldwide or only Croatian-source income.
Residents: Natural persons with permanent or habitual residence in Croatia
Residents are also Croatian civil servants receiving salary from the state
Non-residents: Individuals without permanent residence but earning Croatian-source income
Residents taxed on worldwide income; non-residents only on Croatian income
Income Tax Rates and Brackets
Progressive Tax Rates for 2026
Croatia uses a progressive two-tier tax system where rates are determined by local municipalities and cities. Each local government unit chooses rates within prescribed ranges. If no decision is made, default rates of 20% and 30% apply.
Important:Actual rates vary by municipality. Zagreb applies the maximum 18% surtax, making it one of the highest-taxed locations in Croatia.
2026 Personal Income Tax Rates
| Income Level | Tax Rate Range | Default Rate | Notes |
|---|---|---|---|
| Up to €60,000 annually (€5,000/month) | 15% - 23% | 20% | Lower bracket set by municipality |
| Above €60,000 annually (€5,000/month) | 25% - 33% | 30% | Upper bracket set by municipality |
| Local Surtax (varies by city) | 0% - 18% | Varies | Zagreb: 18%, smaller cities: 0-12% |
Important: Municipalities choose their rates annually by November 30 for the following year. Default rates apply if no decision is made.
Understanding Annual vs Final Income
Annual Income (Progressive Taxation)
Employment income, self-employment income, and certain other income are subject to progressive taxation and included in annual tax assessment. Tax prepayments are made monthly with final settlement after filing annual return.
Final Income (Flat Taxation)
Income from property and property rights, capital income (dividends, interest), and certain other specified income are subject to flat taxation rates (typically 12% or 24%) and are not included in annual tax assessment. Tax paid is considered final.
Income Categories and Tax Rates
Employment Income
Tax Rate
20-30%
progressive based on municipality
Social Contributions
20%
employee pension contributions
Includes salaries, wages, bonuses, and benefits in kind
Taxed progressively with monthly prepayments withheld by employer
Subject to annual tax assessment and settlement
Personal allowances and deductions reduce taxable base
Employer withholds tax and social contributions automatically
Annual return filed by employer or individual if required
Self-Employment Income
Tax Rate
20-30%
progressive based on municipality
Loss Carry-Forward
5 years
for business losses
Income from crafts, independent professions, and small business
Tax base = business receipts minus allowable expenses and personal allowances
Monthly tax prepayments based on previous year's assessment
Must file annual tax return by end of February
Business losses can be carried forward for up to 5 years
Lump-sum taxation available for small businesses under €60,000 turnover
Capital Income
Tax Rate
12-24%
flat rate, no allowances
Includes dividends, interest, and capital gains from financial assets
Dividends and interest: 12% flat rate
Capital gains on securities and shares: 12% flat rate
Stock options and share grants: 24-36% depending on circumstances
Tax withheld at source by payer (no personal allowances)
Final taxation - not subject to annual tax assessment
Rental and Property Income
Tax Rate
12%
after 30% standard deduction
Rental income from movable and immovable property
Standard 30% lump-sum deduction for expenses automatically applied
Alternatively, actual documented expenses can be deducted
Income from property rights: 24% rate with actual expenses
No personal allowances available for property income
Principal residence sale exempt from capital gains tax
Social Security Contributions
Employee Social Contributions
Total Employee Rate
20%
of gross salary (capped)
Maximum Base
€11,958
monthly contribution cap
Croatian employees pay social security contributions for pension insurance. These contributions are withheld by the employer from gross salary and consist of two pillars: first pillar state pension (15%) and second pillar capitalized savings (5%). Contributions are capped at a maximum monthly base.
