Business expansion to Croatia is simple and hassle-free with Marzuna’s Employer of Record Croatia (EOR) solutions. Without the need to establish a distinct legal company, businesses may hire incredibly competent workers in Croatia thanks to our innovative HR platform. By taking care of taxation, payroll, and other regulatory compliances, it simplifies the recruiting and onboarding of remote workers. Schedule a demo with Marzuna now to find out more.
The Labor Act, employment agreements, international conventions and treaties, and the Constitution all govern employment in the Republic of Croatia. Both citizens of other countries and their nationals are subject to Croatian employment legislation. Regarding their entitlements, there are a few variations. The salient features of Croatian employment regulations are presented in the table that follows.
| Entitlements | Explanation |
|---|---|
| Minimum age of employment | The age requirement to work is fifteen years old.
It is also illegal for anyone between the ages of 15 and 18 who attends elementary school by requirement to work. |
| Working Hours | The statutory working hours are 40 hours spread across five days a week. |
| Rest | During working hours, female employees who are between the ages of 14 and 18 are entitled to a two-hour break.
Sunday is a national holiday for rest. Employees who work on their days off must be paid with additional days off. |
| Overtime | Workers are permitted to work up to 10 hours of overtime every week. If an employee wants to expand the scope of their employment, they must obtain written consent from other workers. Unless otherwise specified in the contract, the number of overtime labor hours per year cannot exceed 180 hours.
Under these circumstances, working overtime is permissible.
Pay: There are no legal requirements dictating how much should be paid for overtime labor. The employment agreement establishes the remuneration. |
| Paid Public Holidays | The public holidays in Croatia are as follows.
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| Paid annual leave | Employees are entitled to at least four weeks of paid annual leave. |
| Holiday pay | The employee will receive pay throughout the yearly leave period in accordance with the terms of their employment contract. This sum should, though, be at least equivalent to the previous three months’ average monthly wage. |
| Medical (sick) leave | Workers are entitled to 42 days of paid sick leave each year, which is 70% of their base pay. Beyond this, the employer covers the cost of the leave and Croatia’s Health Insurance Fund reimburses it. |
| Maternity leave | Female employees receive 98 days of maternity leave with 28 days to be availed of before giving birth. |
| Parental leave | For children between the ages of six months and eight years, parents are entitled to four months of leave per parent.
Parents are entitled to 15 months of parental leave for each of their twins or three or more children. Following this, the workers can cut their hours in half until their kids are three years old. The kid may follow this practice until the age of eight if they are handicapped or have special needs. When a kid is adopted, employees are entitled to six months of leave for children up to the age of eighteen, plus an extra six months. |
| Annual leave accrual entitlement | Once an individual has worked continuously for six months, they will be eligible for leave upon hiring.
Workers who have worked for the same employer for fewer than six months are entitled to yearly leave equal to one-twelfth of the total annual leave for each complete month of service rendered. |
| Leave expiry | Employees may spend any unused leave from a given year by no later than June 30 of the next year’s calendar year. |
| Leave cash out | The employee is entitled to reimbursement for the days of annual leave that are not used in the event that the employment contract is terminated. |
| Accrued leave at termination | A portion of the yearly leave that they were entitled to in that specific year is awarded to terminated workers.
Employees may use their right to one-twelfth of their yearly leave for that month if their employment contract is terminated in the midst of an even-numbered month. |
| Employee protection and anti-discrimination rights | Throughout the duration of employment, the employer has a duty to uphold the dignity of its employees. The Labor Act of 2014 and the Anti-Discrimination Act forbid discrimination of any kind. |
| Confidentiality of personal information | According to the Labor Act, information on employees may only be gathered, utilized, or sent to other parties with permission from the Labor Act or another legal framework. Additionally, workers must consent to their employer collecting their personal data under GDPR regulations. |
To guarantee that your growth efforts comply with legal standards, schedule a demo with Marzuna specialists now and learn more about Croatia’s employment rules. We can fulfill all of your needs for growth or employment while abiding by local rules.
