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Employer of Record in Croatia

Updated on:
16 Jan, 2024
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Employer of Record in Croatia

Skuad’s Employer of Record Croatia (EOR) solutions make business expansion to Croatia easy and hassle-free. Our unique HR platform allows companies to hire exceptionally talented employees in Croatia, without having to set up a separate legal entity. It streamlines the process of hiring and onboarding a remote team by handling payroll management, taxation, and other legal compliances. To learn more about Skuad, Book a demo today.

Croatia at a Glance

Population: 3,997,139 people (2024)

Currency: Croatian kuna (HRK)

Capital city: Zagreb

Languages spoken: Croatian, Bosnian, and Serbian

Gross Domestic Product (GDP): USD 176.67 Billion (2024)

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Employment in Croatia

Employment in the Republic of Croatia is regulated by the Constitution, international conventions and treaties, the Labor Act, and employment agreements. Croatian employment laws apply both to foreign nationals and their citizens. However, there are some differences in terms of their entitlements. The following table lays out the key aspects of employment laws in Croatia.

Entitlements Explanation
Minimum age of employment The minimum age of employment is 15 years.
Also, individuals between 15 and 18 years of age who attend obligatory primary school cannot be employed.
Working Hours The statutory working hours are 40 hours spread across five days a week.
Rest Women employees between the age of 14 to 18 are entitled to rest for two hours during work hours.
Sunday is a rest day throughout the country. In case an employee is working on a rest day, they need to be compensated with another rest day.
Overtime Employees can work for a maximum of 10 hours a week overtime. Employees are expected to take written permission from the employees to increase their scope of work. Annually, the overtime work hours should not exceed 180 hours, unless mentioned in the contract.
Overtime work is allowed in the following situations.
  • In force majeure cases
  • If there is an extraordinary rise in the volume of business
  • In other cases where urgent business needs exist
Compensation: No statutory guidelines exist to determine the amount of compensation for overtime work. The compensation is determined through the employment agreement.
Paid Public Holidays The public holidays in Croatia are as follows.
  • New Year’s Day
  • Epiphany
  • Easter
  • Easter Monday
  • Labor Day
  • Statehood Day
  • Corpus Christi
  • Anti-Fascist Struggle Day
  • Independence Day
  • Victory Day and Homeland Thanksgiving Day and Croatian Veterans Day
  • Assumption Day
  • All Saints’ Day
  • Christmas Day
  • St. Stephen’s Day
Paid annual leave Employees are entitled to at least four weeks of paid annual leave.
Holiday pay During the period of annual leave, the employee will be compensated to an amount specified in the employment contract. However, this amount should be at least equal to the average monthly salary for the past three months.
Medical (sick) leave Employees are entitled to 42 days of sick leave annually at 70% of the standard salary. Beyond this, the leave is paid for by the employer and is reimbursed by Croatia’s Health Insurance Fund.
Maternity leave Female employees receive 98 days of maternity leave with 28 days to be availed of before giving birth.
Parental leave Parents are entitled to parental leave for four months per parent for children aged between six months and eight years.
In case the parents have twins or three or more children, they are allowed 15 months each of parental leave.
After this, the employees can reduce their work hours to half until their children turn three years old. In case the child is disabled or has special needs, this routine can extend until the child turns eight years old.
In case of adoption, employees receive six months of leave for children up to 18 years of age and an additional six months if the adopted child is below eight years of age.
Annual leave accrual entitlement When the employee is employed for the first time, their leave entitlement will be granted after six months of continuous work.
Employees with less than six months of service with the same employer shall receive annual leave equivalent to 1/12th of the annual leave for each full month of service delivered.
Leave expiry Employees can avail themselves of the unused portion of leaves of a particular year by June 30th of the next calendar year at the latest.
Leave cash out In case the employment contract is terminated, the employee is entitled to allowance for the unused days of their annual leave.
Accrued leave at termination Terminated employees are entitled to a proportion of their annual leave in that particular year.
If the employment contract is terminated in the middle of a month with an even number of days, employees can exercise the right to 1/12th of the annual leave for that particular month.
Employee protection and anti-discrimination rights The employer is obliged to protect the dignity of their workers during the term of employment. Any type of discrimination is strictly prohibited under the Labor Act 2014 and Anti-Discrimination Act.
Confidentiality of personal information The Labor Act provides that employees’ data may be collected, used, or delivered to third parties only if permitted by the Labor Act or another law. Also, as per GDPR rules, employees are required to assent to the collection of their personal data by their employer.

