Are you seeking to get Croatian dual citizenship and curious if you might owe taxes in Croatia? For expats and dual citizens of Croatia, this is often a common question.

Fortunately, in the vast majority of cases taxes are not an issue for dual citizens due to the residency requirements and tax treaties in place.

In this guide, we put together all the information you need to know. You’ll find out how to determine if you owe taxes, on what income, how to calculate the amount you owe, and how tax treaties can help you.

 

Do I owe taxes in Croatia?

First and foremost, if you do not legally reside in Croatia for over 183 days out of the year and are not working in Croatia, you do NOT need to file taxes in Croatia.

The first step in determining your Croatian taxes is finding out if you qualify as a resident or non-resident.

Residents are people who:

  • have lived in a rented/owned residence in Croatia for 183 or more days per calendar year for the last two calendar years
  • have a “common abode” in Croatia they lived in for 183 or more days per calendar year for the last two calendar years

 

If either of these describes you, then you are a tax resident. Note that this can include people who are not Croatian citizens—including people using a variety of visas to live for an extended period of time here.

So, what difference in your taxes does residence status make?

Tax residents owe Croatian taxes on all of their income, no matter where it came from. Non-residents only owe Croatian taxes on income from sources inside the country.

Croatian Tax Treaties

If you want to avoid double taxation, you need to understand the tax treaty Croatia has with the other country you are a dual citizen of. Croatia currently has tax treaties with 65 countries, which likely covers your situation (but might not).

In these tax treaties, you can apply the taxes you’ve paid in one country as a credit to the taxes you owe in the other—as long as those taxes cover the same money.

Let’s take an example from a dual citizen of the US and Croatia, and let’s say they make $100 freelancing. If they pay $20 in Croatian taxes on that money, they subtract that amount from what they owe in US taxes on that same money.

Even if you do not owe US taxes, you still need to report everything to the IRS.

Use the FEIE

Tax treaties aren’t the only way US citizens can avoid double taxation. No matter where you are a dual citizen, you can use the Foreign Earned Income Exclusion (FEIE). This means you don’t pay US income tax on foreign earnings up to $126,500. So if you make less than that and you live abroad, you can easily avoid paying any US taxes on your Croatian income.

The only major requirement for FEIE is that you qualify as a bona fide resident in Croatia—that means you have documentation like a letter of employment, rental leases, or residence cards.

Why do people use the FEIE and not the tax credit system set up in the Croatia-US tax treaty? The FEIE can be easier and, in many cases, lead to a larger reduction in tax burden.

To take advantage of the FEIE, you’ll file IRS Form 2555 with your US taxes.

How do I calculate Croatian income tax?

Croatia technically has a progressive tax system, but as you’ll see, it is extremely simple compared to most others in Europe with only two brackets:

  • €50,400 and under: 15 to 23.6% (depending on the area)
  • Over €50,400: 25 to 35.4% (depending on the area)

 

Remember that, in progressive tax systems, everyone owes the lower rate on their first €50,400. They only owe the higher rate on the money they make above €50,400.

The income that is taxed at these rates is a combination of wages, salaries, self-employment income, and some other kinds of income. Also, municipalities add on additional taxes.

What other Croatian taxes do I owe?

There are a few common taxes in Croatia you might owe over and beyond income tax:

  • Social Security: Employees have 20% of their pay withheld for social security and pensions. (Because there is no totalization agreement between the US and Croatia, dual citizens of these countries will have to make contributions to both Social Security systems.)
  • Capital Gains: Anytime you make money selling an asset at a profit, you’ll pay tax. It’s 10% on interest, dividends, and property, and it’s 20% on shares and stocks.
  • Value-Added Tax (VAT): The VAT is applied to almost all business transitions—including the sale of goods, imports, exports, and services. If you run a business in Croatia, this will be a major part of your tax burden.
  • Property Tax: Croatia has a fairly simplified property tax system. For your residence, you only pay tax on purchasing existing homes (new homes are subject to the VAT). Second homes (so-called holiday homes) are taxed at €.66 to €1.99 per meter.

 

It’s worth noting here that Croatia does not tax inheritances or large monetary gifts. The lack of these taxes makes the country an attractive place for wealthy families.

What and where do I file Croatian taxes?

First things first, you’ll register with the Croatian Tax Administration to get a tax identification number (TIN). You’ll need this to file your returns.

Once you have a TIN, you can file your taxes in person or online using the country’s electronic service.

Below are the three most common forms you’ll file (though it all depends on your exact circumstances):

  • DOH: Standard income
  • INO-DOH: Income earned in other countries and credits for taxes paid in other countries
  • ZPP-DOH: Other tax credit claims

When do I need to file Croatian taxes?

Taxes are due on the last day of February.

Are You Ready for February?

In speaking with clients, we often are asked if taxes are part of becoming a Croatian dual citizen. Fortunately, in the vast majority of cases taxes are not an issue for dual citizens.

We have lots of other resources for you to learn about Croatian dual citizenship.

 

Disclaimer: This article is for informational purposes only and should not be taken as legal or tax advice. Since tax laws are subject to frequent changes, it is advisable to seek guidance from a qualified lawyer or tax professional to ensure the best course of action for your unique circumstances.

This page was last updated by Marco Permunian