Croatia has introduced new legislation regarding non-taxable payments which became applicable as of September 1, 2019 (Personal income tax act bylaw, Official gazette 80/19).

The changes introduced are as follows:

Nontaxable domestic daily allowance (per diem)

• The nontaxable amount of per diem has been increased to HRK 200.00 (full daily allowance- lasting for more the 12 hours), HRK 100.00 (half of daily allowance, for duration 8-12 hours)

• Up to August 2019, the nontaxable amounts were HRK 170.00 and HRK 80.00

Nontaxable meal allowance

• Up to 5,000 HRK per calendar year if paid to the employee

• Up to 12,000 HRK per calendar year if the meal allowance is organized directly with a catering service/restaurant and the employer receives and pays the invoice for this expense

• Until now such expenses were considered as part of payroll and taxed as benefit in kind.

Accommodation costs of employees incurred while working for an employer

• The employer can cover accommodation expenses for the employees but needs to have back up documentation (hotel receipt, copy of rent agreement etc)

• The accommodation expense is nontaxable in the amount of the actual expenses

Compensation for costs of regular childcare

• The employer can cover the expenses of regular childcare for employees based on sufficient documentation (receipt, confirmation of payment)

• This expense is nontaxable

• Such non-taxable coverage of expenses does not include extra programs that are separately charged (such as English lessons, dance etc)

Vacation pays for employees

• Employers can provide vouchers in the amount up to HRK 2,500. Details on this benefit are not available at this point but are expected to be clarified by tax authorities at a later stage.