To learn more about Croatia’s employment policies to ensure your expansion efforts fall within the legal requirements, book a demo with Skuad experts today. We can meet all your expansion or employment requirements while complying with the local laws.

Contractors vs. Full-time Employees

The Labor Act of Croatia defines the terms “employees” and “employment relations.” Apart from ordinary employees (natural or legal persons performing certain works for an employer), employees can be further divided based on their term period, as follows.

  • Definite (fixed-term contract)
  • Indefinite (indefinite term contract)
  • Full-time employees
  • Part-time employees

Independent Contracting

An easy solution to hiring remote workers is through independent contracting. Independent contracting agreements are legally binding across different jurisdictions that should be executed between the parties. This form of employment involves complex issues such as immigration, taxes, and administrative work. An easy approach to handle such issues while expanding to Croatia can be to use an umbrella company to avoid any kind of misclassification or breach of self-employment rules.

Croatia has also signed the Double Taxation Avoidance Agreement (DTAA) with numerous jurisdictions; depending on the applicability of the foreign tax credit (FTC), relevant deductions can be made under the Croatian taxation regime. While the social security taxes constitute 20% of your gross salary, you can be exempted if such contributions are covered in your native country’s tax regime. The withholding tax for a non-resident company is set at the rate of 12% p.a.

The following table provides a guide to independent contracting in Croatia.

Queries Answers
Do you need a visa to become an independent contractor in Croatia? Non-EU nationals require a visa to work as independent contractors. EU nationals do not require a work visa.
What are the different modes of becoming an independent contractor? To become an independent contractor, you can,
  • Work as a self-employed freelancer
  • Set up your own LLC
  • Work with an umbrella company acting as an intermediary between you and the client for facilitating payment and ensuring performance
What are the tax compliance requirements? Croatia adheres to the 183 days rule to determine your tax residency.
What are the benefits of hiring independent contractors? Such contracts are extremely easy to set up. They represent an inexpensive mode of hiring and are easy to regulate. They require no legal overhead for the company.
What are the disadvantages of independent contracting? Independent contractors are not offered the legal protection ensured to the regular employees. They are also ineligible for local perks and pensions.
What are the terms of service related to termination and probation? The termination clauses are determined as per the employment agreement, that is, the independent contracting agreement.

Whether your business requires contractors or full-time employees, Skuad’s EOR solution for Croatia can take care of all your hiring needs. To know more, book a demo with Skuad experts.

Hiring in Croatia

Hiring in any foreign country is difficult. The Croatian Labor Law protects employees against unwanted corporate practices. Further, the country has established a strong legal regime to combat any kind of discrimination at the workplace or in the hiring process. With the assistance of Skuad, you can hire suitable employees without hassle. 

There are several websites on which employers post their job openings, such as MojPosao, Nova Karijera, Oglasnik, Bika, and Njuskalo. HZZ or Burza Rada is a Croatian Employment Service by the State institution. Major newspapers that advertise for employment opportunities are Vecernji List, Jutarnji List, Novi List, and Slobodna Dalmacija (Split).

During the hiring process, you can ask a potential employee to undergo a medical exam as per your business requirement. However, the cost should be borne by the employer. It is also recommended to run a background check on the employee.

The hiring process cannot be initiated unless your business is registered with the authorities. As per the employment laws in Croatia, a written employment contract specifying the term and duration of the relationship between the employer and the employee is a prerequisite. The contract should necessarily be executed in the Croatian language; the wages and other amounts must be mentioned in HRK. 

The employment contract should also include the following details.

  • Job description
  •  Place and mode of work
  • Date of hiring and termination
  • Number of paid leaves (annually)
  • Salary
  • Working hours
  • Notices
  • Permanent residence of the employees

Outsourcing the Hiring Process

As the process to set up and register a subsidiary could take months before formal approval, you can partner with Skuad to expand into Croatia and begin your business operationsand outsource hiring in Croatia. Skuad’s Croatia EOR solution helps your business expand into Croatia without the need for an entity setup. Our unified and automated global HR platform enables you to expedite the onboarding of your remote team, manage their payroll, benefits, taxation, and other HR tasks in compliance with the local laws. We help you streamline your expansion process with the able assistance of our international network and experts. Contact us today to kick-start your expansion to Croatia.

Probation & Termination


The probationary period in Croatia lasts for a maximum of six months after signing the employment contract as per the Labor Act of 2014. The notice period for termination during the probationary period is at least seven days.


