Croatia Payroll Services

Croatian Payroll Services

The Republic of Croatia, a Balkan nation at the crossroads of eastern and central Europe, is a prime location for foreign investment by international companies focusing on the region’s economic potential.

The World Bank ranks Croatia as a high-income, service-based economy and predicted a nominal Gross Domestic Product (GDP) of US$64.6 billion for 2022, around 80^th in the world. GDP per capita of US$16,300 places the nation around 50^th.

Croatia has a wide range of export activities – trading mainly with the EU – focusing on transport equipment, machinery, textiles, chemicals, food products, and refined fuels. Plus, of course, Croatia is one of Europe’s tourism hot spots, with a spectacular and rugged coastline on the Adriatic opposite Italy, featuring around 1,200 islands and islets. Inland there are mountains, forests, sprawling plains and lakes.

These are among the attractions that draw international corporations towards Croatia as a location for expansion and investment. However, there are inevitably challenges and it is essential that foreign companies make the right moves from the first day. Complying with tax filing, payroll regulations, social insurance and employee rights in Croatia create a heavy workload.

What Croatian Payroll Options are available for Companies?

Remote payroll: This option allows businesses to operate under a single payroll system, by adding employees in Croatia to the parent company’s payroll. However, these employees must operate under different regulations, which can lead to mistakes and cause problems.

Internal payroll: You may operate payroll for your subsidiary, especially if you are committed to growing your company’s presence in Croatia. However, this does require hiring dedicated HR staff who understand Croatia’s employment and compliance laws.

Croatia payroll processing company: If you are considering outsourcing, then working with a Croatian payroll company will help in processing your payroll – but not when it comes to compliance.

Croatia payroll outsourcing: However, there is another option available that solves both concerns – by working with Bradford Jacobs. We can handle payroll and compliance for all your employees in Croatia. We lift the administrative stress from your shoulders so you can focus on what you do best.

Croatian Payroll Services

The rapidly developing Croatian economy has become an increasingly important location for international companies expanding their operations overseas. Among the bonuses is Croatia’s membership of the European Union (EU) – since 2013 – which further widens the horizon of opportunities.

These opportunities come with challenges – and payroll management is one of the trickiest. Whether your company is planning to move staff abroad or hire employees in the new territory, you cannot afford to tumble over barriers in Croatia’s payroll and income tax landscape – it could cost you time and money.

Foreign companies need not establish a legal entity in Croatia in order to hire staff, but they will if intending to run their own payroll in order to deal with Croatia’s Tax Administration. The most popular option is to set up a subsidiary as a private limited company, in Croatian a Drustvo s Ogranicenom Odgovornoscu or DOO. The subsidiary, like any local Croatian company, is regulated by the Companies Act and must register according to the entry procedures laid down by the Court Registry Act.

However, this represents a major move. Operating payroll in Croatia requires detailed practical knowledge of the company, tax, and employment legislation – and staying up to date with regular changes to the rules.

However, there is an alternative and simpler route. Bradford Jacobs’ will navigate around these potential pitfalls effectively and efficiently.

Outsourcing payroll in Croatia will streamline your operations by dealing with the following:

• Registering employees with the Ministry of Finance’s Tax Administration to obtain their Personal Identification Number (OIB), which is assigned either at birth or when individuals become Croatian citizens
• Ensuring foreign incoming employees have correct documentation and IDs to receive their Certificate of Personal Identification Number
• Registering employees with the Croatian Health Insurance Fund (HZZO) for mandatory health insurance to qualify for sickness benefit
• Registering employees with the Croatian Pension Insurance Institute (HZMO)
• Drawing up employment agreements with the employees as per Croatia’s Labor Act
• Draw up company bylaws if there are more than 20 employees
• Maintain records of employees’ attendance and working hours

What is required to set up Croatian Payroll?

Foreign corporations establishing a legal entity in Croatia in order to operate payroll for their staff must decide on the best business structure for their plans. The typical choice is a private limited company, in Croatian a Drustvo s Ogranicenom Odgovornoscu, or DOO. The subsidiary, like any local Croatian company, is regulated by the Companies Act and must register according to the entry procedures laid down by the Court Registry Act.

Procedures required by the Government of the Republic of Croatia include:

• Check with the Court Registry to choose a unique company name. The word ‘Croatia’ or its derivatives cannot be used without permission of the State authorities
• Application to the Court Registry on Form Po. IDs (in the case of foreigners, their passports) must be notarized. All founders and proposed signatories must attend a notary in person
• The parent company supplies its Articles of Association and declaration from its board of intention to open a subsidiary
• The notary electronically submits the forms to the HITRO.HR office, which is a government service to facilitate communications between individuals and business entities with the state administration
• The notary utilizes the e-Company network which collaborates with the Ministry of Justice, Central State Office of e-Croatia, the Commercial Court, the Chamber of Public Notaries, and financial agencies. All Court Registers become available from any HITRO.HR office or public notary
• The notary submits sealed documents to HITRO.HR and the National Bureau of Statistics with all necessary fees
• Complete the RPS Form to obtain registration for the relevant sector from the Bureau of Statistics
• Once registration is approved, HITRO.HR makes the incorporation documents available
• After registration is completed open a business bank account for deposit of initial share capital, the minimum required for a DOO being HRK 20,000 (€2,640, US$2,850)
• Once entered in the Court Register and with the National Bureau of Statistics, the company must be registered with the relevant Ministry of Finance Tax Administration office
• Obtain Value Added Tax ID and pin number (PIB) from the Tax Administration by supplying incorporation documents and OIB (Personal Identification Number), which applies to individuals and companies. Non-European Union members must have a fiscal representative to handle their VAT affairs
• Once registered, the Company Seal is issued on production of the Certificate of Incorporation