The Entrepreneurs' Voice Association has requested in e-consultation the withdrawal of the model of higher tax burden for lump-sum craftsmen with incomes above 40,000 euros, highlighting the lack of data on actual abuses and impact assessments on the economy.
The Entrepreneurs' Voice Association (UGP) strongly opposed the government's proposal for amendments to the Income Tax Act on Saturday, August 1, 2026. As reported by Glas Istre, UGP announced that it will insist in the e-consultation process on the removal of provisions that increase the tax burden for lump-sum craftsmen whose annual incomes exceed 40,000 euros.
The Government of the Republic of Croatia defends this move as a fight against disguised non-independent work. Specifically, the proposed amendments foresee a reduction in recognized expenses from 85 to 70 percent for incomes ranging from 40,000 to 50,000 euros, while for those between 50,000 and 60,000 euros, they would drop to 55 percent.
The association does not dispute the state's right to adjust the tax framework, but emphasizes that the proposal lacks a proper analytical foundation. "The proposal's explanation states that there is a problem of disguised work, but no data is presented showing the actual extent of abuses, nor an assessment of the effects of the proposed changes on small businesses, service prices, and competitiveness," reads the UGP statement cited by Dulist.
They also remind of the specific position of craftsmen, who independently find clients, bear the risk of unpaid receivables, finance equipment and business development, and have no right to paid sick leave, annual leave, or a secure salary. "If someone cheats, the state should find and punish them. There is no need to punish everyone else," UGP stated for Dulist.
UGP warns that the proposed model sends the wrong message to those who are growing their businesses. "Entrepreneurs have been encouraged for years to grow, increase turnover, and develop their businesses. This proposal sends a message that growth itself becomes a reason for new tax burdens," Dulist reports from the statement.
They see a particular absurdity in the fact that the measure is promoted as part of the anti-inflation package. "Increasing the tax burden raises business costs, and part of those costs typically gets passed on to service prices. Therefore, it is legitimate to ask how this measure will contribute to reducing inflation," Dulist quotes the association's stance.
Despite the criticism, UGP recognized positive elements in the government's package. "We welcome the tax relief on pensions and the introduction of the Croatian investment account, which should make it easier for citizens to invest and reduce administration," the statement says, as reported by Dnevno.hr.
However, this does not change their fundamental demand. UGP will seek in the e-consultation precise criteria for detecting disguised work and targeted inspections of those who actually exploit loopholes in the system. "The state should hunt down those who cheat, not those who work, invest, and develop their businesses," the statement concludes, as reported by Dulist.