Under the principal labor legislation, if the employer wishes to terminate a contract with an employee, a written declaration has to be made to that effect stating the reason for termination. The employer is also required to specify the payments that shall be given to the employee upon termination.

The employees who are availing of their maternity, paternity, or childcare leave or those who have sustained medical injuries from their workplace will not be terminated during their specified leave period.

Notice Periods

Chapter 15 of the Labor Act, 2014 prescribes the notice period of employees determined by their duration of service with the employer. The following notice periods are applicable.

Duration of Employment Notice Period
One year Two weeks
After the first year One month
After two years One month and two weeks
After five years Two months
After 10 years Two months and two weeks
After 20 years Three months

For employees over 50 years of age, two additional weeks are added to the notice period. Further, four weeks are added for an employee above 55 years of age.

Severance Pay

Severance pay is granted during termination to an employee who has completed two or more years of service with the same employer. It is set at one-third of the regular monthly salary per year.

Summary Dismissal

Termination without notice shall only be considered lawful in cases where a serious breach of an employee’s obligations and duties has been reported. This right shall be utilized by the employer within 15 days of the reported breach.

To ensure your expansion endeavors are in compliance with the laws regarding probation and termination in Croatia, talk to Skuad experts and book a demo today.

EOR Solution in Croatia

Skuad’s EOR service makes it easier and faster for businesses to expand into the country. You can take the EOR route to ensure things go smoothly for you while hiring employees from Croatia. We will help you onboard and manage employees. Skuad will take care of all employment-related responsibilities and compliance. Additionally, you can rely on us to manage monthly payroll, work permits, taxation, and payroll filing. Skuad’s Croatia EOR solution can .expedite your expansion efforts.

Payroll Outsourcing in Croatia through an Employer of Record 

Hiring employees from a new country is not an easy task. Croatia’s talent pool has immense potential and you will find suitable employees for your company. To make the journey of hiring and employee management easier, you can take the EOR route. Skuad’s EOR solution totally simplifies the expansion processes into Croatia. Its integrated and, high-tech HR platform enables seamless hiring and onboarding of top talents for organizations, topnotch payroll management, and ensures total compliance with the Croatian taxes and employment laws. To learn more about Skuad, Book a demo today.

We can offer tailor-made EOR solutions for all your expansion needs in Croatia. To avail yourself of our services, speak to Skuad experts today.

Types of Visas in Croatia

For European Union (EU) member states, traveling to Croatia is allowed without a visa. Every other non-EU or European Free Trade Association (EFTA) foreign national requires a visa if their stay extends beyond 90 days.

Types of Visas Details and Requirements of the Visas
Short-stay Visa (Type C) Such short-term visas are offered for tourism, medical treatment, or short-term traveling purposes. The maximum duration of stay allowed on such a visa is 90 days within 180 days of availing of the visa.
Business Visa A business visa is also a short stay visa wherein the holder can travel for business-related purposes for up to 90 days. However, the visa holder is not allowed to work in Croatia.
Requirements for a business visa in Croatia are as follows.
  • Letter of guarantee signed by Croatian legal entity inviting you to Croatia
  • Letter of invitation from the company inviting you to Croatia that provides the details such as the purpose and duration of stay
  • Letter from your employer stating your employment details
  • Cover letter by you
  • Proof of financial funds
  • If the holder is self-employed, the company’s registration papers and business visa request letter are written on the company’s official letterhead
Long-stay Visa (Type-D) Any foreign national who wants to stay in Croatia for a period longer than 90 days requires a long-stay visa and a residence permit. It includes a work visa, which allows a foreign national to live and work in the country.
  • Requirements for Croatian work visas are as follows.
  • Proof of health insurance
  • Copy of work contract
  • Copy of employer’s company registration
  • Proof of financial statement
  • Proof of educational qualification and required skills
Transit Visa When the Croatian National Authority invites a foreign national to attend any international conference of public interest or to participate in an event held under the auspices of the Croatian Parliament, the Croatian President and the Croatian Government shall submit a letter of invitation on behalf of the national authority or the organizer of the international event with the visa application.

As an EOR service for Croatia, Skuad takes care of all the requirements and responsibilities related to employment, including applying for and obtaining visas. Get in touch with Skuad experts to learn more.

Work Permit

A work permit and a residency permit are mandatory requirements for employees planning to work in Croatia. Since Croatia is a member nation of the EU, European citizens are allowed to live and work in the country without additional visa requirements. Other foreign nationals require the following to live and work in Croatia.

