Tax Alert, December 2012
Draft Bill on the Amendments to the Personal Income Tax Act; Draft Bill on Amendments to the Contributions Act
The Croatian Government has announced the following draft bills on 6 December 2012:
Draft Bill on the Amendments to the Personal Income Tax Act:
The following amendments to the Personal Income Tax Act are proposed:
- Introduction of a unique form for collecting data on the paid remuneration, accrued taxes and contributions. This single form would replace the following forms: ID, IDD, IDD-1, IP, ID-1 and R-Sm.
- Requirement to declare receipts that are not taxable or considered taxable income is introduced.
- Receipts that are paid out from the funds and programs of the European Union, via an accredited Croatian institution, for the purpose of education and training will be tax-free receipts up to a prescribed amount (the amount will be determined by the published Regulations).
- Income from sale of three or more properties in a five year period will no longer be considered self-employment income. Instead it will be treated as income from property and property rights. Such income will not be taxable if the property disposed of is land up to 250 m2 per each property disposed of and if the total area of all land being disposed of does not exceed 1,000 m2.
- If real estate is acquired by donation and subsequently disposed of within five years from the date of their acquisition by the donor, the recipient will realise taxable income from property and property rights.
- Introduction of audit of all property acquired by individuals from 1 January 2005 in the process of testing the source of property.
Draft Bill on Amendments to the Contributions Act:
The draft bill announces the following changes:
- Deletes the provision of the possibility of calculating the employer's and employee contributions due for all employees jointly and instead calculations must be made separately for each employee.
- Contributions for expatriate workers now have to be calculated separately for their salary (increased by 20% as already prescribed) and for other sources of income.
- Reporting of contributions' liabilities is now mandatory even when there is no obligation to pay salary or compensation subject to contributions liabilities because the insured is entitled to sick leave benefits or salary is paid by the employee's insurer or out of the state budget.