Latest changes to Croatian law (Effective 2024)
Each year, Croatia tweaks and adjusts its laws. In this post, we will briefly review the government’s priorities and major changes in Croatian laws implemented for 2024.
Jump to a change:
- Tax reform
- Law on inclusive allowance for people with disabilities
- Law on compulsory insurance in traffic
- Cryptocurrency regulation
- Pension law
- Minimum wages and retirement age for women
- Trade law
- Law on education in primary and secondary schools
- Debt regulations
- Rights of Croatian veterans
The facts are these…
Latest changes in Croatian laws effective from 2024
Significant adjustments came in 2024 with the new tax reform proposed by the parliament. The key modifications include eliminating the income tax surcharge, raising the higher income tax rate threshold, and increasing the personal deduction.
Not only is the surtax gone, but income tax rates are also tweaked, and the property taxation rate is upped from 10% to 12%, impacting both rental and vacation home taxes.
Additionally, personal tax deductions are raised to 560 euros, and the threshold for higher income tax is lifted. For those earning up to 700 euros gross salary, the base for pension insurance is reduced by 300 euros, offering relief on pension contributions.
A preliminary estimate suggests that for an average gross salary of 1.860 euros in Zagreb, monthly net salaries may increase by 7 to 87 euros, depending on the income tax rate. The city might lean towards a 23,6% rate to compensate for the surtax loss, likely resulting in a modest 7 euros monthly increase. It is up to each city to set the income tax rate.
Rental taxation is increasing
Significant changes are also seen in rental and property taxes. The rental tax increases from 10% to 12%, affecting the entire country, and vacation home taxes see their first hike since the ’90s. Municipalities can set a tax range from 60 cents to 5 euros per square meter for holiday homes.
Starting January 1, 2024, Zakon o inkluzivnom dodatku (Law on inclusive allowance) takes effect, streamlining various rights from existing laws for people with disabilities. This includes personal disability allowance, assistance and care allowance, and an increased allowance for children with significant health issues or severe disabilities. The government plans to allocate over half a billion euros annually, benefiting more than 150.000 individuals with disabilities, an 89% increase.
To enhance the lives of people with disabilities, the government will co-finance education and training for workplace needs, adapt workplaces for accessibility, and support individuals in their jobs. Employers will receive a 75% co-financing of the mandatory health insurance contribution.
The aim is to provide equal opportunities for one of the most vulnerable societal groups. Additionally, the guaranteed minimum compensation and calculation percentages have been raised, along with increased compensation for parents of children with severe developmental disabilities. The number of teaching assistants has also been augmented, with higher compensation for their roles.
Hrvatska agencija za nadzor financijskih usluga (The Croatian Financial Services Supervisory Agency) – HANFA recently convened to address crucial legislative changes and upcoming laws for 2024. Notably, amendments to Zakon o obaveznim osiguranjima u prometu (Law on compulsory insurance in traffic) were discussed to safeguard consumer interests in case of an insurance company bankruptcy.
The changes ensure mandatory payments from Garancijski fond Hrvatskog ureda za osiguranje (Guarantee fund of the Croatian insurance office), covering claims from contracts in both Croatia and other EU/EEA member states.
Looking ahead to 2024, HANFA anticipates several legal changes to enhance regulation in the digital market. Adopting a new Zakon o provedbi europske uredbe o tržištima kriptoimovine (Law on the implementation of the European regulation on crypto-asset markets) is scheduled, marking Croatia’s first regulation of crypto assets.
Amendments to multiple laws, including Zakon o tržištu kapitala (Capital market law), Zakon o osiguranju (Insurance law), Zakon o alternativnim investicijskim fondovima (Alternative investment funds law), and Zakon o otvorenim investicijskim fondovima (Open investment funds law), are also on the agenda.
There will be new, more relaxed conditions for qualifying for Nacionalna naknada za starije osobe (National elderly allowance), commonly called nacionalna mirovina (national pension). These changes are expected to lead to a substantial increase in the number of eligible recipients.
The national elderly allowance is designed for individuals aged 65 and above who do not receive a pension or any other form of income.
As of 2024, the income threshold will be increased from 120 to 300 euros per household member, and the residency requirement will be reduced from 20 years to 10 years. Additionally, the allowance amount is being raised from 120 to 150 euros.
Expanding the income threshold means a broader pool of potential recipients for compensation. For instance, in the case of older married couples, spouses without income whose partners receive a pension of up to 600 euros will now qualify for the national elderly allowance.
The second pension pillar
Also, the parliament has recently made significant updates to four laws related to the second pension pillar, all geared towards fortifying the second and third pension pillars. They want to boost the performance of pension funds, ultimately ensuring better pensions for our future retirees.