The Labor Act of Croatia offers precise definitions for key terms, such as “employees” and “employment relations.” Furthermore, it classifies employees based on different criteria, primarily their employment duration and commitment level, leading to the following categories:
Croatia has also established a Double Taxation Avoidance Agreement (DTAA) with various jurisdictions. Depending on the applicability of the foreign tax credit (FTC), deductions can be made under the Croatian taxation regime. It’s worth noting that social security taxes constitute 20% of your gross salary, though exemptions may apply if these contributions are covered by your native country’s tax regulations. Additionally, the withholding tax rate for non-resident companies stands at 12% per annum. This comprehensive framework provides clarity and guidance for both employees and employers operating within Croatia’s labor and tax systems.
The process of independent contracting in Croatia is shown below.
Marzuna’s EOR solution for Croatia can handle all of your hiring needs, regardless of whether your company wants contractors or full-time staff members. Schedule a demo with Marzuna specialists to learn more.
Hiring employees in a foreign country can be a complex endeavor. Croatia, however, upholds robust labor laws that safeguard employees from unwarranted corporate practices and discrimination in the workplace or during the hiring process. When you enlist the support of Marzuna, the process of hiring qualified employees becomes notably smoother.
To tap into the talent pool in Croatia, numerous platforms provide a conduit for employers to post their job openings. These platforms include MojPosao, Nova Karijera, Oglasnik, Bika, and Njuskalo. The Croatian Employment Service, HZZ or Burza Rada, is a state institution that facilitates employment connections. You can also explore major newspapers like Vecernji List, Jutarnji List, Novi List, and Slobodna Dalmacija (Split) for employment opportunities.
As part of your hiring process, you may consider requesting a potential employee to undergo a medical examination, particularly if it aligns with your business requirements. It’s important to note that the cost of this examination should be covered by the employer. In addition, conducting a background check on potential employees is a recommended practice to ensure the suitability of your hires.
Before commencing the hiring process, your business must be properly registered with the relevant authorities in compliance with Croatian employment laws. One essential requirement is the execution of a written employment contract that outlines the terms and duration of the employment relationship between the employer and employee. This contract must be drafted in the Croatian language, with all monetary amounts stated in Croatian Kuna (HRK). Furthermore, the employment contract should encompass key details, including the job description, workplace location and conditions, dates of hiring and termination, the annual allocation of paid leave, salary details, working hours, notice periods, and the permanent residence of the employees. This comprehensive approach ensures that both employers and employees have a clear understanding of their rights and obligations within the Croatian employment landscape.
In Croatia, the probationary period, as outlined in the Labor Act of 2014, spans up to six months, commencing from the date of signing the employment contract. During this probationary period, a termination notice must be provided by the employer, with a minimum notice period of at least seven days.
When it comes to contract termination, in accordance with the primary labor legislation, the employer must issue a written declaration, clearly articulating the grounds for termination. Furthermore, the employer is obliged to specify the details regarding any payments or benefits due to the employee upon termination.
It’s important to note that employees who are currently on maternity, paternity, or childcare leave, or those who have sustained workplace-related injuries, are safeguarded against termination during their designated leave period. This provision ensures that individuals in these circumstances have job security while they attend to their family or health needs.
Employees’ notice periods are outlined in Chapter 15 of the Labor Act of 2014 and are based on how long they have worked for their company. The notice periods listed below are relevant.
| Duration of Employment | Notice Period |
|---|---|
| One year | Two weeks |
| After the first year | One month |
| After two years | One month and two weeks |
| After five years | Two months |
| After 10 years | Two months and two weeks |
| After 20 years | Three months |
The notice period is extended by two weeks for workers who are over 50. For an employee who is older than 55, an additional four weeks are added.
Severance pay in Croatia is a benefit provided to employees who have served the same employer for a minimum of two years. The amount is calculated at one-third of the employee’s regular monthly salary for each year of service.
Terminating an employee without prior notice is permissible only in situations involving a significant breach of the employee’s duties and obligations. This employer’s prerogative to enact immediate termination must be exercised within 15 days of the reported breach.
