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Croatia PEO PEO Employment Services by Velocity Global

Employer of Record in Croatia

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Croatia at a Glance

  • Currency: Kuna, HRK (kn). Beginning January 1, 2023, Croatia will join the eurozone and adopt the euro (EUR, €) as its official currency.
  • Population: 4.19 million
  • Economy/GDP: $107.11 billion (85th largest)
  • Top Sectors: Chemical and plastic production, machine tools and construction material manufacturing, textiles, petroleum, and tourism
  • Ease of Doing Business: Ranks 51 in the world, according to the World Bank’s latest Doing Business report from 2019
  • Languages: Croatian is the official language of Croatia, where 95% of the population speaks it. Croatia is the tenth most proficient country in speaking English as a second language, according to Education First’s English Proficiency Index, which analyzes data from 2.2 million non-native English speakers in 100 countries.

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Benefits of hiring in Croatia

  • Croatia offers political and economic stability for foreign investors. Croatia remains toward the top of the list as one of the most politically stable countries in the world, according to the U.S. News and World Report.
  • Croatia is a preferred international destination for foreign business development due to an experienced workforce, a large English-speaking population, and favorable tax incentives promoted by the government.
  • Croatia has a simplified business registration process, with few formalities and much less bureaucracy compared to other countries, ensuring a quick start and entry into the business market for foreign investment.
  • Croatia offers direct and effortless gateways to prime markets in Western Europe, Eastern Europe, and Asia, on prominent channels by land, air, and sea.

Challenges of hiring in Croatia

  • Croatia has a notorious judiciary system that is troubled by backlog and complaints. Businesses facing court disputes often wait years for a resolution and there are many grievances regarding lack of enforcement and questionable rulings. Using an employer of record in Croatia can help you avoid any potential legal issues.
  • Foreign business owners in Croatia often find it difficult to establish property ownership since there is a lack of an efficient process for real estate title records.
  • The Croatian market is challenged by more matured and established markets within Europe.

Cultural nuances and must-knows of doing business in Croatia

  • Business introductions in Croatia are similar to the majority of Europe. During a greeting, colleagues shake hands and offer a salutation such as good morning, good afternoon, or good evening.
  • Colleagues are usually addressed by their qualification title or position at work. If unsure of titles, it’s commonplace to use gendered greetings followed by family names. Only use first names if invited to do so, since first names are usually reserved for family and close friends.
  • Croatians prefer face to face communication over written communication because it allows for better mutual understanding. Written documentation is used for formal agreements and business preparations.
  • Croatian society is formal, but business settings allow for personal life influences for getting to know and understand colleagues.
  • Croatians are generally direct while speaking and perceive shyness as vulnerability. Eye contact is considered respectful. Croatian humor is often dark and sarcastic with a tendency of teasing so it can be difficult for newcomers to understand. There’s no intention of animosity or antagonism and Croatians will expect the same behavior in return.
  • When doing business in Croatia some cultural taboos include discussing personal financial situations and the political history of Yugoslavia and Bosnia-Herzegovina.
  • Croatians value punctuality and a business hierarchical structure with decision-making power placed at the top.

Wages and Salaries in Croatia

Minimum wage and salaries in Croatia

In Croatia, the current minimum gross monthly wage is EUR623.70 for 2022. The minimum wage in Croatia is determined once a year for the following year.

Probation period in Croatia

Probation periods are common, but not required by law in Croatia. They have a maximum period of 6 months.

Bonus payment in Croatia

There are no bonus requirements for employers in Croatia, but they are common. If employers pay their employees a bonus, they must include its details in the employees’ written contract.

Onboarding in Croatia

  • When employing an individual in Croatia, an employer must give employees a written employment contract. The contract must include:
    • Name and address of the employer and employee
    • Place of work
    • Name and type of work or description
    • Start date of employment
    • Duration of work, if it’s for a definite term
    • Paid leave entitlements
    • Notice period
    • Salary, bonuses, and frequency of payment
    • Daily or weekly working hours

Termination and notice period in Croatia

  • The minimum notice period that an employer must provide an employee in Croatia depends upon the employee’s length of service:
    • Less than one year: two weeks
    • One year: one month
    • Two years: one month and two weeks
    • Five years: two months
    • Ten years: two months and two weeks
    • 20 years: three months
  • An employee contract may be terminated:
    • By the death of the employer or employee
    • Upon termination of the trade
    • By mutual consent of the employer and employee
    • Upon written declaration by the employer or employee, with or without observing the applicable notice period
    • On the employee’s 65th birthday, after at least 15 years of service
    • By declaration of the court
  • If the employer terminates an employment contract, the declaration must be in writing and state the reason for termination. The employer must specify the payments which need to be made to the employee upon termination of employment.
  • Termination without notice is only permitted if there is a serious breach of the employee’s or employer’s contract or another important reason where the employment relationship is no longer possible.
  • Severance pay can be paid in accordance with the provisions of Croatia’s Employment Act, an employment contract, a collective bargaining agreement, or employment bylaws. If an employee is terminated after two years of service, unless the dismissal is related to the employee’s misconduct, the employee is entitled to statutory severance pay of an amount dependent on the length of service.

