Croatia: New economic measures due to coronavirus

published on 6 April 2020 | reading time approx. 1 minute

A new package of measures to boost the economy was discussed yesterday by the Croatian Government and it should become effective from 6th of April 2020.

The April package of measure,  which is aimed to preserve jobs due to the special conditions caused by the covid-19, announced that the government would increase the amount of the net minimum wage per employee from HRK 3,250 to 4,000 in April and May as part of the existing minimum wage payment scheme used by 65,000 companies for 400,000 workers. Also, the state will cover contributions, which amounts to around HRK 1,460 for a net wage of HRK 4,000. In total, the state will pay HRK 5,460 per employee. In April, May, and March, the state will fund the measure with HRK 8.5 billion. This incentive is available only to employers who will maintain employment contracts.

 
The second measure is aimed at companies that either cannot do business, or it is very difficult for them to do business. They will be partially or completely exempt from their tax liabilities for April, May, and July, namely from paying profit tax, income tax and contributions.
 
The companies that have seen their revenues fall by 20 percent to 50 percent will be entitled to a deferral and payment in instalments for 24 months without interest. The companies whose revenue has decreased by less than 20 percent are stable enough to weather the crisis, the prime minister said. The companies that generate a turnover of less than HRK 7.5 million, which is 93 percent of all companies in Croatia, and whose revenue has decreased by more than 50 percent, will be completely exempt from their tax liabilities, profit tax, income tax and contributions.
   
The companies that generate more than HRK 7.5 million, the 7 percent of big companies, will be exempt from their tax liabilities in proportion to the decrease in their revenue in April, May, and July. If their revenue has decreased by 20 percent to 50 percent, they are entitled to a deferral and interest-free payment in instalments, those whose revenue has decreased by 50 percent to 100 percent will pay proportionately, and if their revenue has decreased by 75 percent, they will only pay 25 percent of their tax liabilities.

 
The third measure applies to VAT payments: it would be possible to defer such payments until the billing of invoices issued, as is now the case with small businesses. The deadline for the submission of financial statements for 2019 is extended until 30 June this year and businesses are exempt from paying the Financial Agency a fee for the publication of financial statements.
  
In the agriculture sector, public procurement procedures will benefit domestic producers, the plan being that at least 60 percent of agricultural and food products are made in Croatia. Emergency aid will also be extended to small dairies through purchases of all of their surpluses.
  
The government adopted the first set of measures to help the economy hit by the fallout of the coronavirus epidemic at its session on 17 March. The package, worth HRK 30 billion (€4bn), included 63 measures aimed at those that were already feeling or were yet to feel the consequences of the crisis.  After the amendments enter into force, the Minister shall prescribe the manner of implementation through ordinance.