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Minimum wage in Croatia

Croatia’s payroll

Croatia’s social security

Other employee benefits in Croatia

Compliant, seamless payroll and benefits in Croatia and beyond

Payroll in Croatia

Managing payroll in Croatia can be complex and time-consuming, especially for companies expanding into the market. Employers must navigate local labour laws, ensure compliance, and guarantee that employees receive all required benefits.

Croatia’s payroll system includes mandatory social security contributions, such as health insurance, pension plans, and unemployment benefits. Calculating and submitting these contributions accurately can be tricky, particularly when dealing with different employee classifications and additional benefits.

Payroll outsourcing in Croatia

Given these challenges, many businesses are opting to outsource these responsibilities. Payroll outsourcing is the practice of hiring an external service provider to handle payroll processes. This includes tasks like calculating employee salaries, managing taxes, ensuring compliance with local laws, and distributing payments.

By outsourcing payroll, companies can reduce administrative burdens, avoid costly errors, and ensure they comply with labour and tax regulations. Partnering with a trusted global provider, such as CXC ensures compliance with local regulations while saving time and resources.

In this guide, we’ll provide everything you need to know about setting up and managing payroll in Croatia, including the statutory benefits, minimum wage, regulations, and more. This way, your business can operate smoothly while staying compliant.

Minimum wage in Croatia

As of 1 January 2025, minimum wages in Croatia have been updated to reflect economic changes. The new minimum monthly wage in Croatia is set at €970, a 15% increase from the 2024 figure of €840. When broken down to an hourly rate, this equates to approximately €5.25 for a full-time employee working a standard 40-hour week.

Employers should note that the minimum wage in Croatia represents the minimum gross salary allowed for full-time work. This rate is recalculated annually, ensuring it aligns with national economic goals and remains effective for the following calendar year. For employees working part-time, the wage is proportionally adjusted to match their hours. Importantly, the base minimum wage does not include additional payments for overtime, night shifts, or work conducted on Sundays and public holidays—these must be compensated separately.

Despite the increment, Croatia’s minimum wage per hour remains below that of several other EU nations, such as Belgium or Germany. However, it represents progress toward improved economic equity and competitiveness within the European labour market.

To ensure compliance and maintain operational efficiency, employers should stay updated on wage regulations and seek guidance if necessary. Keeping up to date with official announcements can help you navigate changes effectively and support your workforce during transitions.

Croatia’s payroll

Managing payroll in Croatia involves understanding local labour laws, taxation, and customary practices to ensure compliance and smooth operations.

Payroll cycle in Croatia

In Croatia, salaries are typically paid on a monthly basis. Employers are required to ensure that payments are made no later than the 15th of the following month for work completed in the previous month.

For example, if an employee works throughout January, their salary should be paid no later than 15 February. Employers in industries such as retail or hospitality, where irregular schedules are common, must ensure accurate payroll calculations to meet these deadlines.

13th-month salary in Croatia

Unlike some other countries, Croatian labour laws do not mandate a 13th-month salary or bonus. However, some employers may choose to offer additional payments, such as holiday or performance bonuses, as part of their company policies. These discretionary benefits can help attract and retain talent in competitive industries.

Payroll taxes in Croatia

Croatia payroll taxes include various contributions that employers must deduct and remit. Key taxes and contributions include:

Income tax: Rates vary based on employee income, with progressive brackets.
Social security contributions: Employers and employees contribute to health insurance, pension funds, and other benefits.
Surtaxes: Additional municipal taxes apply in some regions, such as Zagreb, where a surtax of up to 18% may be levied.

Detailed record-keeping and software tools can assist in managing these complex calculations. Employers must stay updated on these obligations to avoid penalties and ensure compliance with Croatia payroll laws.

Croatia’s payroll laws

Navigating payroll in Croatia requires adherence to several key laws and regulations designed to protect employees and ensure fair compensation. Below are some primary payroll-related laws in Croatia:

Labour Act (Zakon o radu): This Act governs employment relationships, outlining the rights and obligations of both employers and employees. It specifies working conditions, employment contracts, working hours, overtime, rest periods, and termination procedures.
Contributions Act (Zakon o doprinosima): This legislation mandates social security contributions for both employers and employees. Employers are required to contribute 16.5% of the gross salary for health insurance, while employees contribute 20% toward pension insurance—15% to the first pillar (generation solidarity) and 5% to the second pillar (individual capitalised savings).
Income Tax Act (Zakon o porezu na dohodak): The Income Tax Act outlines the taxation framework for personal income. Taxable income is calculated by deducting personal allowances and mandatory contributions from the gross salary. The tax rates are progressive, with income up to €50,400 taxed at 15% to 23.6%, and income above €50,400 taxed at 25% to 35.4%. Additionally, municipalities may impose a surtax on income tax, varying by location.

