The amount of the personal deduction has been increased from €560.00 to €600.00.

Dependent family members (children) may not (with the prescribed exceptions that are not included in the census) earn income (taxable and non-taxable) in the amount of more than €3,600.00 in order for the taxpayer to be able to use the increase in the personal deduction for them (in 2024, this census amounted to €3,360.00).

The amount of the monthly and annual tax base has been increased:

Also, there have been corrections of tax rates to the tax base:

Local self-government units with current prescribed income tax rates outside the newly defined tax rate ranges should publish a new decision on the amount of income tax rates in the Official Gazette by 28.02.2025 at the latest.

As it is envisaged that the tax rates determined by these decisions will be applied when determining advance tax on income from employment and other income from 01.03.2025, the tax differences will be determined when conducting the annual calculation of income tax for the entire year 2025.

The exemption from the obligation to contribute to the salary for young persons (up to 30 years of age) is abolished.

Employers who started using this measure, e.g. in 2024 (or earlier), have the right to continue using the exemption for a period of 5 years.

Example – if you, as an employer, had a fixed-term employment contract with such an employee in 2024, in 12. You have the right to make an amendment to the Contract and conclude an Indefinite Contract, which then acquires the basis for retaining the right to be exempt from the obligation to contribute to the salary for the next 5 years, which leaves the possibility of financial savings for the employer in terms of the total cost of salary.

According to the Contributions Act, an employer who employs a person who is hired for the first time is exempt from paying salary contributions for one year, and this right remains in force.

In order to exercise the right to this relief, the employee must submit proof to the employer before concluding the employment contract that he or she was not registered in the mandatory pension insurance system until the moment of employment.

The tax changes apply to income earned from 01.01.2025, i.e. when calculating the salary for December 2024, which is paid in January 2025.

Note: The new Regulation for the minimum gross wage is in force from 01.01.2025 to 31.12.2025, which means that workers are entitled to an increased gross salary for the salary in January paid in February 2025.

The same provisions apply to the employment of foreign workers (subject to the application of special rules laid down for the employment of foreign nationals).

Tax Exemption for Emigrated Croatian Citizens – Returnees to the Republic of Croatia

According to the Income Tax Act of the Republic of Croatia, the right to a reduction in annual income tax applies to natural persons who meet certain conditions. Specifically:

1. Condition of residence and residence:

– Natural persons must have permanent and permanent residence in the Republic of Croatia.

-Persons must be citizens of the Republic of Croatia.

2. Stay abroad:

A person must have a registered stay abroad of at least two continuous years, according to the Ministry of the Interior (MUP).

3. Certificate of return to Croatia:

Persons must not be posted to work abroad by a domestic employer.

4. Scope and period of liberation

– The reduction of the annual income tax amounts to 100% of the proportional part of the tax liability, which refers exclusively to income from self-employment (salary).

– This right to reduction is exercised for a period of five years, with this period starting from January 1 of the year in which the above conditions are met.

The reduction of the annual income tax under the above conditions is carried out by the Tax Administration in a special procedure for determining the annual income tax. The key steps to exercise this right are:

Procedure for recognizing exemptions:

1. Collection of data from the competent authorities:
   The Tax Administration uses data from the records of registration of residence and residence of citizens of the Ministry of the Interior to determine the fulfilment of the conditions for tax reduction.
2. Possibility of proof via the form: If automatic verification is not sufficient, taxpayers can prove the right to exemption by submitting the ZPP-DOH Form.
   • deadlines for submitting the form ZPP-DOH:
     • By the end of February of the current year for the previous year.
     • No later than July 31 of the current year, which is the deadline for filing an objection to the annual tax return.

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