Leave Entitlements in Croatia

Annual leave in Croatia

  • In Croatia, an employee is entitled to a minimum of four weeks of statutory annual leave. Minor employees and employees subject to harmful impacts, such as firefighters or mine and explosive handlers, are entitled to five weeks.
  • Annual leave that is longer than the minimum statutory period can be regulated by an employment contract, a collective bargaining agreement, or employment bylaws.

Parental and maternity leave in Croatia

  • Employed pregnant women are entitled to 28 days prior to the expected birth date and up to 70 days after childbirth. Additional maternity leave lasts until the baby is aged six months, when the mother can return to work and transfer it, in part or fully, to the father.
  • An employed parent is entitled to parental leave after the baby is aged six months and until the child is eight years old. Both parents receive four months each of parental leave. If there is only one parent, the leave is six months.
  • Employed adoptive parents are entitled to take adoptive parental leave beginning the day the adoption becomes legal. The leave may last for six months for children up to the age of 18 and an additional six months of adoptive parental leave is given for an adopted child under eight years of age. Adoptive parental leave may be extended for 60 days in certain situations.
  • Employed mothers who meet the insurance period conditions receive their full base wage during maternity leave. If these conditions are not met, the government benefit is HRK 2,328.20 (EUR 309.00) per month.
  • Employed parents who meet the insurance period conditions receive their full base wage during parental leave with a maximum of HRK 5,654.20 (EUR 749.00) per month and a minimum of HRK 2,328.20 (EUR 309.00) per month.
  • The government benefit paid during adoptive leave is the full base wage of the adoptive parent, with no maximum.

Sick leave in Croatia

  • Croatian employees must give their employer a physician’s sick note within three days that confirms their inability to work and the duration of their sick leave.
  • During sick leave, employees are entitled to receive a minimum of 70% of their pay on the basis of their average salary from the preceding six months. However, it’s commonplace for employees to receive their full salary throughout the entirety of their sick leave.
  • If an employee’s sick leave lasts longer than 42 days, then sick pay is paid by the Croatian Health Institute.

Regional and national holidays in Croatia

  • Croatia has 14 public holidays in a calendar year, which are not included in the minimum paid leave entitlement but are taken in addition to annual leave. The national holidays in Croatia are:
    • New Year’s Day (January 1)
    • Three King’s Day (January 6)
    • Easter Sunday (April, the specific day fluctuates each year)
    • Easter Monday (April, the specific day fluctuates each year)
    • Labor Day (May, the specific day fluctuates each year)
    • Statehood Day (May 30)
    • Corpus Christi (June, the specific day fluctuates each year)
    • Anti-Fascist Struggle Day (June 22)
    • Victory and Homeland Thanksgiving Day (August 5)
    • Assumption of Mary (August 15)
    • All Saints’ Day (November 1)
    • Remembrance Day (November 18)
    • Christmas Day (December 25)
    • St. Stephen’s Day (December 26)

Employment Benefits in Croatia

  • According to Welcomm, the European Union’s Asylum, Migration, and Integration Fund, the Croatian benefits system provides state-funded entitlements within the social welfare system, including financial assistance and support to Croatian citizens and residents. Social services for those in need are granted through social welfare centers to vulnerable individuals who do not have sufficient means to cover their basic living needs.
  • The social insurance in Croatia consists of health, pension, unemployment, and work accident insurance, as well as maternity and family benefits.

Tax and Social Security in Croatia

  • In Croatia, a resident taxpayer is anyone with a permanent or usual residence in the country. Resident taxpayers pay taxes on total earned income in Croatia and abroad. Nonresident taxpayers do not have a permanent or usual residence in Croatia but earn an income in the country that is subject to income tax. The taxable base for a non-resident taxpayer is the income earned in one calendar year in Croatia.

Tax thresholds in Croatia

  • The basic personal deduction, which is not taxable, is EUR533.
  • The following tax rates apply to taxpayers beginning January 1, 2021:
    • Up to EUR4,000 is taxed at 20%
    • Over EUR4,000 is taxed at 30%
  • The corporate income tax rate in Croatia is 18%.
  • Contributions for social security insurance are calculated on the basis of an employee’s monthly wage. As of 2022, Croatia’s current social security rate charged on income for employees is 36.5% in total: 20% paid by the employee and 16.5% paid by the employer.

