Lecturer: Miljen Matijašević G10, room 6/I, Tue 11:30-12:30 Session 8, 6 May 2014

1. Revision questions and exercises 2. Personal Income Tax

Value Added Tax

 input tax  output tax  deductible  legal entity  taxable activity  non-resident  customs clearance  consideration

1. Who is subject to payment of VAT and who is exempt? 2. What are the taxable transactions? 3. What is the taxable base? 4. What are the rates and what do they apply to? 5. What rules apply to non-residents?

Unit 5

 Paid on worldwide income in case of tax residency in Croatia  Paid by resident and non-resident natural persons

 RESIDENT ◦ Registered residence in Croatia ◦ If he/she intends to stay more than 183 days over a period of two years in Croatia  NON-RESIDENT ◦ Taxed on income earned in Croatia

 Income earned by: ◦ employment (salary) ◦ self-employment  freelance work, crafts, agriculture, forestry ◦ property and property rights  Renting real estate, intellectual property rights ◦ capital ◦ insurance ◦ other income  Management board fees, income earned by sportsmen, referees, translators, tourist workers, etc.

 Income tax not levied on: ◦ Interest on savings in hard currency and HRK ◦ Dividends on shares ◦ Gains from the disposal of financial property ◦ Various kinds of social care ◦ Gifts and inheritance ◦ Etc.

 Total income minus personal allowances  Personal allowances: ◦ Non-taxable income HRK 26,400 per year  monthly allowance HRK 2,200 ◦ Dependents and children ◦ Disabled members of the family ◦ Etc.

 Residents of those areas have special tax breaks ◦ Higher personal allowances ◦ Income tax exemption of earnings from agriculture and forestry ◦ Higher depriciation rates for long-term capital invested in property

 Income tax brackets: Tax base (monthly income total minus deductions) Tax rate HRK 0 – HRK % HRK – HRK % Over HRK %

 Charged in certain municipalities on the total amount of calculated tax  E.g. Zagreb - 18 %

 Employers may give employees benefits not subject to taxation  If these exceed the prescribed limit, the excess is fully taxable (contributions, income tax, surtax)  Contributions – to health and pension insurance

 Subject to income tax  Valued at the market value, including VAT ◦ Use of business buildings, cottages, dwellings and means of transportation provided by the employer, ◦ Low interest on loans granted by the employer (taxable base – the difference between a rate of 4 % and the rate applied) ◦ Gifts and entertainment provided by the employer, and ◦ Shares received from the employer.

freelance work crafts hard curency personal allowance depreciation tax brackets contributions

 Do the exercises on p in your coursebook

Thank you for your attention!