The minimum monthly wage for 2024 is set at 840 euros gross, which represents a 20 percent increase compared to the gross minimum wage for 2023, which was 700 euros. The increase in the minimum wage exceeds the growth rate of average wages in 2023, and in some workplaces, this will result in an increase in the number of workers for whom employers are required to pay a supplement to the salary determined by collective agreements, employment contracts, or work regulations up to the prescribed minimum wage level.
News on Salaries
From January 1, 2024, a new Law on Salaries in Public Service and Public Institutions will come into effect, which uniformly regulates the salaries of officials and employees whose salary funds are provided in the state budget. For the comprehensive implementation of the Law, regulations need to be adopted to regulate job coefficients. The transition to new coefficients is announced for March 2024, so that the first salaries according to the new model can be paid as early as April. From 2025, the evaluation of state and public officials and employees will be introduced, which will affect the payment of a new efficiency supplement, with the first payment based on this criterion expected in 2027.
Already with the payment of salaries for December 2023, which most employers will pay in January 2024, workers whose salary is less than 1300 euros will have their base for calculating contributions for pension insurance of generational solidarity reduced, which will contribute to an increase in their net salary. For individuals who are insured under the second pillar of mandatory pension insurance, savings on contributions can range from 45 to 0.01 euros.
Increased Personal Allowance
From January 1, 2024, all earners of annual income will see an increase in the basic personal allowance as a non-taxable part of income and deductions for dependent children and other dependents. The basic personal allowance will amount to 560 euros per month, with an increase of 280 euros for a dependent spouse, parents of the taxpayer, and for the first child, an additional 392 euros for the second child, and progressively for each subsequent child that the taxpayer supports. The amounts of personal allowances based on the disability of the taxpayer and their dependents have also been increased. The amount of income that a dependent family member can earn without hindering the taxpayer’s right to increase their personal allowance for that person has been amended. In 2024, dependent children and other dependents can earn up to 3360 euros and simultaneously be a tax relief for another taxpayer.
New Tax Tariff
The tax tariff for taxing salaries is changing. A lower tax rate will apply to the monthly tax base up to 4200 euros, while the difference above that amount will be taxed at a higher tax rate determined for the city or municipality of the taxpayer’s residence. Tax rates have been set by cities and municipalities, taking into account prescribed limits, and must be published in the Official Gazette by December 31, 2023.
For municipalities and cities that have not adopted a decision on income tax rates for citizens in their area, a rate of 20% will apply as the lower rate and a rate of 30% as the higher income tax rate. The tax administration will publish the lower and higher rates for all 556 cities and municipalities in Croatia on its website. From 2024, there will be no surtax on income tax.
Other Income
The rates at which craftsmen, freelancers, and farmers will pay income tax advances have been changed. Advances will be paid at rates of 15 and 25 percent, depending on the tax base reported in the last tax return, while income reported in the annual return will be taxed at rates determined by the local unit where the taxpayer resides. The due date for income tax based on the annual income return from self-employment has been amended; the tax difference no longer becomes due on the day of submitting the annual tax return but on the last day of the deadline for submitting the annual tax return.
For income from secondary income and royalties, there are no changes in the amount and type of mandatory contributions, but the tax rate may change. Income tax will be calculated and paid at the lower rate prescribed for the city or municipality where the secondary income earner resides or usually stays. The rates for income tax on property and income tax on capital have been increased. Income from property paid by the Tax Administration will be taxed at a rate of 12 percent, while income from property rights will be taxed at a rate of 24 percent. The payment of profit shares and dividends is taxed at a rate of 12 percent, the allocation of shares and the realization of stock options at a tax rate of 24 percent, and a new development is that income from capital will also be taxed on the allocation of profit shares.