First pillar (state pension fund): 15% of gross salary
Second pillar (individual capitalized savings): 5% of gross salary
Reduced base for salaries up to €1,300 with graduated relief
Maximum monthly contribution base: €11,958 (€970 maximum monthly contribution)
Annual maximum contribution: €12,095
Employer Social Contributions
Health Insurance
16.5%
of gross salary (uncapped)
Employers in Croatia must pay health insurance contributions on employee salaries. Unlike employee pension contributions, employer health contributions have no upper limit and are calculated on the entire gross salary amount.
Health insurance contribution: 16.5% of gross salary
No maximum contribution cap - applies to full salary
Additional obligations for companies with 20+ employees to employ disabled workers
Reduced or exempt contributions for young workers under certain conditions
First-year exemption for workers with no employment history
Young Worker Benefits
Personal Allowances and Deductions
Basic Personal Allowance
Every Croatian tax resident is entitled to a basic monthly personal allowance that reduces taxable income. This allowance increased from €560 to €600 in 2025 and remains at this level for 2026.
Note:Non-residents are also entitled to personal allowances when their Croatian income represents at least 90% of their worldwide income.
Additional Allowances and Deductions
Dependent Children Allowances
First child: +€300/month (€3,600/year); Second child: +€400/month (€4,800/year); Third and each additional child: +€500/month (€6,000/year). Children must have annual income below €3,360 to qualify as dependents.
Dependent Family Members
Additional allowances available for dependent spouse, parents, and other immediate family members if their annual income does not exceed €3,360. Spouses can share or split allowances for children by agreement.
Disability Allowances
Individuals with 100% disability or requiring assistance and care of others receive additional monthly allowance of €498. Specific coefficients apply for various disability levels and circumstances.
Deductible Expenses
Social security contributions paid, alimony payments, voluntary pension contributions (up to €804/year), donations to registered charities (up to 2% of annual income), and supplementary health insurance premiums (up to €500/year).
Tax-Free Benefits from Employer
Meal allowances up to €1,800/year with invoices (€1,200 without), actual accommodation costs, children's preschool expenses, voluntary pension premiums (€67/month), supplementary health insurance (€500/year), and work-from-home allowances.
Special Tax Regimes and Benefits
Returning Emigrant Tax Relief
for 5 years on employment income
Other Special Tax Benefits
Young Worker Tax Relief (Under 25)
Workers under 25 years old receive 100% exemption from annual income tax liability on employment income falling in the lower tax bracket (20%). This provides significant tax savings for young professionals starting their careers.
Young Worker Tax Relief (Ages 26-30)
Workers between 26 and 30 years old receive 50% exemption from annual income tax liability on employment income in the lower tax bracket. This partial relief helps young professionals during career establishment.
Pension Income Tax Relief
Pensioners receive 50% exemption from annual income tax liability on pension benefits. This provides additional financial support for retirees.
First Employment Health Insurance Exemption
Employers hiring workers with no prior employment history are exempt from paying health insurance contributions for one year. For workers under 30 on permanent contracts, the exemption can extend up to five years.
Tax Filing and Compliance
Annual Tax Return Requirements
Filing Deadline
February 28
for previous tax year
Filing Method
Electronic
through Tax Administration portal
Most employees do not need to file annual returns as tax is withheld by employers throughout the year. However, self-employed individuals, seafarers, and those requested by the Tax Administration must file annual returns.
Mandatory filing for self-employment income earners
Employment income taxpayers: Tax Administration assesses automatically
Seafarers must file for income from international voyages
Special procedure available to claim additional deductions and refunds
Form DOH used for annual income tax returns
Monthly Tax Prepayments and Withholding
For employment income, employers calculate and withhold tax monthly based on gross salary minus social contributions and personal allowances. These monthly payments are prepayments against annual tax liability, with final settlement after year-end assessment.
