What exactly is the Government proposing for lump-sum craftsmen?

The Government proposes reducing recognized expenses for lump-sum craftsmen with incomes above €40,000. For incomes between €40,000 and €50,000, expenses would drop from 85 to 70 percent, and for incomes between €50,000 and €60,000, to 55 percent.

Why does the Entrepreneurs' Voice Association oppose this proposal?

UGP believes the measure punishes all craftsmen for a minority that abuses the system, turns business growth into a reason for higher taxes, and is contradictory to present it as part of the anti-inflation package because it increases business costs.

What will UGP do regarding this proposal?

UGP will, in the e-consultation, demand the withdrawal of this taxation model, request clear criteria for determining concealed work, and targeted inspections of those who actually abuse the system.

Economy

UGP Calls for Withdrawal of Higher Tax for Lump-Sum Taxpayers

E.K. · Prije 6h | 3 min

The Entrepreneurs' Voice Association strongly opposes the Government's proposal to reduce recognized expenses for craftsmen with incomes above €40,000, calling the measure contradictory to the anti-inflation package.

Summary

The Government proposes a higher tax burden for lump-sum craftsmen with incomes above €40,000 by reducing recognized expenses.
The Entrepreneurs' Voice Association strongly opposes it, claiming the measure is presented as anti-inflationary but actually increases business costs.
UGP demands the withdrawal of the proposal and targeted controls instead of punishing all craftsmen.

The Entrepreneurs' Voice Association (UGP) has joined the e-consultation on amendments to the Income Tax Act, seeking the withdrawal of a model that would impose a higher tax burden on lump-sum craftsmen with annual incomes above €40,000. According to reports from Dubrovniknet and Tportal, UGP considers the proposal contradictory because, as they state, it is presented as part of the anti-inflation package, yet it actually increases business costs.

'The proposal contains some good solutions. We welcome the reduction of taxes on pensions and the introduction of the Croatian investment account, which should simplify investments and reduce bureaucratic barriers for citizens. However, after that, an additional tax burden is again introduced for craftsmen,' UGP stated on Saturday, as reported by Dubrovniknet.

Tax Hit on Growth: Expenses Drop from 85 to 55 Percent

The Government of the Republic of Croatia proposes reducing recognized expenses for lump-sum craftsmen, with the justification that some of them engage in concealed dependent work. Specifically, for incomes between €40,000 and €50,000, recognized expenses would decrease from the current 85 percent to 70 percent, and for incomes between €50,000 and €60,000, to 55 percent. UGP emphasizes that the state should target those who cheat, not punish everyone.

'If someone is cheating, the state should find and punish them. It should not punish everyone else,' UGP said for Tportal.

UGP stresses that a craftsman finds clients on their own, bears the risk of unpaid receivables, invests in equipment and development, and has no right to paid sick leave, annual leave, or a guaranteed salary. 'Business turnover is neither a salary nor profit,' they add. Despite this, recognized expenses are being drastically reduced.

An Anti-Inflation Package That Raises Prices?

UGP particularly disputes the presentation of these changes as part of the anti-inflation package. 'Increasing the tax burden raises business costs, and part of these costs is usually passed on to service prices. Therefore, it is rightly questioned how this measure will contribute to reducing inflation,' the statement reads.

The association also criticized the lack of analyses and impact assessments. 'We do not dispute the state's right to adjust the tax system, nor do we claim that the existing system cannot be improved. However, any tax reform must be based on analyses, impact assessments, and clearly explained reasons why the proposed model is the best solution,' entrepreneurs stated for Tportal.

UGP will, in the e-consultation, demand the withdrawal of this model, clear criteria for determining concealed work, and targeted inspections of those who actually abuse the system.