Sense Consulting, a Croatian business consulting company, in the December issue of its analytical publication Konsenseus presents an overview of the measures of the new Investment Promotion and Improvement of the Investment Environment Act, which provides numerous opportunities for savings when investing.
The new Investment Promotion and Improvement of the Investment Environment Act encourages investments by micro-entrepreneurs starting from 50 thousand euros. Small, medium, and large companies are entitled to incentives for investments starting from 150 thousand euros. For investments exceeding 5 million euros that generate over 50 new jobs in counties with a registered unemployment rate higher than 20 percent, the state provides additional non-repayable funds of up to 1 million euros.
Tatjana Štefanac, a consultant from Sense Consulting, emphasized that what makes the new law more attractive is primarily the lowering of the minimum investment project level for incentives along with the introduction of a uniform threshold for micro-entrepreneurs.
– This measure aims to directly influence the increase in the number of incentivized investment projects. The threshold for achieving greater tax savings with the employment of fewer employees has also been lowered, so a ten-year exemption from corporate income tax can be achieved with an investment of just 3 million euros and the opening of only about 15 jobs – emphasizes Štefanac, adding that an entrepreneur investing in the modernization of facilities by acquiring high technologies can also achieve a tax incentive without new hiring.
The incentive measures provided by this law include tax incentives, customs exemptions, and non-repayable cash grants. A reduction of the corporate income tax rate by 50 percent can be achieved over a ten-year period with the opening of just five jobs. The amount of tax savings depends on the value of the investment, but also on the remaining incentive measures that can be utilized. Thus, the maximum possible tax savings are reduced by the amount of non-repayable cash grants for employment, education, and for covering capital costs in large investment projects. Non-repayable funds can be obtained for employment, up to a maximum of 9,000 euros per new job, and for the education of newly employed, small entrepreneurs can obtain non-repayable funds amounting to 80 percent of the costs that can be attributed to education. In addition to covering employee costs, the costs of purchasing durable tangible assets up to 1 million euros for larger, labor-intensive investments are also covered.
