Ministry confirmed: Flat-rate taxpayers up to 40,000 euros will not pay more
Package of tax law amendments sent to public consultation, effective from 2027. No changes for over 83% of craftsmen, large companies with excess profits targeted.
Package of tax law amendments sent to public consultation, effective from 2027. No changes for over 83% of craftsmen, large companies with excess profits targeted.
The Ministry of Finance has sent an anti-inflation package of tax law amendments to public consultation, which will, among other things, change the rules for lump-sum craftsmen, large entrepreneurs and pensioners. Deputy Prime Minister and Finance Minister Tomislav Ćorić confirmed that lump-sum craftsmen with annual income up to €40,000 will keep the same amounts of contributions to the state from next year.
According to the Ministry of Finance's estimate, 83.4% of all lump-sum craftsmen (or as many as 83% of those with income up to €40,000, as reported by Trend Karlovac) will not feel an increase in tax burden. This covers the first four tax brackets, not just the first three with income up to €19,900 as initially announced. "Through constructive dialogue with solid arguments, we succeeded in ensuring that anti-inflation measures remain untouched for 77,000 people. On this path, we will not hinder the development of Croatian crafts. If I'm not mistaken, €27 million remains with Croatian craftsmen for improving their businesses and for new employment," said Dalibor Kratohvil, president of the Croatian Chamber of Trades and Crafts (HOK), for Trend Karlovac.
For craftsmen in higher tax brackets, contributions are nonetheless increasing. In the sixth tax bracket, the annual obligation rises by €1,336 (30%), to a total of €5,728, while the highest bracket, those with incomes from €50,000 to €60,000, will see a jump of as much as €3,033 (66%), to €7,605 annually, reports Dubrovniknet. Ćorić meanwhile emphasizes that the taxation of lump-sum taxpayers in Croatia remains among the most favorable in the European Union and notes that since the announcement of the new measures, an additional 1,750 new craftsmen have entered the system.
One of the key novelties is the introduction of an additional tax on excessive profit margins. It covers around 1,800 large and medium-sized entrepreneurs who generate more than half of their profit in Croatia. Export-oriented companies are exempt. In 2026, company profit will be compared with the three-year average (2023-2025), with an allowed deviation of 15%. "The logic of introducing this tax, or these amendments to the profit tax, is primarily aimed at taxing those who in 2026 unjustifiably raised their profit margins compared to the three-year average of 2023, 2024 and 2025, with this rate of 50%," Ćorić explained for Trend Karlovac. He added that the tax has a preventive character because entrepreneurs can reduce margins by the end of the year and avoid additional taxation.
The minister claims that the measures will not significantly fill the state budget. "Here we are talking about increasing fairness in taxation. That should be our primary task. Even for the finance minister," Ćorić stated, as reported by Trend Karlovac.
The package also brings permanent relief for 541,000 pensioners: from January 1, 2027, income tax on pensions will be abolished. The state will allocate €180 million annually for this, and intends to compensate local governments for that amount. The first inflation estimates for July, in which Ćorić expects further slowdown, will be published by the Croatian Bureau of Statistics (DZS) on Friday, July 31.
For small renters, the lower limit of the annual lump-sum tax per bed is raised: in the first category (most developed destinations) from €100 to €150, and in the second category from €70 to €100. Ćorić believes that "99% of people in Croatia" consider such a lump-sum price in the first group of destinations justified, reports Dubrovniknet.
While the Croatian Chamber of Trades and Crafts welcomes the amendments, the Croatian Employers' Association (HUP) does not support the additional profit tax. "Increasing taxes in conditions of strong domestic demand and continuous growth of citizens' purchasing power does not represent an effective measure for long-term suppression of inflation, the causes of which are predominantly structural in nature," states a HUP press release cited by Trend Karlovac. The Voice of Entrepreneurs Association, meanwhile, says that decisions about entrepreneurs cannot be made without entrepreneurs. The amendments, after public consultation, are expected to take effect on January 1, 2027.
