ACT ON INVESTMENT PROMOTION
Incentive measures for investment projects in the Republic of Croatia are regulated by the Act on Investment Promotion (OG, No. 102/15 ) and pertain to investment projects in:
- manufacturing and processing activities,
- development and innovation activities,
- business support activities,
- high added value services.
Incentive measures can be used by enterprises registered in the Republic of Croatia investing in fixed assets the minimum amount of:
- € 50,000 together with creating at least 3 new jobs for microenterprises
- € 150,000 together with creating at least 5 new jobs for small, medium and large enterprises.
Classification of enterprises is done in accordance with the GBER.
|Enterprise category*||Number of employees and||Annual turnover||or||Annual balance sheet|
|Large||≥ 250||> 50 million €||or||> 43 million €|
|Medium||< 250||≤ 50 million €||or||≤ 43 million €|
|Small||< 50||≤ 10 million €||or||≤ 10 million €|
|Micro||< 10||≤ 2 million €||or||≤ 2 million €|
*When classifying enterprises one should also consider affiliated enterprises
The amount of aid shall be calculated as a percentage of investment value, which is determined on the basis of eligible investment cost. Eligible investment costs are:
- tangible (value of land/buildings and plant/machinery) and intangible assets (patent rights, licences, know-how),or
- gross wage calculated over a period of two years
The minimum period for maintaining the investment and newly created jobs linked to an investment is five years for large enterprises, and three years for small and medium-sized enterprises, but no less than the period of use of the incentive measures.
Profit tax incentives
|Investment amount (€ mil.)||Number of newly employed||Period (years)||Period of employment (years)||Profit tax rate|
|<1||5 (3 for micro)||10 (5 for micro)||3 (SME’s), 5 (large)||10%|
|1-3||10||10||3 (SME’s), 5 (large)||5%|
|>3||15||15||3 (SME’s), 5 (large)||0%|
|County Unemployment Rate||Incentive Rate in Relation to Eligible Costs of Opening New Workplaces*||Increase for Technology Innovation and Development Centres||Increase for Business Support Strategic Activities and High Added Value Investment Activities||Incentives for innovation and development activities|
|<10%||10% (max. 3,000 €) for employing groups of persons covered by Article 9. paragraph 3. of Regulation*||+50% (1,500 €)||+25% (750 €)||20% of the eligible cost of buying the equipment/machinery (up to € 0.5 million)All the equipment/machinery has to be high technology|
|10-20%||20% (max. 6,000 €) for employing groups of persons covered by Article 9. paragraph 3. of Regulation*||+50% (3,000 €)||+25% (1,500 €|
|>20%||30% (max. 9,000 €) for employing groups of persons covered by Article 9. paragraph 3. of Regulation*||+50% (4,500 €)||+25% (2,250 €)|
*Please note that the Regulation on Investment Promotion (NN 31/16) prescribe in more detail employment incentives.
For investment in development and innovation activities, a non-repayable grant shall be approved for the purchase of plant/machinery amounting to 20% of the actual eligible costs for purchasing plant/machinery, in the maximum amount of EUR 500,000 in equivalent HRK value, provided that the purchased plant/machinery represents high technology equipment.
Incentives for education and training:
The eligible costs for the purpose of training may include trainers’ personnel costs, for the hours during which the trainers participate in the training; trainers’ and trainees’ operating costs directly relating to the training project such as travel expenses, materials and supplies directly related to the project, depreciation of tools and equipment, to the extent that they are used exclusively for the training project. Accommodation costs are excluded.; costs of advisory services linked to the training project; trainees’ personnel costs and general indirect costs (administrative costs, rent, overheads) for the hours during which the trainees participate in the training.
Incentives will not be awarded for the training conducted to ensure compliance with the mandatory training prescribed by national norms.
The aid intensity shall not exceed 50 % of the eligible costs. It may be increased, up to a maximum aid intensity of 70 % of the eligible costs, as follows:
(a) by 10 percentage points if the training is given to workers with disabilities or disadvantaged workers;
(b) by 10 percentage points if the aid is granted to medium-sized enterprises and by 20 percentage points if the aid is granted to small enterprises.
Incentive measures for the capital costs of the investment project
Eligibility: over € 5 million and more than 50 new jobs
|County Unemployment Rate||Incentives for Capital Expenses|
|10-20%||Cash grant in amount of 10% of the eligible costs of investments for:
(max amount up to 0.5 million EUR with the condition that the part of investment in the machines / equipment equals at least 40% of the investment and that at least 50% of those machines/equipment are of high technology)
|>20%||Cash grant in amount of 20% of the eligible costs of investments for:
(max amount up to 1 million EUR with the condition that the part of investment in the machines / equipment equals at least 40% of the investment and that at least 50% of those machines/equipment are of high technology)
Incentive measures for labour-intensive investment projects
|Number of newly created jobs||Increase of Support for creating new jobs|
|100 and higher||25%|
|300 and higher||50%|
|500 and higher||100%|
Investment incentives for the invetsment in the minimum amount equivalent to € 13,000,000 provided that a minimum of 10 new University degree level jobs related to the investment project are created.
|INCENTIVES TO MAINTAIN THE CURRENT BUSINESS ACTIVITY||INCENTIVES FOR INVESTMENT||INCENTIVES HALF AND HALF||GRACE PERIOD TO PAY TAX LIABILITIES|
|through co-financing up to the differences in tax liabilities and liabilities arising from contributions determined in accordance with the regulations that were in force at the time of filing the application for approval of the status of aid beneficiary and tax liabilities and liabilities arising from contributions in accordance with the regulations in force at the time of calculation of those commitments, for a period of 10 years from the beginning of investment||through co-financing of the part of the tax liabilities to the state other than value added tax, or part of the amount of the obligatory contributions in the period to 10 years from the initial investment||through co-financing of:
|through interest-free loan from the competent ministry for the payment of tax liabilities, except value added tax, for a period of three years from the beginning of investment|
According to the procedure for applying for incentive measures under the Act on Investment Promotion (NN 102/15) an enterprise intending to acquire the status of a beneficiary of incentive measures must file an Application for the use of incentives using the prescribed forms either to the Ministry of Economy if it falls under the category of a large enterprise or to the Ministry of Entrepreneurship and Crafts if it falls under the categories of micro-, small or medium enterprise before the beginning of the investment.
Source: Agency for Investments and Competitivenes web page