Amendments were made to laws covering mandatory and voluntary pension funds, pension insurance companies, and pension supplements under Zakon o mirovinskom osiguranju (Pension insurance law). The one-time payment from the second pillar can now increase to an impressive 20%. They’re standardizing the supplement to the basic pension at a solid 27%.
Investing 5% of the net assets from mandatory pension funds (categories A and B) in an alternative investment fund is now mandatory. What’s special about it? A guaranteed return, plus a primary focus on boosting the Croatian economy.
[Read: How to retire in Croatia]
In 2024, the government approved a decree establishing the minimum wage at 840 euros gross, a significant increase from the current 700 euros gross. This marks a 20% raise, resulting in a net minimum of approximately 677 euros.
[Read: Minimum wage salaries in Croatia]
Changes are also coming to the retirement age for women in Croatia. Currently set at 63 years and three months, it will increase by three months each year until 2030, reaching parity with the retirement age for men.
New rules allow every worker in Croatia to receive tax-free allowances of up to 250 euros monthly, provided the employer opts for this benefit.
Additional adjustments include a rise in the fee for using a private car for business purposes from 40 to 50 cents. Daily wages for work within the country also increase from 26,55 euros to 30 euros.
Students and pupils will benefit from substantial tax-free increases, with scholarships rising to 840 euros and sports allowances up to 560 euros becoming tax-free. These changes aim to enhance financial support for various groups in Croatia.
With the amendments to Zakon o trgovini (Trade law), which came into force in 2023, work on Sundays is allowed only 16 Sundays during the year. Since the law entered into force in the middle of the year, traders and employers could distribute those 16 Sundays over six months. From 2024, those 16 working Sundays will be spread over all 12 months.
The most significant change in Croatia in 2023 was the introduction of the euro as the official currency instead of the previous kuna. Therefore, there was an obligation to display prices twice in 2023 – in euros and kuna, for easier adjustment to the new currency.
The period of dual display of prices ended on December 31, and from January 1, prices are displayed only in euros. Traders who wish to do so can keep the dual display of prices, although it is not expected that there will be many of them.
Parliament made amendments to Zakon o odgoju i obrazovanju u osnovnoj i srednjoj školi (Law on education in primary and secondary schools), with a focus on transitioning all primary schools to a single shift by 2027. Croatia is adjusting its legislation to access two billion euros from Nacionalni plan oporavka i otpornosti (National recovery and resilience plan) – NPOO, aiming to prepare school infrastructure for this transition, aligning with the EU standard. Currently, around 60% of students attend elementary schools operating in two or three shifts.
The changes also include allowing teachers to work beyond the age of 65. If no expert applicant comes forward for a position, the school director can recall an individual from sabbatical leave for one year and extend their contract for an additional year, not exceeding the age of 67. Additionally, a new feature is the electronic enrollment option for elementary schools, facilitating parents in justifying their children’s absences through the e-Dnevnik (e-Diary).
Parliament revamped laws on debt collection, introducing key changes for better transparency and fairness. These laws cover consumer lending, including housing, and outline debt servicing and transaction rules.
Now, debt collectors are limited to making calls on weekdays from 8:00 to 20:00, with strict guidelines against workplace disruptions or unsolicited visits. Agencies must offer repayment solutions before resorting to enforcement or selling claims, a practice applicable to all creditors.
In case of debtor non-compliance, agencies must issue a notice before proceeding with the purchase or sale of receivables. Additionally, debtors will be informed about transactions involving non-performing loan agreements, ensuring clarity about their creditors.
NOTE: Debt collection companies now require a license, marking a significant step toward a more transparent and equitable debt collection landscape.
Recent parliamentary amendments to Zakon o hrvatskim braniteljima iz Domovinskog rata (Law on Croatian veterans from the Homeland war) bring about noteworthy changes. These modifications encompass an increase in basic veterans’ rights and benefits, extended employment opportunities, and the groundwork for establishing veterans’ centers.
The revised law sets a significantly higher base for determining personal disability allowances and veterans’ rights, particularly impacting those with a 20% disability. Annually decided by the government, this base cannot be lower than the preceding period, providing a safeguard against reduction.
A critical adjustment is the extension of veterans’ working capabilities while receiving a pension. Those with the lowest pension can now work up to half-time while still receiving the full amount. Disabled pensioners can also work up to half-time while receiving a full disability pension.
Family pension recipients, typically spouses, are now allowed part-time employment while receiving the full family pension. This contrasts with the previous policy, where working while receiving a family pension was not an option, and employment led to pension suspension.
View the latest changes to Croatian law effective 2023 here.
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Please note: Information provided by Expat in Croatia is only for the purposes of guidance. It does not constitute legal or financial advice in any form. Croatian laws and bureaucratic rules often change, and each personal case is individual, so different rules may apply. For legal advice, contact us to consult with a licensed Croatian lawyer. For financial advice, contact us to consult with a licensed Croatian tax advisor or accountant.