Organization : Government of Croatia
Facility : Corporate Tax
Country : Croatia
Website : https://gov.hr/en/associations-in-the-tax-and-customs-systems/596
What is Corporate Tax?
Corporate tax is not charged in relation to generated revenue, but rather in relation to profit realised in the course of business operations. Under the Corporate Tax Act, non-profit organisations are not liable to pay corporate tax. The category of those liable to pay corporate tax includes companies and other legal and natural persons engaged in economic activity, independently and permanently, for the purpose of generating revenue, profit or other economically assessable benefits.
Related / Similar Facility : Croatia Assets of Associations
Corporate Tax Base
Non-profit organisations that have been subjects of a decision imposing obligation to pay corporate income tax for the performance of a certain economic activity can determine the corporate tax base according to accounting regulations on the basis of their business records, or, under certain conditions, in a lump sum.
The starting value for determining the corporate tax base applicable to corporate taxpayers who determine the corporate tax base according to accounting regulations, is the difference between the realised revenue and expenditure arising from economic activity in the tax period (usually a calendar year), adjusted for certain items that increase and for certain items that decrease the corporate tax base.
The difference between revenue and expenditure (the so-called “accounting profit”), calculated when determining the corporate tax base, is increased pursuant to Article 7 of the Corporate Tax Act.
According to the said Act, the corporate tax base is increased, among other, for the following items:
** 50 percent of entertainment expenses, which include expenses related to hospitality, gifts, vacation costs, recreation, sports, leisure, car, boat and aircraft rental, vacation homes, and other similar expenses incurred for the purpose of accommodating business partners and offering them corporate gifts
** 30 percent of expenses incurred in connection with own or rented motor vehicles and other means of personal transport of managers, executives and other employees, with the exception of expenses related to insurance of personal vehicles and other means of transport, expenditures for the annual road motor vehicles tax, and expenditures based on the interests for financing the purchase of cars and other means of personal transport which are considered fully tax deductible expenses; as of 1 January 2018, the percentage increase of the corporate tax base for transportation expenses was increased to 50 percent instead of the current 30 percent
** amount of depreciation in excess of the highest amounts that can be allowed as tax deductible
** expenses for fines and offences
** all other expenses not directly related to the realisation of profit, in case when there is no liability to pay corporate tax for those expenses.
Corporate Tax Return/ Report
Liability to pay corporate tax is determined after the end of the calendar year. Taxpayers that determine the corporate tax base according to accounting regulations, have to determine the corporate tax liability no later than 30 April of the current year for the previous tax period.
As regards business entities operating for less than one year, the corporate tax liability is determined no later than four months after the end of the period for which the generated profit is determined. For example, if a taxpayer started business operations in the middle of the year, in July, they are required to file a corporate tax return for the corresponding business period in the previous year (for the period July – December).
Also, if a business entity ceases to operate during the year (e.g. liquidation proceedings are carried out in May), it is required to file a corporate tax return within four months for the period from the beginning of the calendar year to the end of business operations (in this case for the period January – May, by 30 September at the latest).