Business expenses in Croatia in 2026: what your company can deduct

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You run your work through a Croatian company or craft, or you soon will, and you want to know which costs cut your bill. The answer depends on your legal form as much as on the expense. This guide gives the 2026 rules, the limits, and the tax-free payments you can make to yourself.

Croatia business expenses in 2026: the key figures

What changed for 2026

• E-invoicing started. Since 1 January 2026, VAT-registered businesses must issue and receive domestic invoices as eRačun. Non-VAT businesses must receive them now and issue them from 1 January 2027, per the Fiscalisation 2.0 guide.
• The Profit Tax Act was amended by NN 151/2025, in force on 1 January 2026. The deduction limits in this guide are unchanged.
• The 2026 benchmark rate for related-party loans is 2.65%, published by the Croatian National Bank (PwC, secondary). Interest above it on related-party loans is deductible only with arm's-length support.

Is this guide for you?

Read on if you…

• own a d.o.o. or j.d.o.o. and want to know what the company can pay for;
• freelance through a craft (obrt) and are choosing between flat-rate tax and real books;
• manage a foreign company from Croatia and need to know which costs Croatia would recognise.

Probably not your case if you…

• are an employee with no business; read personal tax deductions and benefits in Croatia;
• have not picked an entity yet; start with legal forms of business in Croatia.

Which legal form lets you deduct what?

The same laptop is fully deductible, partly deductible or irrelevant, depending on your structure.

The Tax Administration's flat-rate guide publishes the bands. In the top band (EUR 50,000.01–60,000), the base is EUR 9,000 and the tax EUR 1,080 a year.

In practice, a flat-rate craft wins when your costs are low and receipts stay under EUR 60,000. Once you carry heavy equipment, travel or subcontractors, a company that deducts them at 10% often wins. Heavnn can set it up through business setup.

What can a Croatian company deduct in full?

The Profit Tax Act starts from accounting profit: revenue minus expenses, before profit tax. Costs booked under accounting rules reduce profit unless the Act adds them back. Typical fully deductible costs:

• Salaries and employer contributions, including your own director's salary and the 16.5% employer health contribution.
• Subcontractors and freelancers, Croatian or foreign, with a proper invoice.
• Software, cloud, hosting and domains, including services billed from abroad.
• Office rent, coworking and utilities for business premises.
• Business travel: transport, accommodation and per diems within the tax-free limits.
• Bad debts, if more than 60 days passed between due date and year-end, and other conditions are met.

Depreciation of equipment

Long-term assets are depreciated, not expensed at once. Art. 12 sets maximum straight-line rates. Computers and software take 50% a year, so two years. Equipment and intangibles take 25%, personal cars 20% and buildings 5%. You may double these rates. Depreciation above the allowed amount is taxable.

Which costs are only partly deductible, or not at all?

The 50% rules

• Entertainment (reprezentacija): client meals, drinks, gifts and hospitality. Half is added back to the taxable profit under art. 7.
• Vehicles used by managers and staff: 50% of fuel, leasing, maintenance and depreciation is added back. Insurance and interest are excluded from the add-back.

Capped items

• Donations: deductible up to 2% of the previous or current year's revenue. Higher amounts need specific government decisions.
• Shareholder loans: interest is disallowed where loans from a 25%+ shareholder exceed four times that shareholder's equity share (art. 8).
• Net interest: deductible up to 30% of EBITDA or EUR 3 million, whichever is higher.

Zero deduction

• Fines and penalties imposed by Croatian authorities.
• Goodwill amortisation, which is not recognised for tax.
• Depreciation of assets not used for business.
• Hidden profit transfers to foreign affiliates, measured against market prices.

The Tax Administration's profit tax page lists the Act and its ordinance. PwC's deductions summary (secondary) covers the same limits.

How do you pay yourself tax-free amounts?

An employer can pay several amounts free of income tax. As owner-director on the payroll, you qualify too. The main 2026 limits:

These limits come from art. 7 of the Income Tax Rulebook, consolidated up to NN 157/25. Above them, a payment is salary, taxed at local rates with 20% pension contributions. Travel needs a travel order, or per diems turn into salary.

How do you document and file expenses in Croatia?

