Croatia corporate tax - guide for international expansion

Are you considering expanding your business operations to Croatia? Understanding the country's corporate tax landscape is essential for making informed decisions about your international expansion strategy.

Croatia, as a member of the European Union since 2013 and the Eurozone since 2023, offers a stable business environment with clear tax regulations. Whether you're planning to establish a subsidiary, acquire a Croatian company, or simply understand your tax obligations for existing operations, getting to grips with Croatia's corporate tax system is crucial for successful business operations. Wise Business can help streamline your international payments and currency management as you navigate this expansion, making it easier to handle tax payments and operational expenses in euros.

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This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Croatia Corporate tax rate in 2025

The standard corporate income tax rate in Croatia is 18% for companies with annual revenues exceeding €1 million. This rate applies to most large and medium-sized enterprises.¹ For smaller companies with annual revenues up to €1 million, Croatia offers a reduced corporate tax rate of 10%. This two-tier system is designed to support smaller businesses and encourage entrepreneurship within the Croatian economy.¹

Croatia offers a range of incentives to promote investment in specific activities and regions. Companies that invest in fixed assets and create new jobs can qualify for corporate income tax reductions for up to 10 years, with the reduction rate increasing based on the investment amount and the number of new jobs created. For instance, a 50% tax rate decrease is available for investments of at least €50,000, while a 100% reduction is possible for larger investments.²

The corporate tax is levied on worldwide income for Croatian tax residents, while non-resident companies are taxed only on Croatian-source income. A company is considered a Croatian tax resident if it is incorporated in Croatia or has its place of effective management in Croatia.³

Read more about Corporate Tax Planning best practices

How to pay corporate tax in Croatia

The Croatian Tax Administration operates this comprehensive online portal that allows companies to file returns, make payments, and manage their tax obligations electronically. All medium-sized and large taxpayers, as well as VAT-registered companies, are legally required to use electronic filing and payment methods.⁴

Corporate tax returns must be filed within four months following the end of the company's tax year. For companies following the calendar year, this means the deadline is 30 April. Companies must pay any outstanding tax liability by the same deadline to avoid penalties and interest charges.⁵

Companies must also make advance tax payments during the year based on the previous year's tax liability. These advance payments are due monthly by the end of each month for the previous month, helping to spread the tax burden throughout the year.⁵

If a company fails to pay its corporate tax on time, interest is charged at an annual rate of 5.15% for the period from July 1, to December 31, 2025.⁶ Late filing penalties are substantial, with fines ranging from EUR 260 to EUR 26,540 for not submitting the tax return on time, and increasing to EUR 390 to EUR 39,810 for repeated failure to file.⁷

Let's calculate the tax liability for a company with €1.5 million annual turnover. Assuming a profit margin of 10%, the taxable profit would be €150,000. At Croatia's standard corporate tax rate of 18%, the tax owed would be:

€150,000 × 18% = €27,000

When expanding your business to Croatia, the right financial tools will make the process smoother. Using a platform like Wise Business makes it easy to expand internationally with local EUR account details. A multi-currency account allows businesses to pay for incorporation costs, registration fees, and government taxes in local currency without paying high exchange rate fees.

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Tax Compliance in Croatia

Some crucial steps to keep your company compliant with Croatian tax rules:⁵

• Register for taxes early: Once incorporated, register promptly to avoid penalties. Companies must cover CIT, VAT, WHT, and payroll taxes. A corporate tax expert can guide you through potential corporate tax rate change updates.
• Know when to file corporate tax returns: All Corporate Income Tax (CIT) payers must file an annual return with the Tax Administration within four months of the tax period’s end. No monthly CIT advances are required in the first year, but from the second year onward, monthly advances are due by month-end for the previous month.
• Prepare for audits: The Croatian Tax Administration may launch audits within three years of filing, while the statute of limitations extends to six years. Proper record-keeping ensures smoother audits and reduces risks.
• Work with a corporate tax preparer: Engaging a preparer helps with tax filing, accounting, and planning, and ensures ongoing compliance with local tax regulations.

