Lawyer
An expert in corporate and international corporate law. He has many years of experience in establishing and reorganizing companies, supporting M&A transactions, as well as providing legal support for opening and running a business in the EU, Asia, and North America.
Accounting support in Croatia
Croatian accounting legislation is fully harmonized with the European Union directives. Its basic acts are:
- Accounting Act (Zakon o računovodstvu)
- International Financial Reporting Standards (IFRS/MRS)
- Profit Tax Act (Zakon o porezu na dobit)
- Value Added Tax Act (Zakon o porezu na dodanu vrijednost)
Accounting support begins even before the start of operations. After registering a company with the Commercial Court (Trgovački sud) and obtaining an OIB (Personal Identification Number), it is necessary to:
- Register with the tax authorities (Porezna uprava) as a payer of income tax and, if the criteria are met, VAT.
- Register with the Croatian Institute of Accounting (HZR) to obtain an activity code and the obligation to submit statistical reports.
Tax accounting and reporting
Income Tax (Porez na dobit):
- Rate: 18% (a preferential rate of 10% may apply to small businesses up to a certain level of income).
- Advance payments: Companies pay quarterly advance payments based on the previous year’s profit or current results.
- Declaration: The annual declaration is filed by February 28 of the following year. Calculation is carried out according to special tax rules.
Value Added Tax – VAT (Porez na dodanu vrijednost – PDV):
- Rates: Standard rate – 25%. There are preferential rates of 13% (food, beverages) and 5% (books, medical supplies).
- Registration: Mandatory if annual turnover exceeds EUR 40,000 (in national currency). Voluntary registration is possible.
- Declaration and payment: Submitted monthly by the 20th of the month following the reporting month. Quarterly reporting is possible for small taxpayers.
- Electronic Invoice (e-Račun): A critical system through which all B2B invoices are transmitted to the tax office in real time. Failure to send or incorrectly sent e-Račun results in fines.
Annual financial statements and audit:
- Submission of reports to the Commercial Court and the Tax Inspectorate within 12 months of the end of the financial year.
- For entities subject to audit, an audit opinion must be submitted in addition.
Electronic systems and reporting
Croatia has a developed electronic infrastructure for interaction with the state:
- e-Građani / e-Građanke: Portal for obtaining official documents and access to public services.
- e-Porezna: Tax information system for filing all tax returns, receiving notifications and correspondence.
- FINA: Financial agency providing electronic invoicing (e-Račun) and other financial services.
- Central Invoice Register (CRR): Database where all e-invoices are received.
Nuances for different types of companies
- Small enterprises (Mala prijevod). Have simplified reporting procedures: can prepare abbreviated financial statements, use a preferential income tax rate (10% under certain conditions), submit a quarterly VAT return.
- Foreign companies (Strana društva).
- Branch (Podružnica): Not a separate legal entity, but is obliged to maintain separate accounting and submit financial statements in Croatia, as well as pay taxes on income received through the branch.
- Subsidiary company (Društvo s ograničenom odgovornošću – d.o.o.): Legal entity, resident in Croatia. Subject to all requirements of full accounting and tax accounting. It is critically important to correctly document transfer prices (Transferne cijene) in interaction with a foreign parent company.
- Permanent establishment (Stalna poslovna jedinica): If a foreign company operates in Croatia through a dependent agent or a construction site, this may create a permanent establishment with tax obligations.
- Freelancers and sole proprietors (Obrtnici, Samostalni djelatnici). Can choose simplified taxation systems (e.g. “paušalni obrt” – a single tax based on estimated income), but when the limits are exceeded, they switch to the general system with all its requirements.
What should you pay attention to?
- Fines for late VAT registration, failure to submit reports or errors in e-Račun can be significant (from hundreds to tens of thousands of euros).
- Inability to work with e-Porezna, e-Građani and the e-Račun system makes doing business practically impossible. This requires technical training and language skills.
- Tax and accounting legislation changes frequently. Constant monitoring of innovations is necessary.
- After opening an account, banks conduct constant monitoring of transactions for AML. Unusual transactions or transactions with “risky” jurisdictions may lead to account blocking.
Prikhodko & Partners offers a full range of accounting and tax consulting services for businesses in Croatia. Our specialists, who have in-depth knowledge of local legislation, experience working with electronic systems (e-Porezna, e-Račun) and fluency in Croatian, will provide your company with:
- Legal registration and registration with all necessary state authorities.
- Daily accounting and tax accounting in accordance with Croatian standards.
- Error-free formation and timely submission of all types of reporting (tax, statistical, financial).
- Calculation and payment of wages, taxes and contributions.
- Work with the electronic invoice system (e-Račun).
- Constant advisory support and protection of interests during inspections.
We take care of all the bureaucratic and accounting issues, allowing you to focus on the strategic goals of your business. Contact Prikhodko & Partners for a reliable and professional accounting partner in Croatia.
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