Introduction to Payroll in Croatia

Croatia’s growing economy, beautiful coast, and thriving cities are becoming a catalyst for business investors around the globe. If you, too, are considering expanding your company to this country, then you will be able to enjoy a profitable market and exciting new revenue streams.

Not however before you have resolved one of the biggest challenges of doing business in Croatia: payroll management. This, in fact, can be a very complicated process, particularly if you don’t seek the support of an experienced and reputable global payroll provider like Skuad.

Payroll Process in Croatia

In Croatia, as well as in most other countries, payroll comprises three different but interconnected stages: pre-payroll, payroll calculation, and post-payroll.

Pre-payroll phase

This is the initial stage of the whole payroll process, and it requires you to create your business in Croatia, in full compliance with the country’s payroll laws.

Setting up the organization

The first step is to establish your new business entity in Croatia, which in turn will help you operate your business legally.

Business profile

Registering your business also allows you to receive your unique business identification number. This important number is used as a reference on all official forms and documents about payroll.

Work location

Depending on where, exactly, in Croatia you establish your business, you might need to follow specific local laws on payroll and labor.

Leave policy

During this phase you will also need to define and communicate policies on all types of leave, including sick leave, maternity leave, and annual leave.

Attendance policy

Establishing standards and special provisions around work attendance is another essential aspect of the pre-payroll phase.

Statutory components

All of the above can be defined, decided, and officialized within your own company. However, it always must adhere to both local and state laws.

Salary components

In Croatia, monthly wages are inclusive of both allowances, such as bonuses and benefits, and deductions, such as leave and special permits.

Pay schedule

Typically, Croatian employees are paid once a month. It’s up to you, though, to establish, and observe a specific payday and payment schedule.

Employee information

In order to calculate payroll, you will need to gather specific information on all your employees.

Payroll calculation phase

This phase follows the pre-payroll phase, and it involves feeding that data collected during pre-payroll into your payroll system, which will return accurate salaries for all your employees.

Post-payroll phase

Salary payments

The bulk of the post-payroll phase is represented by paying out your staff’s wages. You can choose to do so either manually via your bank, or automatically by using specialized software.

Payroll accounting

Remember to keep a close eye on all your salary payouts each month, as this is important to your internal accounting processes.

Payroll reporting and compliance

Certain Croatian authorities will need you to provide detailed payroll information at specific times. Failing to do so can trigger complaints and fines.

There is a lot at stake, when you choose to manage payroll in Croatia without any expert support. You can, however, avoid all trouble by teaming up with a payroll provider like Skuad, who can assist you throughout the entire payroll process.

Payroll Processing in Croatia

In Croatia, companies are required to submit tax returns within specific timeframes, as well as provide relevant authorities with payroll-related information.

Payroll Processing Company in Croatia

At Skuad, we know how to make payroll processing in Croatia a no-brainer. We take care of every little detail, so you don’t have to, permitting you to go ahead with strategic business operations and decisions.

Payroll Management in Croatia

Maintaining a solid, accurate record of your payroll data in a fully compliant way is essential to good payroll management in Croatia.

Payroll Compliance in Croatia

Rules and regulations around employment in Croatia are mostly established by the Croatian Labor Law, as well as the country’s Constitution.

Payroll Components in Croatia

In the following sections, we will discuss some of the most important components of payroll in Croatia. It’s vital that you get to know and understand them in order to manage and process payroll efficiently.

Compensation

Since January 2022, the Croatian government has increased the country’s minimum wage by just over 10%, from 3,400 Croatian Kuna to 3,750 Croatian Kuna.

Working hours

Standard working hours in Croatia are 40 per week, spread over a typical Monday to Friday workweek.

Overtime laws

Overtime work in Croatia is not uncommon, although it can only be required by an employer in urgent situations. Even then, it cannot go beyond 50 hours per week, or 180 per year.

Social security

In Croatia, the social security rate for employees is established at 20%.

Sick leave

The country does not have any standard provisions regarding the specific number of annual sick leave days. However, the first 42 days of leave within the same year are paid at 70% by the employer.

Parental leave

New mothers in Croatia are entitled to paid maternity leave up until their child’s six-month birthday. In fact, pregnant employees must take 98 days of continuous leave, 28 days to be taken before their due date, and 70 days after giving birth.

In addition to this, women can request further leave starting from the 71st day after birth. In the case of an employee suffering a stillbirth before the beginning of her maternity leave, she is entitled to receive standard maternity leave starting from the day her child has died.

Public holidays

Below is a list of the main  public holidays in Croatia:

January 1:  New Year’s Day

January 6: Epiphany

Easter Sunday

Easter Monday

May 1: Labor Day

May 30: Statehood Day

Corpus Christi

June 22: Anti-Fascist Resistance Day

June 25: National Day

August 5: Homeland Thanksgiving Day, Victory Day, Croatian Veteran Day

August 15: Assumption Day

November 1: All Saints’ Day

November 18: Remembrance Day for victims of Homeland War and victims of Vukovar and Škabrnja

December 25: Christmas Day

December 26: St. Stephen’s Day

Payroll taxes

Croatia does not have any specific provisions or laws around payroll taxes.

Other laws

Termination of Employment

In Croatia, employees can be terminated when just cause has been found, and when notice of at least two weeks has been provided. In this case, the terminated employee will receive a termination payment package from the employer, which takes into consideration annual leave days and other reimbursements.

When deciding to terminate an employee, companies must communicate this in writing and not just verbally.

Paid Annual Leave

The Croatian allowance for paid annual leave is of four weeks per year. Nonetheless, different and more advantageous agreements can be reached by employees in specific situations, and if the employer agrees. These agreements include employment agreements, collective bargaining agreements, and agreements between employers and trade unions.

In order to access the statutory minimum paid annual leave, an employee needs to work for the same employer for at least six continuous months.

Conclusion

Payroll processing and management in Croatia can be so complicated and confusing that it might deter you from pursuing business expansion in this country, thus missing out on excellent opportunities for growth and profit. If you choose to go about payroll management without the assistance of a third party, you will incur higher costs as well as the need to hire a specialized team of HR and accounting people.

The good news is that you don’t have to do everything by yourself.  In fact, you have three more options when it comes to your Croatian payroll management:

1. Remote payroll. If you select this method, you will be managing your payroll in Croatia straight from your parent company’s headquarters. If this sounds simple enough, then you might need to think again. To be successful in this approach, you’ll need to have a strong, accurate, and up-to-date knowledge and understanding of all payroll laws in Croatia, all the time.
2. Payroll processing company in Croatia. This alternative often seems like a good compromise, but there are more complexities involved. You will, in fact, need to research the local market thoroughly in order to identify a trusted, efficient, and professional payroll agency that can help you manage your Croatian payroll. If you don’t speak the language, have no connections in the country, and have no understanding of the local laws, this can be incredibly challenging.
3. Outsourced payroll. With this option, you have the peace of mind that every single part of your payroll will always be processed and managed in the best and most compliant way, leaving no stone unturned. Choosing an expert global payroll provider like Skuad can truly contribute to the success of your Croatian business venture.

If outsourced payroll sounds too good to be true, then why not take a look at how we achieve all this, in practice? Request and view a FREE demo today, or get in touch with a member of the Skuad team for more information today.

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