Payroll & Employment Guide Croatia

In Croatia, employment contracts must be written and signed before employment begins. They must comply with the Croatian Labour Act and outline all key terms, including job responsibilities, working hours, compensation, and termination conditions.

Notice periods: Usually 2 weeks to 3 months.

Termination of employment: Can occur through resignation, mutual agreement, or dismissal with notice. Specific rules apply depending on the reason and duration of employment.

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Employers in Croatia are legally required to provide several statutory benefits. In addition to these, many employers offer additional perks to attract and retain talent.

Mandatory benefits: Social security contributions, overtime pay, sick leave compensation, vacation pay.
Common perks: Meal and transportation allowances, performance bonuses, health benefits, flexible working arrangements, professional development, and holiday bonuses.

Leave policies: Annual leave, sick leave, maternity leave, paternity leave, parental leave.

Croatia operates a progressive income tax system. Employers must withhold taxes and social contributions from employee salaries and make additional contributions as part of their employment costs.

Personal Income Tax: Croatia uses a progressive income tax system. Income up to €50,400 annually (€4,200 monthly) is taxed at a lower rate, while income above this is taxed at a higher rate.

Local municipalities and cities also apply a surtax on income tax. For example, in the City of Zagreb, the total tax rate ranges from 15% to 23.6% for lower income and 25% to 35.4% for higher income, depending on the taxpayer’s residence.

Corporate tax: Standard rate of 18%, with a reduced rate of 10% for small businesses.

Value Added Tax (VAT): 25%

Social security contributions: Employers are required to contribute 16.5% of an employee’s gross salary toward social security, covering health insurance, and employees contribute 20% of their salary toward pension.

Withholding taxes: On dividends, interest, and royalties, typically at 12%.

Employers in Croatia must process employee salaries in accordance with the country’s labour regulations and the terms outlined in individual employment contracts. This includes adhering to legal timelines, applying the correct tax rates and contributions.

Salary payment deadline: By the 15th of the month following the payroll period

Taxes and contributions payment deadline:

Payroll declarations deadline: By the 15th of the month following the payroll period

Payroll currency: Euro (EUR)

Croatia’s labour laws are governed by the Labour Act and are aligned with EU directives. Understanding these laws is crucial to ensure fair employment practices and compliance.

Total employment cost:

• Employer’s social security contributions: 16.5%
• Employer’s health insurance costs: 16.5%
• Employees’ social security contributions: 20%
• Employee’s health insurance costs: 0

Minimum wage: EUR 970 gross/month

Probation period: Up to 6 months

Foreign nationals working in Croatia must obtain a residence and work permit unless exempted (e.g., EU nationals). Requirements vary by nationality, role, and duration of employment.

Types of permits: EU blue card and work permit.

Process length: Three to four months.

Process cost: Starts at €1,500 for an EU blue card and at €1,400 for a work permit.

*Please note that additional costs may apply after reviewing individual use cases.

Using EOR services in Croatia allows you to legally employ individuals in the country without opening legal entities there. The EOR takes over all the legal responsibilities as an official employer, including:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

Using PEO services in Croatia provides HR and administrative support, while you remain the legal employer. PEO services are ideal for employers who already have legal entities in Croatia but need support to manage their workforce operations, including:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams provides a payroll calculator adjusted per Croatia’s labour laws. Estimate gross-to-net salaries, tax withholdings, and employer costs in Croatia with our localised calculator. Designed to meet all payroll and compliance requirements.