On the basis of Article 93 of the Income Tax Act ("Official Gazette", no. 115/16, 106/18, 121/19, 32/20 and 138/20), the Minister of Finance issued the Ordinance on Amendments to the Ordinance on Tax on the income according to which the sums of some tax-free receipts have been increased.
The provisions of the aforementioned Ordinance refer to:
- an increase in tax-free amounts of receipts that will come into force on October 1, 2022,
- the possibility of changing the method of paying the costs of meals to workers during the year, which will come into force on January 1, 2023.
In accordance with the aforementioned changes, from October 1, 2022, tax-free receipts can be paid in the following amounts:
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1.
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Occasional allowances (Christmas allowance, vacation allowance, etc.)
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up to HRK 5,000.00
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2.
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Severance payments upon retirement
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up to HRK 10,000.00
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3.
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Gift to a child up to 15 years of age (who turned 15 by December 31 of the current year)
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up to HRK 1,000.00 per year
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4.
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Fees for the use of a private car for official purposes
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up to HRK 3.00 per kilometre travelled
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5.
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Monetary awards for work results and other forms of additional employee remuneration (additional salary, supplement to monthly salary, etc.)
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up to HRK 7,500.00 per year
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6.
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Lump-sum cash allowances for meeting the costs of food for workers
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up to HRK 6,000.00 per year
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According to the aforementioned Ordinance, the increased amount of compensation for the use of a private car for official purposes of HRK 3.00/km can only be applied for kilometres travelled from October 1, 2022, which deviates from the basic principle in income tax - the cash register principle. The non-taxable fee for the use of a private car for official purposes for distances travelled by September 30, 2022 is up to HRK 2.00 per km.
From January 1, 2023, the provision related to the newly prescribed way of providing meals to workers will enter into force. In order to enable the payment of non-taxable food costs in these cases, a proportional monthly part of the payment of food costs is prescribed, with the condition that they are mutually exclusive at the level of the month, i.e.:
- HRK 500.00 per month in cash or
- HRK 1,000.00 per month if food is provided on the basis of authentic documents, i.e. a limit per month is prescribed for each of the above-mentioned receipts, and the possibility is prescribed to pay out tax-free at once/enable receipt for several missed months of the same tax period, i.e. the receipts can be paid for months back, but no longer for months ahead.
Until December 31, 2022, it is not allowed to provide tax-free meals during the year in both prescribed ways for the same worker, but this possibility is prescribed with application from January 1, 2023. However, from October 1, 2022, employers can provide workers with a lump-sum payment to cover meal expenses already for 2022 to pay the difference between the amount of HRK 6,000.00 (the newly prescribed tax-free amount) and the tax-free amount used until September 30, 2022.
Also, up to HRK 1,000.00 is the amount that can be set aside for a gift to a child up to 15 years of age (who turned 15 by December 31 of the current year).
Data source: NARODNE NOVINE