Croatia: Tax changes in 2011

Some changes to the income tax law have come into force respectively on 15 October and 8 December 2011.

Loans with a favorable interest rate: The interest rate for the calculation of income on employer-provided loans is reduced from 4% to 3%. If an employer-provided loan has an interest rate below 3%, the difference between 3% and the interest rate on the loan is treated as income to the employee.

Dividends and profit shares on the basis of share capital: It is no longer necessary to make payments of dividends and profit shares on the basis of share capital to the shareholder’s giro account in a bank. However, payers of dividends and profit shares are now required to maintain records of calculated and paid dividends and profit shares for every individual shareholder, and to submit a prescribed report of calculated and paid dividends and profit shares (DU form) to the tax authorities.

The DU Form must be prepared and submitted to the tax authorities by the 15th day of the month following the month in which dividends and profit shares were paid. If advance payments of dividends and profit shares on the basis of share capital are made during the tax period, the DU form must be filed following the advance payment, but the dividend is considered to be paid when the advance payments are settled against the realized profit.

There is an exception provided if the advance payments of dividends are made in the current tax period for the previous tax period; in such instances, the dividend is considered to be paid in the moment of making the advance payment.

Value added tax: The changes to VAT regulations approved with effect from 1 August 2011 introduce electronic invoicing. Thus, as of this day it is not necessary to issue paper invoices for goods supplied and services provided. Invoices can be issued electronically, if certain conditions are met.

 

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