Investment Guide

Osijek-Baranja County

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Areas of Special State Concern

Areas of special state concern in Osijek-Baranja County are:

1.      Towns, municipalities and settlements classified in Group 1 of the special state concern areas [1]:

·         Antunovac

·         Beli Manastir

·         Bilje

·         Čeminac

·         Darda

·         Draž

·         Erdut

·         Ernestinovo

·         Jagodnjak

·         Kneževi Vinogradi

·         Petlovac

·         Popovac

·         Šodolovci

·         Osijek – gravitating settlements: Klisa, Nemetin, Sarvaš, Tenja

 

2.      Osijek-Baranja County has no locations classified in Group 2 of the special state concern areas[2].

 

3.      Municipalities classified under Group 3 of the special state concern areas [3]:

·         Levanjska Varoš

·         Podgorač

·         Podravska Moslavina

·         Punitovci

·         Satnica Đakovačka

·         Semeljci

·         Trnava

·         Vladislavci

 

INCENTIVE MEASURES

A series of measures and reliefs have been adopted in the attempt to secure a balanced and harmonised development of these areas and encourage the population to return, remain or move to these areas.

Reliefs are eligible to those legal entities who have a registered office or craft business owners who have a domicile residence in the areas of special state concern and natural persons who have domicile residence and who stay in these areas.

 

TAX PRIVILEGES

Privileges at profit taxation

I. Tax payers who carry out agricultural and fishing activities in an area of special state concern and employ more than five employees for an indefinite period of time, where 50% of the employees hold permanent and temporary residence in the area of special state concern for no less than nine months until the accession of the Republic of Croatia in the European Union pay profit tax as follows:

 

Special state concern areas
Profit tax rate
Group I.
not subject to profit tax
Group II.
25% of the prescribed tax rate
Group III.
75% of the prescribed tax rate
 
 

It is considered that the taxpayer liable for profit tax who conducts activities in the special state concern area employs an employee for an indefinite period of time, if during the employment; the employee was employed and held permanent and temporary residence in the special state care area for at least nine months during the taxation period.

II. Taxpayers liable for profit tax who conduct activities in a special state concern area (other than agriculture and fishing activities) and employ more than five employees for an indefinite period of time, where more than 50% of the employees hold permanent and temporary residence in the special state concern area pay profit tax as follows:

1. A profit tax payer who carries out an activity in an area that falls under Group I of the special state concern areas:

- is not liable to pay profit tax during the period 2008 - 2010

- pays 25% of the prescribed tax rate in the period 2011 - 2013

- pays 75% of the prescribed tax rate in the period 2014 – 2016

- as of the year 2017 shall pay the full value of the prescribed tax rate.

 

2. A profit tax payer who carries out an activity in an area that falls under Group III of the special state concern areas:

- 75% of the prescribed tax rate in the period 2008 - 2010

- 85% of the prescribed tax rate in the period 2011 - 2013

- as of the year 2014 shall pay the full value of the prescribed tax rate.

                                                               

Privileges at income taxation

Those tax payers having a permanent and temporary residence in special state concern areas shall have their basic personal deduction accounted during a year in the amount of 1,800 HRK per month.

At the end of the year, based on filed annual income tax return, tax payers shall be acknowledged increased base personal deduction


Special state concern areas
Base personal deduction
Group I.
3.840 HRK
Group II.
3.200 HRK
Group III.
2.400 HRK

 

 
Obveznicima poreza na dohodak koji obavljaju samostalnu djelatnost na područjima posebne državne skrbi umanjuje se utvrđeni porez na dohodak od tih djelatnosti na tim područjima.
Special state concern areas
Percentage reduced
Group I.
100%
Group II.
75%
Group III.
25%
 

Income tax payers may take advantage of income tax exemption or reduction for ten years as of the date of effect of the Income Tax Act (in effect as of 1 January 2005), provided that they employ more than 2 workers for an indefinite period of time, whereas more than 50% of the workers have permanent residence and reside in special state concern areas for at least nine months of a tax accounting period.

 

Privileges at real estate taxation

No real estate transfer tax is paid by citizens who acquire real estate located in special state concern areas if they have or are currently registering a permanent residence in such area. Real estate transfer tax is subsequently paid if within 10 years as of the date of acquisition the real property is alienated, if the tax payer changes residence to outside of the special state concern area and if the tax payer despite having a registered permanent residence does not actually reside in the special state concern area.

 

Privileges at inheritance and gifts taxation

Natural persons who have permanent residence in special state concern areas are not under the obligation to pay inheritance and gifts tax if the subject of inheritance or donation are real properties located in such area.

 

LOAN PROGRAMMES OF THE CROATIAN BANK FOR RECONSTRUCTION AND DEVELOPMENT

Alongside the loan programmes carried out by the Croatian Bank for Reconstruction and Development (HBOR) for the entire territory of Croatia, there is a special programme intended for special state concern areas – Loan Programme to Encourage Small Business in Special State Concern Areas.

Loan beneficiaries

Eligible loan beneficiaries are legal and natural persons :

·    private companies, craftsmen, farmers and fishermen from special state concern areas

·    entrepreneurs from other parts of Croatia who want to relocate their entire business or part thereof to a special state concern area or wish to establish a craft business, company or farm in such area

·    agricultural cooperatives, farmers and fishermen from all parts of Croatia who invest in fishing and agriculture

The end beneficiary of a loan may not be a co-owner in two or more companies having more than 30% of ownership in each or the owner of two or more craft businesses.

Eligible for loans are companies that employ less than 250 persons and whose revenue during the 12 months prior to the preparation of balance sheet do not exceed 40 mil. HRK and whose balance sum does not exceed 20 mil. HRK.

 


[1] The first group are areas of towns and municipalities that were occupied during the Homeland War and are located along the state border, and the distance to the town or municipality centre does not exceed 15 km as the crow flies, with a population of no more than 5,000 according to the 1991 census, as well as all other then occupied areas of the towns, municipalities and settlements of the Croatian Danube region.

[2] The second group includes areas of towns, municipalities and settlements that were occupied during the Homeland War, but are not classified into Group I.

[3] The third group includes special state concern areas that are towns and municipalities estimated to be parts of Croatia lagging behind in terms of development according to three respective criteria: economic, structural and demographic.

 

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