Croatia: amendments to the General Tax Act

Following recent amendments to the General Tax Act, managers and shareholders of Croatian limited liability and joint-stock companies can be held jointly liable for the payment of tax and other debts associated with their companies.

If the tax authorities or regular courts establish that the actions of company directors or other employees, as well as the actions or instructions given by shareholders or silent partners create situations preventing the effective collection of taxes or other receivables, this would be deemed to be an instance of joint liability.

In the event the tax authorities establish that a company that has delayed the payment of taxes has performed illegal activities or if the directors or shareholders manage the company with the intention of misleading creditors or with the intention of misusing the company’s assets effectively treating them as personal assets the joint liability is applied.

Managers and shareholders of limited liability companies can also be held liable for the payment of debts when they enter into bogus contracts with dependant companies, when they fail to file statistical and financial reports on time, or if they fail to apply for bankruptcy on time.

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