In December 2016, the Croatian parliament adopted a tax reform with amendments being effective as of 1 January 2017. Below, we have summarized the most important tax law changes.

Corporate income tax.

The corporate income tax rate was reduced from 20% to 18%. Moreover, a reduced corporate income tax rate of 12% was introduced for enterprises with annual revenues below HRK 3 million (approximately EURk 397).

Business entertainment expenses are now deductible at 50% of the cost as opposed to previously 30%.

Personal income tax.

The lowest individual income tax rate of 12% was abolished and two remaining rates were reduced from 25% to 24% and from 40% to 36%.

Real estate transfer tax.

Persons acquiring their first immovable property are no longer exempt from real estate transfer tax. However, the tax rate was reduced from 5% to 4%.