Employers withhold tax at rates applicable to employee's residence municipality
Monthly tax prepayments credited against annual liability
Refunds issued if prepayments exceed annual liability
Additional payment required if prepayments insufficient
Self-employed make estimated prepayments based on previous year
Key Filing Deadlines for 2026
| Obligation | Deadline | Applies To |
|---|---|---|
| Annual Tax Return (Form DOH) | February 28, 2027 | Self-employed, seafarers, those requested by Tax Administration |
| Request for Special Assessment (Form ZPP-DOH) | February 28, 2027 | Employees claiming additional deductions not automatically applied |
| Monthly Payroll Reporting (Form JOPPD) | Monthly | All employers for employee tax and contributions |
| Property Income Report | Within 15 days of year-end | Those with property rights income |
Important: Electronic filing is mandatory through the Tax Administration's online portal at porezna-uprava.gov.hr
Tax Treaties and International Considerations
Double Taxation Agreements
Croatia has signed double taxation treaties with over 65 countries, including all EU member states, the United States, Canada, and major Asian economies. These treaties help prevent double taxation on cross-border income.
Foreign tax credits available for taxes paid abroad on foreign-source income
Credit limited to amount of Croatian tax payable on same income
Must report all worldwide income and foreign taxes paid in annual return
Treaty provisions may reduce or eliminate withholding taxes
EU/EEA residents can claim family allowances if Croatian income is 90%+ of worldwide income
Foreign Asset Reporting
Croatian tax residents and individuals with stay permits exceeding 12 months must report certain foreign assets to the Croatian National Bank.
Foreign bank accounts and securities must be reported
Foreign forwards, futures, swaps, options, and derivatives
Dividends and profit shares from abroad exceeding certain thresholds
Reporting obligations separate from tax filing
Penalties apply for non-compliance with reporting requirements
Tax Calculation Examples for 2026
Single Employee in Zagreb (€50,000 annual salary)
Gross salary: €50,000. Employee pension contributions (20%): -€9,667 (capped at annual max). Personal allowance: -€7,200. Taxable income: €33,133. Income tax at 23% (Zagreb lower rate): €7,621. Employer health insurance (16.5%): €8,250. Total tax burden: approximately 31.7% of gross salary.
Self-Employed Professional (€80,000 annual income)
Business receipts: €80,000. Allowable expenses: -€30,000. Personal allowance: -€7,200. Taxable income: €42,800. Tax calculation: First €60,000 at 20% = €8,560; Remaining €22,800 at 30% = €6,840. Total income tax: €15,400. Effective tax rate: 19.3% of gross income (excluding social contributions).
Parent with Two Children (€40,000 annual salary)
Gross salary: €40,000. Employee pension contributions (20%): -€7,813. Personal allowance: -€7,200. Child allowances (2 children): -€8,400. Taxable income: €16,587. Income tax at 20%: €3,317. With children's allowances, effective tax rate drops to 8.3% (excluding social contributions).
Rental Property Owner (€20,000 annual rental income)
Gross rental income: €20,000. Standard 30% expense deduction: -€6,000. Net taxable income: €14,000. Tax at 12% flat rate: €1,680. No personal allowances apply to rental income. Effective tax rate: 8.4% of gross rental income. Alternative: actual documented expenses can be used instead of 30% standard deduction.
2026 Updates and Changes
Personal Allowance Increased to €600
The basic monthly personal allowance increased from €560 to €600 (€7,200 annually) effective from January 2025, continuing into 2026. Additional coefficients for dependent children and family members were also adjusted upward.
Income Threshold Raised to €60,000
The threshold for the upper tax bracket increased from previous levels to €60,000 annually (€5,000 monthly). This allows more taxpayers to benefit from the lower tax rates, reducing overall tax burden for middle-income earners.
Municipal Tax Rate Adjustments
13 local self-government units changed their income tax rates for 2026. Municipalities now have greater flexibility in setting rates within prescribed ranges (lower: 15-23%, upper: 25-33%), replacing the previous surtax system abolished in 2024.
Returning Emigrant Tax Exemption
New five-year 100% income tax exemption introduced for Croatian emigrants returning after at least two years abroad. This applies to employment income and aims to attract skilled workers back to Croatia. Exemption also covers Croatian citizens who never registered permanent residence.
