The law stipulates the obligation to determine a gross salary which must be specified in the employment contract and which the employer pays the worker for work performed. Also, the provisions of law determine the minimum gross salary an employer must pay a worker for performed work.
For difficult working conditions, overtime and night work, and work on Sundays, holidays or any other day which the law stipulates is a day off, the worker is entitled to an increased salary.
The average monthly gross salary per employee in legal entities in the Republic of Croatia for August 2022 is EUR 1,389.10.
A worker who receives a salary is obliged to pay income tax, a surtax on income tax and salary contributions. The employer is obliged to calculate, retain and pay these benefits on the worker’s behalf.
An employer who concludes an employment contract with a young person (up to 30 years of age) for an indefinite time period is obliged to calculate only contributions from the base rate for a period of up to five years as follows:
– Pension insurance contribution at a rate of 20% or 15% for insured pension insurance based on individual capitalized savings, and
– Contribution for pension insurance based on individual capitalized savings at a rate of 5%.
Within the specified period of five years, there are no obligations to pay health insurance contributions at the rate of 16.5%.
Likewise, there is a reduced tax liability by 100% for young people up to 25 years of age and by 50% for young people from 26 to 30 years of age for a salary up to an annual basis of EUR 47,780.28.
Hence, workers up to 25 years of age are completely exempted from paying taxes on income, and for persons aged 26 to 30, income tax is reduced by 50%. However, the prescribed exemption or reduction is carried out by the Tax Administration in a special tax assessment procedure, which means that employers during the year calculate the tax advance for these persons in the manner prescribed for all other employees, without exemption or reduction.
Salary is calculated pursuant to the provisions of the Income Tax Act, the Ordinance on Income Tax, the Contributions Act, and income taxpayers who have a permanent or usual residence in the municipality/city who prescribed the obligation to pay surtax, pay surtax.
The following is an example of how a salary is calculated in the City of Zagreb when applying a personal deduction factor of 1.
|TOTAL COSTS FOR THE EMPLOYER (GROSS II)||Amount||1,389.10 EUR|
|Mandatory contribution to be paid by the employer 16.5%||229.20 EUR|
|GROSS SALARY (GROSS I)||Amount||1,159.90 EUR|
|Obligatory contribution to be paid by the employee (Pension insurance pillar I – 15% and Pension insurance pillar II – 5%)||231.98 EUR|
|Personal allowance (1)||530.89 EUR|
|Taxable income||265.45 EUR|
|Tax (20%) for an annual salary below 47,780.21 EUR per year||53.09 EUR|
|Tax (30%) for an annual salary over 47,780.21 EUR per year||0 EUR|
|Total tax amount||53.09 EUR|
|Surtax (18%)||9.56 EUR|
|Total tax and surtax||62.65 EUR|
|NET SALARY||Amount||865.27 EUR|