Mazars Central and Eastern European tax guide 2023

The Hungarian office of Mazars published for the eleventh time its regional tax guide, which presents snapshots and comparative charts of the tax systems of 25 CEE countries for 2023.

This guide, which has grown from covering 15 countries in 2013 to 25 in 2023, delves into a broad spectrum of tax issues, focusing on corporate income taxation, transfer pricing, employment, and sales taxes.

The 2023 guide offers a detailed analysis of tax regimes across a range of countries including Central and South-Eastern Europe, Germany, Austria, Moldova, Ukraine, the Baltic States, and for the first time, Central Asian countries such as Kazakhstan, Kyrgyzstan, and Uzbekistan.

Highlights for 2023 - Croatia:

  • The tax burden from the aspect of profit tax in the Republic of Croatia does not deviate significantly from the average of the CEE region.
  • In the Republic of Croatia, the level of the interest rate on loans between related parties that is considered market (from the point of view of the safe harbor rule) is usually published at the end of the business year for the following year and the same for 2023 (Decision issued at the end of 2022. year) is 2.4%.
  • Taking into account the trends in the financial markets and the upward trends in borrowing costs, it is to be expected that certain business entities that do business with related parties and carry out certain mutual financial transactions (credit arrangements, etc.) will very likely face the challenge of proving or documenting (primarily from the perspective of loans received) that the cost of borrowing on funds received from related companies is acceptable from a tax perspective, i.e. tax deductible. In this regard, it is to be expected that taxpayers will look for an alternative in determining the market value of the interest rate by conducting economic analyses, while using one of the prescribed transfer pricing methods in accordance with Article 13 of the Income Tax Act.
  • From the aspect of local income tax rules, it can be concluded that there have been no significant changes in the Republic of Croatia.
  • However, one should definitely take into account the planned changes from the perspective of income tax that are expected at the beginning of 2024, and among other things, they refer to the increase of the amount of the personal deduction from EUR 530.90 to EUR 560, the reduction of the pension insurance base for the first pillar to a maximum of EUR 300, raising the threshold for the application of a higher income tax rate from EUR 47.780 to EUR 50.400 and abolishing the surcharge, while the determination of the income tax rate will be left to local self-government units, in a range to be determined by the Government of the Republic of Croatia and others.

We hope and trust that our readers will find this summary useful and inspiring. We also included the contact information for Mazars offices and experts.

Download the guide in English by clicking the link below.

Mazars CEE Tax Guide 2023 - pdf version

Please visit the interactive online platform of the Mazars CEE Tax Guide 2023:

Mazars Central and Eastern European Tax Guide 2023



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