To guarantee that your expansion into Croatia aligns with the country’s probation and termination regulations, consult with the experts at Marzuna. Schedule a demo with us today to ensure your compliance with these critical aspects of employment law.
With Marzuna’s EOR service, enterprises may enter the nation more quickly and easily. If you want to make sure that employing Croatian workers goes as easily as possible, you might use the EOR approach. We’ll support you with hiring and managing staff. Marzuna will handle all obligations and compliance pertaining to the job. We can also handle work permits, payroll filing, taxes, and monthly payroll management. Your growth efforts can be expedited with Marzuna’s Croatia EOR solution.
Employing someone from a foreign nation is a difficult undertaking. There is a wealth of talent in Croatia, so you’re sure to discover qualified workers for your business. You can choose the EOR path to simplify the hiring and staff management process. The EOR solution from Marzuna makes the expansion procedures into Croatia very simple. Its sophisticated, comprehensive HR software guarantees complete compliance with Croatian employment and tax regulations, facilitates the hiring and onboarding of top personnel for businesses, and provides excellent payroll administration. Schedule a demo with Marzuna now to find out more.
For all of your growth requirements in Croatia, we can provide specialized EOR solutions. Speak with Marzuna specialists now to take advantage of our services.
Croatia is open to visitors from member states of the European Union (EU) without the need for a visa. If a non-EU or European Free Trade Association (EFTA) foreign national plans to remain longer than ninety days, they must get a visa.
| Types of Visas | Details and Requirements of the Visas |
| Short-stay Visa (Type C) | These transitory visas are available for short-term travel, medical care, and tourism. When using one of these visas, the longest stay permitted is ninety days during the first 180 days after the visa is obtained. |
| Business Visa | A business visa is sometimes known as a short-stay visa, allowing the bearer to travel for up to ninety days for business-related trips. Nevertheless, the bearer of the visa is not permitted to work in Croatia.
These are the prerequisites for obtaining a business visa in Croatia.
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| Long-stay Visa (Type-D) | Any foreign national who wants to stay in Croatia for a period longer than 90 days requires a long-stay visa and a residence permit. It includes a work visa, which allows a foreign national to live and work in the country.
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| Transit Visa | The Croatian President and the Croatian Government must include a letter of invitation on behalf of the national authority or the international event organizer with the visa application when the Croatian National Authority extends an invitation to a foreign national to attend any international conference of public interest or to take part in an event held under the auspices of the Croatian Parliament. |
Marzuna handles all work-related paperwork and obligations as an EOR service for Croatia, including applying for and securing visas. To find out more, speak with Marzuna specialists.
Workers who intend to work in Croatia must have both a work permit and a residence permit. Since Croatia is an EU member, there are no additional visa requirements for European nationals living and working in Croatia. The following is necessary for other foreign nationals to reside and work in Croatia.
| Work Permits | Explanation |
|---|---|
| Croatian Residence Permit | Any international visitor intending to stay in Croatia for more than ninety days has to get a Croatian residency permit. The only people who qualify for the same are those who have long-stay visas. A local police agency is where the permission application may be submitted. |
| Work Permit | You must have a Croatian employer that can get a work permit for you before to submitting an application for a long-stay visa for work or business orders. You will not be issued a temporary residence permit unless you are in possession of a valid work permit. |
One of the key responsibilities of Marzuna’s EOR services is obtaining work permits. Join forces with us right now to accelerate your Croatian expansion. Set up a demo to find out more.
When it comes to establishing your payroll system and managing taxes in Croatia, it’s crucial to understand your obligations as an employer. If you’re a foreign company venturing into the Croatian market, you have several options to ensure compliance with local regulations:
In-house Payroll: In this approach, your internal HR team handles the payroll within your organization. These HR professionals are employees of your company and receive their compensation through the same payroll system as other staff members.
Global Outsourcing: Alternatively, you can choose global outsourcing, a method that involves collaborating with a third-party global Employer of Record (EOR) service to oversee your payroll and other HR functions, ensuring smooth and compliant operations.
Employee salaries are disbursed on a monthly basis, typically by the end of the month or no later than the 15th day of the following month.