Work Permits Explanation
Croatian Residence Permit Every foreign national who plans on staying in Croatia for a period longer than 90 days requires a Croatian residence permit. Only the holders of long-stay visas are eligible for the same. The application for the permit can be made at a local police department.
Work Permit Before applying for a long-stay visa for work and business orders, you must have an employer in Croatia who can obtain a work permit for you. A temporary residence permit shall not be granted to you unless you hold a valid work permit.

Securing work permits is an essential task of Skuad’s EOR services. Partner with us today to expedite your expansion in Croatia. To learn more, book a demo.

Payroll & Taxes in Croatia

Setting Up Payroll in Croatia

To set up payroll and manage taxes in Croatia, it is necessary to have clarity regarding your responsibilities as an employer. As a foreign company, you can opt from the following options to ensure your compliance with the local laws of Croatia.

  1. In-house payroll: In-house payroll is managed by an HR team in the internal department of the same business. HR team members are employees of the business. They also draw their pay from the same payroll system, similar to other employees.
  2. Global outsourcing: Global outsourcing involves partnering with a third-party global EOR service to look after your payroll and other HR activities.

Payroll Cycle

  • The salaries are paid to the employees monthly by the end of the month and no later than the 15th day of the succeeding month.

In 2021, Croatia set the monthly minimum wage of HRK 4,250 or EUR 562.80 (approximately USD 672).

Taxation in Croatia

Croatia follows a progressive tax system. Employer taxes are set at 16.5%.

1. Corporate Income Tax

Capital gains and losses are covered under this regime.

Income Tax Rate (Percentage)
Up to HRK 7.5 million (for entrepreneurs) 10%

2. Personal Income Tax

The Personal Income Tax is applicable on taxpayers who are physically present in Croatia or have real estate at their disposal for an uninterrupted period of 183 days in either one or two calendar years are deemed as resident taxpayers.

Earning Tax Rate (%)
Above HRK 360,000 30%
Up to HRK 360,000 20%
Lump-sum taxation of activities (such as rentals and leases) 10%
For digital nomads (third-country personnel employed to perform business operations through telecommunication) None

3. Monthly Tax Rates

Earning Tax Rate (%)
Up to HRK 30,000 20%
Above HRK 30,000 30%
Lump-sum taxation of activities (such as rentals and leases) 10%
For digital nomads (third-country personnel employed to perform business operations through telecommunication) None

Numerous deductions are also prescribed for individuals in the form of personal allowances, exemptions, and incentives.

4. Withholding Tax (WHT) on Dividend Income

Dividend and other profit payments made to a resident company Non-taxable
Dividend and other profit payments made to a non-resident company WHT at 12%

5. Social Security Contribution

In Croatia, social security contributions are based on the gross salary of employees and cover the pension scheme and health insurance. They are not state-sponsored.

Pillar Payment I: General solidarity 15% tax contribution
Pillar Payment II: Individual capital 5% tax contribution
Total employee cost 20% tax contribution

6. Value-added Tax (VAT)

The VAT is 25% for HRK 15 million and above.

7. Other Regulations

Croatia has an established system in the following types of insurance.

  • Health insurance: 16.5% of employer contribution
  • Unemployment insurance: 1.7% of employer contribution
  • Accident insurance: 0.5% of employer contribution

However, an employer is exempted for five years from paying such contributions if they hire an employee under the age of 30 years.

  • Gift tax: A person who receives or inherits a gift in Croatia is liable to pay a gift tax. The tax is determined at a rate of 4%.
  • Property tax: None

To manage payroll and taxes while expanding in Croatia, it is prudent to partner with an EOR service. Skuad’s Croatia EOR solution enables 100% compliance with the Croatian tax regulations and its unified employment platform helps in effective payroll management for organizations. To learn more about Skuad, Book a demo today

Incorporation: How to Set Up a Subsidiary in Croatia

This section will address how to register and incorporate a business in Croatia. Primarily, an employer cannot initiate their business and hiring operations in Croatia without registration. The following are the five main business structures followed in the country.

Process of Setting Up a Subsidiary in Croatia

The process of setting up a subsidiary and fulfilling all the statutory requirements such as getting it duly registered, obtaining the required capital, and getting approval could take several months. Any misstep can cause you to veer off your timeline for getting your business running in Croatia. Skuad offers an easy alternative to all your HR needs by taking over the HR tasks of establishing a subsidiary as your EOR partner.

The following steps are involved in setting up a subsidiary.

