Croatia
The new round of tax reform introduced certain legal changes in the Income Tax Act, the Personal Income Tax Act, the Value Added Tax Act and the Corporate Income Tax Act. Here is a summary of the most significant expected tax changes for 2021.
Amendments to the Personal Income Tax
The novelties in these Amendments are: reduction of the tax rates applicable to annual and final income from 24% to 20% and from 36% to 30%; reduction of the tax rates applicable to final income and flat rate scheme from 12% to 10% and the tax treatment of the national support for the elderly has been established. This support will not be considered as an income for personal income tax purposes. Also, this receipt will not be considered when determining the right to personal deduction for dependent members; the extension of the possibility of providing benefits in kind arising from share awards or optional purchase of own shares that employers give to employees, board members, and natural persons or other related parties, which are used to reward and retain the employees.
Amendments to the Value Added Tax Act
– Most of the changes in this Amendment are the result of implementing EU VAT legislation into Croatian VAT Act. Namely, the e-commerce package and defence efforts within the Union framework. These are some of the most important novelties: extension of the possibility to apply the VAT postponed accounting on importation because the taxpayers will not need to engage financial funds to pay VAT on import and increase of the threshold for the application of the cash accounting scheme from HRK7,500,000.00 to HRK15,000,000.00.
Amendments to the Corporate Income Tax Act
The most important novelties are: reduction of the tax rate from 12% to 10% for taxpayers who generate income up to HRK 7,500,000.00) and reduction of the withholding tax rate from 12% to 10% for dividends; reduction of the withholding tax rate from 15% to 10% on the fees for foreign performers (artists, entertainers and athletes). Furthermore, in order to mitigate the negative effects of the crisis caused by COVID-19 and improve the position of the debtors, the amount of write-off of receivables (principal and interest) from non-related natural person or legal entity, which were previously value-adjusted and reserved in accordance with HNB regulations, are considered as tax deductible cost of credit institutions. The credit institution is obliged to provide the debtor and guarantor with a written statement of waiver of the right to collect the written-off amount of the claim, whereby the amount of the written-off debt is not be included in taxable income.
Slovenia
Law on intervention Measures to Mitigate the Consequences of the Second Wave of the COVID-19 Epidemic Act (“PKP7”) – PKP7, which affects 35 other laws, brings a number of measures to help the economy and protect jobs (PKP7 measures in the field of taxation) and allowances for the most vulnerable groups of the population in Slovenia. The government has passed several ordinances extending or supplementing measures to stem the epidemic. One of the measures is also the postponement for all execution procedures against natural persons until January 31st 2021. This measure could be prolonged for 3 months (up until May 2021).