Minimum Wage Increase
Minimum monthly gross wage increased to €1,050 for 2026. For directors and board members, minimum gross salary is €1,295.45. These increases affect contribution bases and may impact net take-home pay calculations.
Maximum Effective Tax Rate
Frequently Asked Questions
What are the personal income tax rates in Croatia in 2026?
Croatia has progressive income tax rates set by municipalities: 15-23% (default 20%) for income up to €60,000 annually, and 25-33% (default 30%) for income above €60,000. Local municipalities can add surtax ranging from 0-18%, with Zagreb applying the maximum 18% rate. The exact rate depends on your place of residence in Croatia.
How much is the personal allowance in Croatia for 2026?
The basic personal allowance in Croatia is €600 per month (€7,200 annually) for 2026. Additional allowances are available: €300/month for first child, €400/month for second child, €500/month for each additional child, and €498/month for individuals with 100% disability or requiring care assistance.
What social security contributions do employees pay in Croatia?
Croatian employees pay 20% in pension contributions on their gross salary: 15% to the first pillar (state pension fund) and 5% to the second pillar (individual capitalized savings). These contributions are capped at a maximum monthly base of €11,958, resulting in a maximum monthly contribution of approximately €970 or €12,095 annually.
What social contributions do employers pay in Croatia?
Employers in Croatia pay 16.5% health insurance contributions on employee gross salaries. Unlike employee contributions, there is no maximum cap on employer health insurance contributions - they apply to the full gross salary amount. Total employer cost is approximately 16.5-17.5% on top of gross salary.
Are there tax benefits for young workers in Croatia?
Yes, Croatia offers significant tax benefits for young workers. Workers under 25 receive 100% exemption from income tax on employment income in the lower tax bracket. Workers aged 26-30 receive 50% exemption. Additionally, workers with no prior employment history are exempt from health insurance contributions for the first year, with employers potentially exempt for up to five years.
What is the five-year tax exemption for returning emigrants?
Croatian emigrants who return after living abroad for at least two years qualify for a complete 100% income tax exemption on employment income for five years. This applies to those who previously deregistered their Croatian residence or declared early departure, as well as Croatian citizens who never registered permanent residence in Croatia.
How is rental income taxed in Croatia?
Rental income in Croatia is taxed at a flat rate of 12% after a standard 30% expense deduction (effectively 8.4% of gross rental income). Alternatively, if you maintain business books, you can deduct actual documented expenses instead of the 30% standard deduction. No personal allowances apply to rental income, and the tax is considered final (not subject to annual assessment).
When do I need to file a tax return in Croatia?
Most employees do not need to file annual tax returns as tax is withheld by employers. However, self-employed individuals, seafarers, and those specifically requested by the Tax Administration must file annual returns by February 28 for the previous tax year using Form DOH. Employees can file a special assessment request (Form ZPP-DOH) to claim additional deductions.
How is capital income taxed in Croatia?
Capital income in Croatia is subject to flat taxation rates. Dividends and interest are taxed at 12%, and capital gains from securities are taxed at 12%. Stock options and share grants may be taxed at 24-36% depending on circumstances. No personal allowances apply, and tax is typically withheld at source. This is final taxation - not subject to annual tax assessment.
What is the difference between annual and final income in Croatia?
Annual income (employment, self-employment) is subject to progressive taxation and included in annual tax assessment with monthly prepayments throughout the year. Final income (property, capital income) is taxed at flat rates when received and considered final - not subject to annual reassessment. Tax paid on final income cannot be adjusted regardless of other income levels.
Calculate Your Personal Tax in Croatia
Use our comprehensive calculator to estimate your personal income tax, social contributions, and net salary after all deductions. Compare scenarios with different allowances and income levels to optimize your tax position.
Sources and Further Reading
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