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Starting from the New Year, freelancers, landlords, and all employees who earn additional fees alongside their salary no longer need to have a giro account for receiving payments – a current account is sufficient. More precisely, they can choose which account the payment will be credited to.
Namely, all those who have been receiving any income based on contracts for work, author fees, or rents for years were not allowed to receive such payments into their current account but exclusively into a ‘business’ giro account. With the final proposal for amendments to the Income Tax Act, the Government proposed that salaries no longer need to be mandatorily paid into a current account.
According to previous regulations, salaries could be paid into a current account, while all other income had to go into a giro account. Since the tax administration system is interconnected in such a way that this is neither necessary nor required, and also due to the relief for citizens and entrepreneurs who now have to maintain two or more accounts, the Government has abolished this obligation, and payments can now be made to any account the citizen wishes. The administrative relief will encompass all taxpayers receiving and paying out income, as stated in the explanation of the decision.
This is not a huge change that will fundamentally alter someone’s life, but it certainly allows for the optimization of bank accounts and a reduction in fees for their maintenance (which have been rising during historically low-interest periods, as they partially needed to compensate for the lack of income from interest). Furthermore, very few bank clients used cards for giro accounts; they most often set up standing orders to transfer funds from that account to their current account. Although this is a transaction within the same bank and the same client, it usually meant they lost another day in which they could not access their money.
How will this decision affect all parties involved, bank clients, banks, and the Tax Administration? Will clients save money? Will tax officials see income better or worse, faster or slower? Will banks start losing fees for opening and maintaining giro accounts? Essentially, there will not be tectonic shifts.
A small but welcome simplification
From HUB, on behalf of the banks, they briefly respond that banks will, as always, act in accordance with the applicable provisions of positive regulations, respecting and fulfilling all prescribed obligations. – At this moment, it is not possible to accurately assess the impact of the legal changes on the extent of the use of transaction accounts. Namely, bank clients use transaction accounts for various purposes, not just for salary payments, so accordingly, we expect that they will continue, depending on individual assessments, to use the accounts and services of banks that they need for business and daily life.
Vladimir Nol from Mazars also briefly states that this is a small but welcome simplification, with which freelancers and others will no longer have to open giro accounts to conduct business or receive other income.
– Namely, the Tax Administration has long had insight into all bank accounts of taxpayers, both giro and current accounts, and even foreign accounts, indirectly, through the exchange of information with financial institutions and tax administrations. Thus, it has become indifferent to the Tax Administration which account individuals receive compensation for their work; they will certainly continue to check whether such income has been reported to the Tax Administration. Ultimately, banks may lose some fees for maintaining giro accounts, but we do not see any serious changes beyond that, concludes Nol.
Among users, the decision has been well received, as besides not having to open or maintain a giro account, they generally do not need to have a foreign currency account either, as current accounts have been multi-currency for some time. Therefore, it is quite possible to save on fees – if a package with a unique price has not been contracted.
A freelancer who quit her job a few years ago to focus on sewing was already at the bank, but there she was told that they still do not have official instructions on whether it is possible to pay only into a current account, so they advised her to come back at the end of the month when they would know more. Were they stalling because she does not have a contracted service package but pays a separate fee for each account, and closing the giro account would mean they lose that fee? She says that is probably the case, but she will definitely return at the end of January and insist on closing it.
Next is a visit to the bank
Financial blogger Sandra Ferenčak (Aunt), who spread the information on social media, says that she currently has an open current euro account (formerly kuna), a multi-currency foreign currency account, a euro giro (formerly kuna), and a foreign currency giro account at her home bank. – Obviously, I have a visit to the bank ahead of me in the first 60 days of this year when closures can be made without a fee, she concludes.
However, the Accounting Section of the Croatian Chamber of Trades and Crafts warns that the whole matter could have been even simpler. They say they ‘welcome the proposal to reduce administration, thus avoiding penalties currently prescribed in case a certain fee is not paid into the legally prescribed account.’ However, they warn of possible problems this will cause – changes to a large number of data in the systems, frequent changes in data throughout the year (depending on the possibility of citizens ‘reconsidering’), etc.
Therefore, the Accounting Section of HOK has proposed to the Government that all income of individuals (salary and other income) be paid exclusively into a current account. This would contribute to significant administrative relief and reduce the costs of maintaining two accounts (individuals probably only have a giro account open for one or two payments a year), and such a provision would not further burden payroll calculations and accounting, they recommend in HOK.
Such a proposal has not yet been accepted by the Government, although there is no doubt that the whole matter would be further simplified. In any case, if you live off fees, rentals, or earn extra alongside your salary, be sure to visit your banker and reduce the fees you pay.
