From 1 September 2012 follow the news on economic operations here.

Amended Law on Profit Tax

Starting July 1st 2010, an amended Law on Profit tax will be implemented. There are significant changes in the Law in the part that is concerned with the companies that have     so-called suites and vacation houses registered in their property...

When calculating the profit tax annual liabilities, amortization of such real estates cannot be acknowledged as tax expenditure, as cannot any other expenses that arose due to their usage, in case the tax payer hasn't generated revenue of at least 5% of the purchase value of a suite or a vacation house in that fiscal year.

When amending the Law (due to the economic recovery measures of the Republic of Croatia), the legislator's starting point was that the main goal of performing economic activity is – gaining profit. Consequently, they consider that the question arises of what is the point of using such property if by using it one cannot settle even the most basic expenses (i.e. compensate the annual amortization).

Further, when clarifying the amendments, they state that it has been noticed by tax auditors that tax payers often purchase such property for their business needs (and thereby ask for VAT return on the purchase value of the building), and with the intention of using real estate for their private purposes. With the aim of impeding intentional avoidance of paying the profit tax, it has come to the above mentioned amendments of legal provisions.

Vessels and aircrafts fall under the same category. The only difference is that if you own them, the realized annual revenue has to be at least 7% of purchase value of the vessel or the aircraft.

Another condition for acknowledging amortization and other expenses related to the real estates is that the company has to be registered for  the activity/trade of renting property, i.e. for the transportation activity.

<< Back


  All rights reserved B.D.M. 2010