  • Registration with the Commercial Court after preparing relevant documents such as articles of association and a balance sheet of parent company
  • Getting a Statistical Registration Number from the Croatian Bureau of Statistics
  • Registering for VAT through the Tax Authority
  • Applying for licenses and permits
  • Enrolling in the pension scheme (HZMO) and health insurance (HZZO)
  • Creating a local bank account
  •  Obtaining the company seal
  • Abiding by the regulations under the Croatian Company Act, and Civil and Commercial Code

Professional Employer Organization (PEO)

What is a PEO?

A professional employer organization (PEO) acts as a co-employer of the organization to provide comprehensive HR services. It can be termed as an outsourced HR department providing access to different services.

Services Provided by PEO

A PEO offers in-house HR training and development, recruitment and hiring, compliance assistance with local labor and employment laws, payroll processing, and support in providing employee benefits.

Is an EOR Service a Replacement for PEO?

An EOR company offers similar HR services to a PEO. However, the EOR acts as a legal employer and not a co-employer.

A PEO is useful when a foreign company intends to establish its legal presence in the country where it has employees. However, an EOR is more suited to the needs of an employer who wishes to hire employees in a country without setting up a legal presence.

Though a PEO offers a wide range of HR services, it has its drawbacks, such as the employer’s loss of control over organizational policies that are to be decided by the hired PEO and unexpected price fluctuations made by the PEO in the services offered by the employer’s company. Importantly, the employer will be held liable for the penalties imposed on any unwarranted employment-related actions executed by the PEO.

Things to Consider before Selecting Your EOR Service

Before moving ahead with your business plans by partnering with an EOR service, assess their background and capabilities properly. 

Here’s a checklist for selecting the perfect EOR solution for your organization.

  1. What services are offered by the EOR company and are they consistent with the services you are looking for?
  2. Do the pricing and plans of the EOR company suit your needs? Determine the method in which service fees are charged and the invoice records are managed.
  3. Do they have a global presence? It is important to assess if the EOR service has its operations in the international markets. In addition, do they have the required staff physically present or have subsidiaries in those locations?
  4. IP protection and security are crucial. Gather comprehensive details about the sharing of information, such as the number of people who will have access to your information, whether the web transfers are done through the HTTPS mode, and how the sensitive information is safeguarded. 

Skuad provides both PEO and EOR solutions for companies. Hire Skuad’s EOR solution for Croatia to take care of all the compliance and HR-related tasks, from onboarding to training. Talk to Skuad experts to learn more.

Conclusion: What Gives Skuad’s Croatia Solutions an Edge?

Overall, the cost of living in Croatia is quite reasonable. It has tremendous business potential. Establishing a subsidiary in Croatia can be an option, though the overall execution of work becomes very complex, given the stringent employment and labor laws in place and the language and cultural barriers. Thus, the most viable option would be to let an EOR firm handle your hiring, tax, and other regulatory compliances and provide you with a skilled team of exceptional talent.

Skuad has an extensive network in 150+ countries across the globe and provides a single interface to onboard and manage employees and contractors. It offers consistent prices irrespective of the locations and manages the payment of your team through a single invoice. It also ensures that your IP, invention rights, and sensitive employee details are fully protected wherever you operate. For more details, contact Skuad experts!

FAQs for EOR in Croatia

What is the Employer of Record in Croatia?

An Employer of Record (EOR) in Croatia enables companies to employ talent in Croatia without establishing a local entity. By managing payroll, tax responsibilities, and compliance with labor and employment laws in Croatia, an EOR, like Skuad, facilitates seamless global employment strategies, enabling business expansion into the Croatian market.

What is the EU Employer of Record?

The EU Employer of Record simplifies the complexities of hiring across multiple EU countries by managing employment responsibilities like local contracts, payroll processing and compliance with local employment laws. This solution enables seamless employment across the European Union, without the need for multiple local legal entities.

Why do you need an Employer of Record?

Employing an Employer of Record (EOR) in Croatia is crucial for companies looking to expand tothe Croatian market without the hassle and expense of setting up a legal entity. An EOR manages all employment-related compliance, payroll in Croatia, and labor laws, enabling companies to focus on core business operations while minimizing legal and financial risks.

What is the difference between EOR and PEO?

While both EOR and PEO services manage HR tasks, an Employer of Record (EOR) in Croatia assumes all legal responsibilities for the employees, making it ideal for companies who want to enter a new market without a local presence. In contrast, a Professional Employer Organization (PEO) supports a co-employment model, where employment responsibilities as well as risks are shared between the PEO and the company.

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