On November 17, 2022, the draft of the final proposal of the Law on Extra Profit Tax was published. The most important elements of the draft are listed below:

Extra Profit Tax will be applied only for one tax period, namely for the year 2022 or, for taxpayers whose tax period is not a calendar year, the period starting after January 1, 2022 (hereinafter: "Period" );

Extra Profit Tax payers are Corporate Profit Tax payers, regardless of the type of performed business activity, which during the Period fulfilled the following criteria:

  • total income exceeding HRK 300 million; and
  • taxable profit of the Period is at least 20% higher than the average taxable profit in the last four tax periods.

The basis for calculating Extra Profit Tax is the positive difference between:

  • the taxable profit of the Period; and
  • the average taxable profit of the four previous tax periods increased by 20%.

Taxable profit for the purposes of Extra Profit Tax is the profit reported on positions 36 and 39 of the annual Corporate Profit Tax return, in accordance with the Corporate Profit Tax Law.

For the purpose of calculating the Extra Profit Tax base, income from write-off of liabilities in pre-bankruptcy and bankruptcy proceedings, income in bankruptcy proceedings resulting from the sale of assets to settle debts to creditors and income from the sale of long-term tangible and intangible assets (which were used in the process of production or provision of services) to unrelated persons is excluded.

The Extra Profit Tax base must also be corrected for any adjustments of income or tax liabilities assessed in tax inspections.

If a taxpayer reported a tax loss in any of the previous tax periods, for the purposes of calculating Extra Profit Tax, it is assumed that the taxable profit of that tax period is equal to zero.

The Extra Profit Tax rate is 33%.

A separate Extra Profit Tax return must be submitted, whereby the same deadlines apply for return submission and payment of Extra Profit Tax liabilities as for Corporate Profit Tax.

Extra Profit Tax is not applied to independent entrepreneurs established in 2022 or to those who ceased business activities during the Period (without transferring activities to other taxpayers).

A taxpayer and the Croatian Tax Authorities can enter into an Administrative agreement to settle Extra Profit Tax liabilities.