Last reviewed 21 Aug 2023
In general, permissible only for limited liability companies.
The use of subordinate debt is allowed.
Interest is tax deductible if the loans are used for business purposes, i.e. for creating income.
An interest surplus (excess of tax-deductible interest expense over taxable interest income of a financial year), is only deductible to the extent of 30% of the tax EBITDA. An allowance of EUR 3 million is applicable.
Upon request of a shareholder holding at least 95 % of the share capital, the shareholders‘ assembly is entitled to carry out the transfer of shares of the minority shareholder with the obligation of paying severance pay to the minority shareholder (applicable only to a joint stock company). The principal shareholder determines the amount of the payment to be paid to minority shareholders for their shares. The adequacy of the consideration must be reviewed by one or more auditors appointed by the court.
No special capital gains tax is applicable. If a seller is not a Croatian tax resident no tax consequences in Croatia. Capital gains realized by a Croatian corporation subject to corporate income tax are included in the taxable income and taxed at a rate of 18 % or 10 %.
No special capital gains tax is applicable. If a seller is not a Croatian tax resident no tax consequences in Croatia. Capital gains realized by a Croatian corporation subject to corporate income tax are included in the taxable income and taxed at a rate of 18 % or 10 %.
No special capital gains tax is applicable. If a seller is not a Croatian tax resident no tax consequences in Croatia. Capital gains realized by a Croatian corporation subject to corporate income tax are included in the taxable income and taxed at a rate of 18 % or 10 %.
There is no additional capital gains tax in Croatia. Capital gains realized by a Croatian corporation subject to corporate income tax are included in the taxable income and subject to CIT at the regular rate of 18 % or 10 %.
Sale of business units:
The sale of business units (or parts of businesses) is possible. It is important for all assets, receivables, claims and liabilities involved in a particular business activity to be included in the business unit that is being transferred.
Sale of shares in a company:
The sale of shares in a company – a share deal – is possible.
Sale of business units:
The correct accounting treatment of business units is set out in IFRS 3, Business Combinations.
At the time of the sale, all identifiable assets and liabilities are to be valued at fair value. In HSFI*, the terms ‘business unit’ and ‘business combinations’ are not explicitly defined, however it is to be assumed that they are to be treated in the same way.
The transfer of a business unit is not subject to VAT, provided the unit is transferred as a complete entity, and provided that the acquiring entity is entitled to input VAT deduction.
Sales of shares in a company:
The sale of shares in a company is valued in the same way under IFRS and HSFI, depending on the size of the interest being transferred. Sales of shares in companies are not subject to VAT.
Sale of business units:
Goodwill (purchase price less the fair values of assets and liabilities taken over) is initially valued at cost of acquisition.
Sales of shares in a company:
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Adjustments to fair values in accordance with IFRS are required. Deferred taxes must be recognised under IAS 12, and also under CFRS (Croatian financial reporting standards).
Under carrying value (2 entities allowed to be merged according to historical values) otherwise according to purchase price allocation (PPA). According to PPA identifiable assets acquired and identifiable liabilities are measured at their fair values on the date of acquisition. According to IFRS 3, fair value is the basis of valuation for PPA purposes and is defined as the price that would be realized by selling an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.
Where a business combination is subject to IFRS, goodwill arising from the combination must be reviewed for impairment. Any loss in value of goodwill is deductible for tax purposes.
Where a business combination is subject to HSFI, goodwill should be amortised over its expected useful life, or a maximum of five years.
Amortisation or impairment of goodwill arising from business combinations is not deductible for tax purposes.
Adjustments to fair values are generally not subject to tax. The revaluation reserve does not affect the tax basis of assessment as long as it is included under equity. In this situation the revaluation reserve becomes taxable when realised. If the revaluation reserve is recognised as income, then it is taxable in the period in which it arises.
Contributions in kind are permissible. The assets introduced are recognised at market values as established by expert valuation, or at their carrying value in the accounts of the investor (but not higher than market value).
The gain of the company from the increase in fair values of the assets introduced is taxed if the assets are recognised at market values.
Contributions in kind, with the exception of business units and shares in companies, are as a general rule subject to VAT.
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Opening Hours:
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Opening Hours:
Mo-Th: 08:00 – 17:00
Fr: 08:00 – 14:00
