In December, a new Rulebook on Amendments to the Rulebook on Personal Income Tax and the Value Added Tax Act was brought into effect. We bring you an overview of the most important tax changes that come into effect on January 1, 2018.
New amount of minimum wage
For the year 2018 a new minimum wage, in the gross amount of HRK 3,439.80 for full time is applied.
The lowest salary for part-time work is determined in proportion to the minimum wage for full-time and hours worked for which the employee is registered. For example, a minimum wage of less than 1.719,90 HRK per month is payable to an employee who is working part-time of 20 hours per week.
VAT for cars
As of 01.01.2018. a taxpayer may deduct 50% of the VAT calculated for the purchase or rental of personal cars and other personal transport means including the purchase of all goods and services in respect of those goods unless they are above the purchase price of HRK 400.000,00.
At the same time, the new Amendments to the Rulebook prescribe the obligation of special reporting on the deduction of VAT connected to cars and car related goods within the monthly VAT report, for the purpose of monitoring by the Tax Administration. Data on the deducted VAT will be entered in field VIII. 1.2. of the VAT report. Only the net amount of which 50% of the VAT has been deducted will be entered in this field. For example, if a car worth 200.000,00 HRK NET plus 50.000,00 HRK VAT is purchased, the amount of 100.000,00 HRK will be input into the field in question, since this is the amount of the base on which the tax can be deducted. This applies equally to other goods and services related to automobiles that deuct 50% of the VAT.
Threshold for entering/exiting VAT system
Taxpayers who exceed the value of taxable deliveries of goods or services performed in excess of 300.000,00 HRK in 2017 (without VAT) are obliged to enter the register of VAT payers as of January 1, 2018. Taxpayers who do not exceed this amount are obliged to apply for deletion from the register of VAT payers to the competent tax office of the Tax Administration by 15 January 2018 or in writing to request that they remain in the VAT system. Taxpayers who do not achieve these deliveries in excess of HRK 300,000.00 in 2017 will remain taxpayers if they have been entered in the register of taxpayers at their own request, which obliges them to regular VAT taxation procedures for the next three calendar years.
Changes in daily allowances
Current provisions that provide for a reduction in the daily allowance when a meal is provided to an employee (except for breakfast which is included in the price of overnight stays) are more clearly defined and prescribe that they consider the meal to be provided if the meal is included in the following:
- the price of attendance for seminars, professional consultations and the like
- the price of the boat trip ticket
- the price of the airline ticket due to travel break
- the cost of the representation of customers (business lunches,dinners)
These provisions also apply to fieldwork allowances.
The current paragraph stipulating that the foreign daily allowance is calculated from the hour of departure of the aircraft from the last airport in the Republic of Croatia changes and states that the foreign allowance is calculated from two hours before the expected take-off. It is added that any detention in a foreign country shorter than 12 hours is added to the next country in which more than 12 hours have been spent. Furthermore, if a person travels for more than 8 that is 12 hours, while abroad less than 8, a domestic daily allowance is paid, taking into account the total number of hours spent traveling domestically and abroad.
In the case of referral of employees to education and training outside their place of residence, it is possible to pay out non-taxable:
- the cost of transportation in the amount of public transport
- the cost of accomodation at the level of actual expenses
- for seminars shorter than 7 days daily allowances and/or amount for using private car dor official purposes
Changes related to benefit in kind
Taxable income on the basis of work is not considered to be water and hot and cold beverages (other than beverages containing alcohol itself) which the employer provides to workers during their working hours. For these costs, benefit in kind is not calculated.
The current amount of 400,00 HRK for non-taxable gift in kind is raised to 600,00 HRK.
Dependant members of family and tax card
The new provision, which enters into force on 1 January 2018, prescribes that a child is considered a dependant, when they are still being supported by parents, adopters, foster parents and guardians. Children are also considered dependants after completing their regular education until their first employment, and dependent family members are considered to be: spouses, taxpayer’s parents, children after their first employment and adult persons who have been appointed with a guardian under special regulations and if they make annual earnings less than 15.000,00 HRK.
At the request of the employer, with the consent of the employee, from 2018 the tax administration has the possibility to provide the tax card electronically.
An employee, pensioner and/or natural person may make changes to their tax card that are related to dependant members or changes of residence, (which would affect their personal deduction) within 30 days of the date of the change directly via the e-citizens system or exceptionally through the competent tax administration office and deliver credible documents.
In situations where the employee earns income from the employment of two or more employers in a part time work, the Tax Administration shall indicate the ratio (percentage) of the personal deduction to the payers (employers) according to the employee’s request.