Croatia: Proposed tax measures to address inflation
Proposed reforms would introduce a temporary excess-profit tax, pension tax relief, investment incentives, and higher tax and social contribution burdens for certain lump-sum entrepreneurs.
The Croatian Ministry of Finance has proposed a package of tax reforms that includes a temporary 50% tax on excess profit margins for certain medium-sized and large companies for the 2026 tax period, when profit margins exceed historical levels by more than 15%.
The proposals would also provide 100% income tax relief on pensions taxed at the lower rate, introduce a Croatian Investment Account (HIR) with preferential tax treatment, and increase the tax burden on higher-earning lump-sum-taxed entrepreneurs by reducing deemed expense deductions for annual receipts above €40,000.
In addition, the proposed amendments to the Contributions Act would increase social contribution bases for lump-sum entrepreneurs with annual receipts above €40,000 effective January 1, 2027, while leaving lower-income lump-sum taxpayers unchanged.
For more information, contact a KPMG tax professional in Croatia:
Bojan Đukić | bdukic@kpmg.com