Yesterday, the Croatian Parliament passed amendments that are expected to result in increased wages for citizens and will come into effect on 1 January 2024.

According to the media, the Croatian Parliament passed amendments yesterday that include the abolition of the income tax surcharge, an increase in the threshold for applying a higher income tax rate, and an increase in personal deduction.

The basic deduction is raised from EUR 530 to EUR 560 and the base for the personal deduction for dependent family members is increased. Additionally, the threshold for applying a higher tax rate is raised from EUR 47,780 to 50,400 per year. Further, the base for pension insurance in the first pillar is reduced, which is expected to result in higher wages for Croats.

Within these tax changes, the taxation of income from capital, property, and property rights through an increase in tax rates is introduced with the overall effect of which is slightly less than EUR 6m.

Further, tips can now be left through cards. The non-taxable amount for tips will be set at EUR 3,360, while the amount of tips above the non-taxable part will be subject to a 20% tax rate.

In the new tax package, amendments were made to laws concerning income tax, local taxes, financing of local and regional self-government units, contributions, fiscalization in cash transactions, profit tax, VAT law, as well as laws on tax consultancy and administrative cooperation in the field of taxes.