International Expansion to Croatia

Clear tax rules and EU membership give Croatian companies a strong base for international trade. As a fully integrated member of the EU, the Schengen Area, and the eurozone, the country provides direct access to a market of over 440 million consumers. Its stable financial position, reflected in consistent A-credit ratings, further strengthens investor confidence.⁸

The Croatian economy has been growing faster than the EU average, recording 3.8% growth in 2024 compared to the EU’s 1%. Tourism plays a major role, contributing about 25% of GDP and generating $16.2 billion in revenue in 2024. Beyond tourism, Croatia is set to benefit from nearly $30 billion in EU funding through 2030, which is expected to stimulate job creation and long-term growth.⁸

Foreign direct investment has reached €53.7 billion since 1993,⁹ supported by attractive tax incentives such as up to 100% exemption or reduction of corporate income tax for as long as ten years.¹⁰ Businesses can also benefit from the relatively lower cost base, as GDP per capita remains below the EU average, leaving room for productivity and competitive growth.

Infrastructure is another strength. Zagreb Airport connects directly to 70 destinations and handled 4.3 million passengers in 2024.¹¹ The Port of Rijeka reported a 33% rise in container traffic, while Croatia’s road and rail networks ensure strong regional connectivity.¹²

To establish your business in Croatia, you should:¹³

1. Conduct market research to understand the Croatian market and target audience.
2. Draft a solid business plan that aligns with local opportunities.
3. Select the most suitable business type for your goals.
4. Register the company with the Commercial Court.
5. Obtain a Tax Identification Number (TIN) from the Tax Administration.
6. Open a corporate bank account for financial operations.
7. Ensure ongoing corporate tax compliance to meet local regulations.

You must do your due diligence before entering Croatia. Review a list of Croatian banks and get expert corporate tax advice for informed financial planning.

Discover the top 5 best Corporate Tax softwares

Incorporation of Business in Croatia

To set up a company in Croatia, entrepreneurs should follow these steps:¹⁴

• Check name availability: Confirm your chosen business name through the Court Registry.

• Notarize incorporation documents:

• Declaration of Incorporation – for a single founder.

• Articles of Association - for multiple founders, outlining the company’s name, office, capital, and governance.

• Pay share capital:

• Minimum EUR 2,500 deposited into a temporary bank account or with FINA.

• At least one-quarter paid before registration.

• Full amount paid within one year of entry in the court register.

• Register with the Commercial Court: Submit notarised documents and proof of capital payment. The court issues a registration decision and an OIB (personal identification number).

• Open a corporate bank account: Provide the registration decision and other required documents. A signature card records details of authorised representatives.

These steps build the foundation for business operations in Croatia. After setup, companies must handle corporate tax return filing and corporate tax submission or apply for a corporate tax extension when needed.

Business Entities in Croatia

Under the Croatian Companies Act, businesses can choose from several entity types:¹⁵

• Sole Proprietorship (Obrt): Owned and managed by one individual with full liability for business debts.
• Limited Liability Company (d.o.o.): The most common entity, requiring at least one shareholder and a minimum share capital of HRK 20,000 (approx. EUR 2,660). Shareholders’ liabilities are limited to their contributions.
• Joint-Stock Company (d.d.): Designed for larger businesses, requiring at least one shareholder and HRK 200,000 (approx. EUR 26,600) in share capital. Shares can be publicly traded.
• Limited Partnership (k.d.): Combines general partners with full liability and limited partners liable only for their contributions.
• Partnership (Javno Društvo): Two or more individuals share profits, losses, and liabilities equally.

Each structure has its own benefits, but foreign investors often choose the d.o.o. due to its flexibility and limited liability.

International corporate tax best practices

Managing corporate tax obligations across multiple jurisdictions requires a strategic approach to ensure compliance while optimising tax efficiency.