1. Get an invoice in the company's name, with its OIB, for every cost.
2. If you are VAT-registered, issue and receive domestic B2B invoices as eRačun since 2026, through an information intermediary.
3. Keep travel orders for each trip that pays per diems or mileage.
4. Book costs in the period they belong to, and track the add-backs above.
5. File the PD profit tax return within four months of year-end.

A flat-rate craft keeps a simple receipts book instead, and files the PO-SD report by 15 January. Rates, advances and losses are in corporate income taxes in Croatia.

Running a foreign company from Croatia: the residence warning

If you live in Croatia and run a foreign company from your kitchen table, the company can become Croatian. Art. 3 of the Profit Tax Act makes a company resident if its place of effective management is here. Short of that, your work can create a Croatian permanent establishment, a taxable presence, with profit taxed here.

Honestly? For a one-person business staying for years, a Croatian d.o.o. at 10% with full cost deduction is often simpler. Treaty tie-breakers are in international tax treaties of Croatia. The Tax Administration lists 72 applying treaties.

Common mistakes (and what they cost)

• Deducting 100% of client dinners and gifts → half is added back on audit, plus default interest on the unpaid tax.
• Running a private car through the company → 50% of its costs is added back every year.
• Staying on the flat-rate craft with high real costs → you pay tax on a fixed base and deduct nothing; a company would have cut the bill.
• Paying per diems without travel orders → they are treated as salary, with contributions and income tax.
• Donating above 2% of revenue → the excess is added back at 10% or 18%.

Frequently asked questions

Can a flat-rate craft deduct business expenses in Croatia?

No. A paušalni obrt pays 12% on a fixed base set by receipts band, up to EUR 60,000 of receipts. Actual costs do not change the bill. If your costs are high, keeping real books or using a d.o.o. lets every documented business cost reduce the tax base. Compare both before the year starts.

Are meals and entertainment deductible for a Croatian company?

Only half. Under art. 7 of the Profit Tax Act, 50% of entertainment costs, such as client meals, drinks, gifts and hospitality, is added back to profit. Staff meal allowances are a different item. They are tax-free for the employee up to EUR 1,200 a year without invoices, or EUR 1,800 with them.

How are company car costs treated in Croatia?

For vehicles used by managers and staff, 50% of the costs is added back to taxable profit. Insurance and interest are excluded from that add-back. Personal cars depreciate at up to 20% a year, a rate you may double. The benefit-in-kind side, for private use, follows separate income tax rules.

What per diem can I pay myself tax-free in Croatia?

For business trips within Croatia, up to EUR 30 a day is tax-free. Using your own car for business can be reimbursed at up to EUR 0.50 per km. You need a travel order that documents each trip. Without it, the payment is treated as salary, with contributions and income tax.

Can I deduct my home office in Croatia?

A company can deduct costs it actually bears for business premises, such as rent paid under a lease. Paying your private household costs without a contract risks being treated as a hidden payment to you. Separately, an employer can pay EUR 4 per home-working day tax-free, up to EUR 70 a month.

Do I need e-invoices for my expenses in 2026?

Yes, if you are VAT-registered and buy from Croatian suppliers. Since 1 January 2026, VAT payers must issue and receive domestic B2B invoices as eRačun. Non-VAT businesses must already receive them and will issue them from 1 January 2027. Invoices from foreign suppliers can still arrive in other formats.

Related guides

• Legal forms of business in Croatia compared
• Corporate income taxes in Croatia: 10% and 18%
• Personal tax deductions and benefits in Croatia
• Specific taxes in Croatia: VAT and more
• Tax landscape overview of Croatia
• Business expenses in Austria
• Business expenses in Malta
• All country tax guides

Sources

• Zakon o porezu na dobit, consolidated text – Zakon.hr (legislation portal)
• Profit tax – Croatian Tax Administration (Porezna uprava)
• Pravilnik o porezu na dohodak, consolidated text (Income Tax Rulebook) – Zakon.hr
• Obrtnici paušalisti (flat-rate crafts) – Croatian Tax Administration
• Vodič kroz Fiskalizaciju 2.0 – Croatian Tax Administration
• Double taxation agreements – Croatian Tax Administration
• Croatia: corporate deductions – PwC Worldwide Tax Summaries (secondary)
• Croatia: individual income determination – PwC Worldwide Tax Summaries (secondary)

This guide is general information, not personalised tax advice. See how we research and review.