Croatia Tax Changes 2027: Pensions, Paušalni Obrt and E-Invoicing
A draft bill makes pensions tax-free and raises the burden on flat-rate sole traders earning over €40,000. E-invoicing for non-VAT businesses is already law. Salaries stay where they are.
Main change for freelancers
Deemed expenses for paušalni obrt with revenue of €40,000–50,000 / €50,000–60,000
Croatia taxes: 2026 vs 2027
| Parameter | 2026 | 2027 | Status |
|---|---|---|---|
| Personal allowance (osnovni osobni odbitak) | €600/month | €600/month | No change proposed |
| Income tax rates, Zagreb | 23% / 33% above €60,000 a year | Set by municipalities by 30 November | Pending |
| Employee pension contributions | 20% | 20% | No change |
| Pension income: tax reduction | 50% | 100% (pensions tax-free) | Draft |
| Paušalni obrt up to €40,000 revenue | Current rules | No change | No change proposed |
| Paušalni obrt €40,000–50,000: deemed expenses | 85% | 70% | Draft |
| Paušalni obrt €50,000–60,000: deemed expenses | 85% | 55% | Draft |
| Tax + contributions a year, €40–50k bracket | €4,392 | €5,728 | Draft |
| Tax + contributions a year, €50–60k bracket | €4,572 | €7,605 | Draft |
| E-invoicing for businesses outside VAT | Not required | Mandatory from 1 January | Adopted |
| Flat tax per bed, holiday lets (minimum, category I / II) | €100 / €70 | €150 / €100 | Draft |
| Minimum wage | — | Decree due by 31 October 2026 | Pending |
| Maximum contribution base | €11,958/month | Set in December 2026 | Pending |
Draft = Income Tax Act and Contributions Act amendments adopted by the Government on 10 September 2026 and pending in Parliament. 2026 totals for paušalisti are the 2027 figures minus the published increases.
Take-home pay: 2026 vs 2027
€2,500 gross a month, Zagreb
Single employee, no dependants, standard allowance, same gross in both years. The 2027 result holds only if Zagreb keeps its 23% rate; municipal decisions are due by 30 November 2026.
Employees
No national change
The personal allowance (osnovni osobni odbitak, the monthly tax-free amount) stays €600 and the 20% pension contribution is unchanged. Net pay moves only if your city or municipality changes its rates for 2027, or through the yearly reset of contribution bases. Rate decisions are due by 30 November 2026, and the Tax Administration (Porezna uprava) publishes the 2027 rate table in December. Without a local decision the default rates are 20% and 30%. The 2027 minimum wage is due by government decree by 31 October 2026.
Paušalni obrt, freelancers and landlords
Under €40,000 revenue: nothing changes
Paušalni obrt is the flat-rate sole-trader regime: tax and contributions depend on the revenue bracket, not on actual profit. Brackets 1–5 (revenue up to €40,000) keep the 85% deemed expenses and today's amounts. Only the two top brackets change:
€40,000.01–50,000: deemed expenses 85% → 70%; tax and contributions +€1,336 a year (+30%), to €5,728.
€50,000.01–60,000: deemed expenses 85% → 55%; +€3,033 a year (+66%), to €7,605.
Monthly contributions for both brackets rise as well, through a parallel amendment to the Contributions Act; the totals above include them.
E-invoicing for everyone outside VAT (adopted)
Under the Fiscalisation Act, from 1 January 2027 all businesses outside the VAT system, including paušalisti and freelancers, must issue e-invoices (eRačun). The Tax Administration offers a free tool, MIKROeRAČUN.
Holiday lets (draft)
The flat tax per bed for tourist rentals rises: the minimum goes from €100 to €150 (category I) and from €70 to €100 (category II). Where the municipality makes no decision, the default rises from €200 to €225 and from €135 to €150.
Expats, retirees and relocants
What matters if you moved to Croatia
Croatian pensions become tax-free from 2027 if the bill passes, for about 541,000 pensioners. The bill does not say whether foreign pensions are covered.
Digital nomads (temporary stay, foreign income exempt): no change found.
A new Croatian Investment Account (HIR) is proposed, with tax-free gains and withdrawals if conditions are met. The conditions will be set by regulation.
What is still pending
FAQ
Do salaries in Croatia change in 2027?
Not at national level. The personal allowance stays €600 a month and the 20% pension contribution is unchanged. In Zagreb, €2,500 gross gives €1,678 net in both years, unless the city changes its 23% rate by 30 November 2026.
Which paušalisti pay more in 2027?
Only those with revenue above €40,000. In the €40–50k bracket deemed expenses fall from 85% to 70% (+€1,336 a year); in the €50–60k bracket to 55% (+€3,033). Up to €40,000 nothing changes. The bill is still a draft.
Are pensions tax-free in Croatia from 2027?
That is the plan: the bill raises the pension reduction from 50% to 100% from 1 January 2027. It went to Parliament on 10 September 2026 and had not passed as of 15 October. Coverage of foreign pensions is not stated.
Do paušalisti need e-invoices from 2027?
Yes. This part is already law: from 1 January 2027 all businesses outside the VAT system must issue e-invoices. The Tax Administration provides the free MIKROeRAČUN tool.