Health insurance in Croatia

  • As shared by the Croatian Health Insurance Fund, the Croatian Ministry of Health plays the role of the primary controller of Croatia’s health system with a wide scope of authority. The Croatian Ministry of Health requires health insurance for all residents, where all employed residents and their employers pay health care contributions from their salaries. The Croatian Ministry of Health’s insurance covers the costs of general and urgent care and exams, workplace injury and illness treatment, compensation for loss of pay during sick leave, maternity, paternity, or parental leave, and health services transportation costs.

Pension in Croatia

  • In Croatia, the required age for eligibility to receive a pension is currently 65 for men and 64 and four months for women, with an accumulation of at least 15 years of service.
  • After 35 years of service, men are eligible to claim an early retirement pension, provided they are at least 60 years of age. For women, they must have 32 years and four months of service and be at least 57 years and four months of age.
  • Pension is calculated using key factors including age, duration of the pension scheme status, and salary contributions during the employee’s working life.

Payroll in Croatia

  • An employer of record in Croatia helps make payroll seamless.

Tax due dates in Croatia

  • The Croatian tax year is the calendar year. The tax filing deadline is the end of February of the current year for the previous year.

Payroll cycle in Croatia

  • The payroll cycle in Croatia is usually monthly with payments made at the end of each month.

Average working hours in Croatia

  • A regular work week is 40 hours however it may be extended up to 48 hours a week, due to special business needs which are agreed upon by the employer and employee.

Overtime in Croatia

  • Overtime in Croatia is only allowed if the employer does not request more than 10 hours of overtime work per week and 180 hours per year, unless otherwise stated in a collective bargaining agreement. The overtime is only permitted at the employer’s written request and in the following conditions:
    • In force majeure cases
    • If there’s an extraordinary increase in the amount of business
    • An urgent business need arises

Why Work in Croatia?

A member of the European Union since 2013, Croatia is located in southeastern Europe, across the Adriatic Sea from Italy. Part of former Yugoslavia until 1991, it borders Slovenia, Hungary, Bosnia-Herzegovina, Serbia, and Montenegro.

Croatia’s economy is very open to international trade and the country stands as a universal favorite destination for foreign business development. Its active workforce, a large English-speaking population, and favorable tax incentives have prompted increased global interest in Croatia. In a constantly changing climate, foreign investment calls on security and stability before expanding a business in a new domain. Croatia offers security as it’s one of the safest and most politically stable countries in the world, which allows for its most profitable industry of tourism to thrive.

The Croatian government has introduced visas to entice skilled workers into the country, most notably its digital nomad visa, which has created a digital nomad enclave in the city of Zadar. This allows remote workers to live and work in Croatia for up to a year, creating a combination of a tourist visa and a long-term residency visa.

Those searching for reasons to work and live in Croatia can look forward to excellent standards of living, a calm and relaxed pace, and a relatively low cost of living compared to other European destinations. Croatia has one of the most enviable lifestyles in the world, since Croatians place considerable value on spending quality time with loved ones.

Croatia enjoys a Mediterranean climate of hot, dry summers and cool, rainy winters. In the northern region, where winter is cold and summer remains rainy, it can be described as a transitional Mediterranean climate.

The views in Croatia are extraordinary. The country is world-famous for its scenic beaches and crystal-clear waters. The coastal city of Dubrovnik has been one of the most prominent filming locations for the acclaimed HBO show, Game of Thrones. Croatia’s beautiful sunshine and weather make it an ideal destination for outdoor activities. With over 1,000 islands, it has a wealth of sea activities and the coastal topography is perfect for hiking and wine cultivation.

Croatia is jam-packed with picturesque, historical sites and culture. Straight out of the Adriatic Sea, the seafood is fresh and highly revered. With eight national parks, there is plenty to adventure and view such as the lakes, waterfalls, and greenery. Croatia has become a favorite for global festivals featuring world-class musicians. The islands of Dalmatia have become a popular destination for wine-lovers, as wine is known as one of the landscape’s favorites.

Transportation can be reasonably cheap in Croatia. In warmer months, airlines fly from regional airports to other European destinations, making Croatia a strategic gateway to other parts of the world. Ferries to the Croatian islands are affordable and the public transit network is extensive throughout the rest of the country.

Croatia is admired around the globe for its quality of life and gorgeous landscape. It’s one of the most popular destinations for tourists all year round. If you’re thinking of working in southeastern Europe, Croatia may be the place for you.

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