In 2021, Croatia established a minimum monthly wage of HRK 4,250, which is equivalent to approximately EUR 562.80 (about USD 672). Staying informed about these financial regulations and payroll options will help you navigate the Croatian employment landscape effectively.
Croatia follows a progressive tax system. Employer taxes are set at 16.5%.
Corporate Income Tax
Capital gains and losses are covered under this regime.
| Income | Tax Rate (Percentage) |
|---|---|
| Up to HRK 7.5 million (for entrepreneurs) | 10% |
Personal Income Tax
The Personal Income Tax is applicable on taxpayers who are physically present in Croatia or have real estate at their disposal for an uninterrupted period of 183 days in either one or two calendar years are deemed as resident taxpayers.
| Earning | Tax Rate (%) |
|---|---|
| Above HRK 360,000 | 30% |
| Up to HRK 360,000 | 20% |
| Lump-sum taxation of activities (such as rentals and leases) | 10% |
| For digital nomads (third-country personnel employed to perform business operations through telecommunication) | None |
Monthly Tax Rates
| Earning | Tax Rate (%) |
|---|---|
| Up to HRK 30,000 | 20% |
| Above HRK 30,000 | 30% |
| Lump-sum taxation of activities (such as rentals and leases) | 10% |
| For digital nomads (third-country personnel employed to perform business operations through telecommunication) | None |
Numerous deductions are also prescribed for individuals in the form of personal allowances, exemptions, and incentives.
Withholding Tax (WHT) on Dividend Income
| Dividend and other profit payments made to a resident company | Non-taxable |
| Dividend and other profit payments made to a non-resident company | WHT at 12% |
Social Security Contribution
The pension plan and health insurance are covered by social security contributions in Croatia, which are calculated based on the gross wage of the workforce. They are not supported by the state.
| Pillar Payment I: General solidarity | 15% tax contribution |
| Pillar Payment II: Individual capital | 5% tax contribution |
| Total employee cost | 20% tax contribution |
Value-added Tax (VAT)
The VAT is 25% for HRK 15 million and above.
Other Regulations
Croatia operates a well-structured insurance system encompassing various categories:
An important incentive to note is that employers are exempted from these contributions for a period of five years if they hire an employee below the age of 30 years, which encourages youth employment and eases the financial burden on employers.
Gift Tax: In Croatia, individuals receiving or inheriting gifts are subject to a gift tax. This tax is levied at a rate of 4%, ensuring that gift-related financial transactions are appropriately regulated.
Property Tax: There is no property tax in Croatia, simplifying the taxation landscape for property owners.
Understanding these aspects of Croatia’s insurance and tax systems is essential for individuals and businesses operating within the country.
The process of setting up a subsidiary in Croatia, which involves adhering to all statutory requirements, such as proper registration, securing the necessary capital, and obtaining approvals, can be a time-consuming endeavor. Any missteps in this process can potentially disrupt your timeline for launching your business in Croatia. However, there’s a convenient solution to navigate these challenges. Marzuna offers an effortless alternative for all your HR requirements by assuming responsibility for establishing a subsidiary as your trusted Employer of Record (EOR) partner.
The following steps are integral to establishing a subsidiary in Croatia:
Navigating these steps diligently is essential to ensure a successful and compliant entry into the Croatian business landscape. Marzuna’s expertise and support can significantly streamline this process, allowing you to focus on your core business objectives with confidence.
On the whole, Croatia offers a reasonably affordable cost of living, making it an attractive destination for businesses seeking growth. With substantial business opportunities, Croatia is a market ripe with potential. However, establishing a subsidiary here can be a multifaceted challenge, primarily due to the intricacies of employment and labor laws, as well as the presence of language and cultural barriers.
To navigate this landscape effectively and maximize your success, the most pragmatic approach is to enlist the services of an Employer of Record (EOR) firm. By entrusting your hiring, tax obligations, and regulatory compliance to these experts, you gain access to a pool of highly skilled and exceptional talent, ensuring a smoother and more successful venture into the Croatian market.
