How can an Umbrella Company Help with Contracting in Croatia?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Croatia. Even better, most are experts in Croatia and expat tax law, meaning they’ll also help you optimise your earnings in Croatia.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Croatia.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Croatia, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Croatia and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Croatia
One of the most consistently challenging aspects of contracting in Croatia is complying with the country’s tax system. As well as paying tax in Croatia, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Croatia
If you’re working in Croatia under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Croatia for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Croatia, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Croatia through PAYE is left with the prospect of doing everything themselves.
Do you know much about Croatian Tax Law? Does Croatia have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Croatia can range from 24 to 36 percent not inclusive of municipal tax, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Croatia
| When Do You Need to Lodge Your Tax Return? | After the end of the tax year (Dec 31). |
| Tax Filing Deadline | End of February. Note: If you have income from abroad, you must file the INO-DOH form before January 31. |
| Can you file it online? | Yes, https://e-porezna.porezna-uprava.hr/Prijava.aspx?ReturnUrl=%2f |
How to File Taxes in Croatia as a Contractor
Only individuals who realize income from self-employment or income from abroad must submit an annual tax return. In all other cases (e.g. regular employment income, other income) the tax authorities will perform the annual tax calculation and issue the tax assessment accordingly. Any tax liability must be paid within 15 days of receipt of the annual tax assessment.
The process of filing income tax in Croatia for individuals who realize income from self-employment or generated income from abroad involves:
Step 1: Enter the National Identification and Authorisation System (NIAS) here(link is external). Select one of the credentials and follow the sign-in instructions.
Step 2: On the Početna page (Home page), click Dostavi obrazac (submit a form) which will show a list of tax forms.
- JOPPD Form: for individuals that earned capital gains.
- INO-DOH Form: for individuals that have income abroad.
Step 3: Complete the required form and attach the supporting documents.
Step 4: Submit the form and await the tax assessment.
Step 5: Pay any tax liabilities within 15 days of receipt of the annual tax assessment.
Additional Information
Guide for filing tax returns in Croatian available here(link is external).
Tax Figures in Croatia
| Currency | Croatian Kuna (HRK) | ||||||
| Tax-free Threshold in Croatia | None | ||||||
| Income Tax Rates |
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|---|---|---|---|---|---|---|---|
| Notes | Income tax is increased by municipal surcharges ranging from 0% to 18% which are levied on personal income by the local government. The highest rate of 18% applies in Zagreb. |
Tax Residency in Croatia
When do you become a tax resident in Croatia
You become a tax resident in Croatia when:
- You are considered to have permanent residency if you own a place of abode or have one at your disposal for an uninterrupted period of 183 days.
- If you stay in Croatia for at least 183 days, you are considered to have a temporary place of residence.
Does the 183 day rule apply in Croatia
Yes
Am I taxed on my global income in Croatia
Yes, if you are a resident. Non-residents are subject to tax on their Croatian-sourced income only.
Can you set up your own Limited Company in Croatia?
| How long does it take to set up | 7 days |
| How much does it cost | HRK 5,730 + additional VAT fee |
| Is it easy? | Starting a Business Rank: 87 |
Tax Calculator in Croatia
If you are a contractor and want a calculation on your tax and net retention in Croatia, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Croatia
Contractors in Croatia are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Croatian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Croatian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Croatian tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Croatia
We work with numerous umbrella companies in Croatia, many of whom are experts in tax and immigration laws. If you have any questions about tax in Croatia, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Croatian work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Croatia but without the overhead of directly dealing with the Croatian tax authorities. Get in touch with us today for some reliable advice on tax in Croatia!
A Contractor’s Guide to Work Permits in Croatia
Immigration is one of the primary concerns for any contractor hoping to start working in Croatia. Permanent employees will find it easy to get their Croatian work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Croatian work permit is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Croatia is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
Work Permit Processing Time
As your permanent employer, umbrella companies are able to sponsor you for your Croatian work permit provided they’re on the register of approved sponsors. Many different companies offer this service, because it makes contracting in Croatia infinitely simpler and saves you the hassle of continuous paperwork. Instead of changing your work permit every time you get a new contract, you can just work how you ordinarily would under the same permit. They protect you from the bureaucratic “rain” of legal compliance with the Croatian immigration authorities. They can even deal with the Croatian Embassy directly. Through their service you may be able to use a business visa to get started quickly and then transition to a work visa in Croatia. It depends on your specific visa requirements. Be aware you may have to register for a residence permit in Croatia.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Croatia (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Croatia. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Croatia and match contractors with the right company for them. If you’ve already secured a contract in Croatia, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