Maintain comprehensive documentation and records in local languages where required. Croatian tax authorities expect detailed financial records to be maintained in Croatian or accompanied by certified translations. This includes contracts, invoices, and supporting documentation for all business transactions that may be subject to tax audits.

Understand and leverage double taxation treaties effectively. Croatia has signed double taxation agreements with over 60 countries, which can help prevent the same income from being taxed twice. These treaties often provide reduced withholding tax rates on dividends, royalties, and interest payments between treaty countries, potentially reducing overall tax burdens for multinational operations.

Stay current with local tax law changes and compliance requirements. Croatia's tax legislation can change, particularly regarding incentives for specific industries or regions. Regular consultation with local tax advisors ensures your business remains compliant and takes advantage of available benefits while avoiding costly penalties.

Implement robust transfer pricing documentation, especially for multinational enterprises. Croatia follows OECD transfer pricing guidelines, and companies must be able to demonstrate that intercompany transactions are conducted at arm's length prices to avoid adjustments and penalties.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to Croatia efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.

• Get paid like a local: Use local account details for 8+ major currencies to easily receive payments from customers or investors.

• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.

• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.

• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from paying your first registration fee to receiving international payments and managing your global treasury.

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FAQs - Corporate tax in Croatia

Who is liable for corporate tax in Croatia?

All companies incorporated in Croatia are liable for corporate tax on their worldwide income. This includes domestic enterprises engaged in independent activities on a long-term basis for profit, as well as business units (permanent establishments) of foreign enterprises operating in Croatia. Foreign companies with a permanent establishment in Croatia are taxed only on Croatian-source income, while individuals performing business activities may choose to pay corporate tax instead of personal income tax.

Are there any tax incentives for businesses in Croatia?

Yes, Croatia offers several attractive tax incentives. Companies investing in underdeveloped areas can receive tax reductions of 50%, 75%, or even 100% for up to 10 years, depending on investment amounts and job creation. Research and development activities qualify for enhanced tax deductions and companies located in free zones or special support areas may benefit from reduced tax rates, provided certain conditions are met.

What is the tax treatment of dividends in Croatia?

Dividends paid by Croatian companies to non-resident companies are subject to a 10% withholding tax. However, dividends paid to resident companies are generally not subject to withholding tax. For EU resident companies, dividends may be exempt under the EU Parent-Subsidiary Directive if certain conditions are met, including maintaining a minimum shareholding and meeting specific holding period requirements.

What is the process for registering for corporate tax in Croatia?

Companies must register with the Croatian Tax Administration (Porezna uprava) as part of their business registration process. This typically occurs when incorporating the company or establishing a permanent establishment in Croatia. Registration involves submitting required documentation through the e-Porezna electronic system or at local tax office branches, including incorporation documents, business registration details, and information about planned business activities.

What are the common pitfalls to avoid regarding corporate tax in Croatia?

Common mistakes include failing to use electronic filing when required, missing monthly advance payment deadlines, inadequate transfer pricing documentation for related-party transactions, and not maintaining proper financial records in Croatian or with certified translations. Companies should also ensure they understand the distinction between the 10% rate for smaller companies and the 18% standard rate, and properly calculate their revenue thresholds to determine applicable rates.

Sources used in this article:

1. Invest Croatia: Tax System
2. PwC Tax Summaries: Croatia Tax Credits and Incentives
3. PwC Tax Summaries: Croatia Corporate Residence
4. e-Porezna: Tax Administration Portal
5. PwC Tax Summaries: Croatia Tax Administration
6. Crowe: Penalty Interest Update
7. Moore Global: Croatia International Corporate Tax
8. U.S. Trade.gov: Croatia Investment Climate Statement
9. Invest Croatia: About Croatia
10. Invest Croatia: Official Website
11. Zagreb Airport: Facts & Figures
12. Adriaports: Container Traffic at the Port of Rijeka
13. Multiplier: Croatia Company Registration
14. Gov.hr: Establishment of a Company
15. Lawgratis: Business Law in Croatia

Sources last checked 24/09/2025