As an employer in Croatia, understanding the intricacies of the country’s social security system is essential to remain compliant. From health insurance to pension insurance, the system provides key protections for workers, while employers play a crucial role in ensuring contributions are made accurately and on time.

Social security system in Croatia

Croatia’s social security system is established to protect employees from various risks, such as health issues, unemployment, and old age. It covers several key areas: health insurance, pension insurance, and accident and unemployment insurance. Both employers and employees are responsible for making contributions to fund these benefits.

Health insurance in Croatia

Health insurance is mandatory for all residents, providing access to basic health services. The Croatian Health Insurance Fund (HZZO) manages the compulsory primary health insurance, which includes coverage for services related to workplace injuries and illnesses. Additionally, it compensates workers during sick leave, maternity leave, and paternity leave.

Croatia’s social security rate

The total social security contributions in Croatia are divided between employers and employees. Employer social security contributions are primarily used to fund health insurance, pensions, and accident insurance.

As an employer, you are required to contribute a total of 16.5% of your employee’s gross salary to the Croatia social security system, which covers health insurance, worker’s accident insurance, and unemployment benefits. For pension insurance, employees contribute 20% of their gross income, which goes into Croatia’s three-pillar pension system.

Social security for self-employed in Croatia

Self-employed individuals in Croatia must also contribute to the Croatia social security system, though their obligations differ slightly. Self-employed workers are required to contribute to health insurance, pension insurance, and accident insurance.

The contribution rate for self-employed individuals varies depending on the type of work and income, but it generally mirrors the rate paid by employed individuals. For pension insurance in Croatia, contributions are divided between the first and second pillars. While contributions to the third pillar are voluntary, self-employed individuals can choose to make additional contributions.

Pension insurance in Croatia

The Croatian pension system consists of three pillars designed to provide financial security in retirement:

First pillar: A pay-as-you-go system funded through employee and employer contributions and the state budget.
Second pillar: Compulsory individual pension insurance, where employees contribute a portion of their salary to individual pension accounts.
Third pillar: Voluntary pension insurance, which allows employees to make additional contributions for extra benefits in retirement.

Contributions to the first two pillars are mandatory, with employees contributing 20% of their gross salary. The third pillar is optional, providing additional flexibility for those wishing to enhance their retirement savings.

Employers can also offer additional benefits as part of their compensation package, including voluntary pension insurance contributions, to attract and retain talent.

Other employee benefits in Croatia

Offering a well-rounded benefits package is essential for attracting and retaining talent, in addition to meeting legal requirements. While statutory benefits such as health and pension insurance are mandatory, many employers choose to offer additional benefits to enhance their employee offering.

Supplementary benefits in Croatia

Supplementary benefits are additional offerings that complement the basic statutory benefits required by law. These benefits can significantly improve employee satisfaction and help companies stand out in the competitive job market.

Some common supplementary benefits in Croatia include:

Private health insurance: Many employers offer private health insurance in Croatia as an additional benefit to ensure that employees have access to private healthcare options and shorter wait times for treatment.
Travel insurance: Travel insurance in Croatia is another supplementary benefit employers may offer, covering employees for medical emergencies while travelling on business or personal trips.
Retirement plans: In addition to the mandatory pension system, employers may offer voluntary retirement plans to help employees save more for their future.
Salary add-ons: For employees working on Sundays or holidays, employers may offer a 50% salary increase, as per Croatian labour laws.
Mileage allowance: Employees who use their private cars for business travel may be eligible for a mileage allowance, covering fuel costs and wear-and-tear.

These supplementary benefits provide employees with a safety net and enhance their overall work experience, making the company more attractive to top talent.

Voluntary benefits in Croatia

Voluntary benefits are optional offerings that employees can choose to purchase or participate in, providing them with additional flexibility. These benefits allow employees to tailor their benefit packages to suit their personal preferences and needs.

Common voluntary benefits in Croatia include:

Voluntary pension insurance: While pension insurance is mandatory in Croatia, employees can also make voluntary pension contributions to the third pillar of the pension system for added retirement security.
Travel health insurance: Employees may choose to purchase travel health insurance for personal or work-related trips, ensuring they are covered for any health issues abroad.
Personal accident insurance: Another optional benefit that employees can opt into is personal accident insurance, which provides coverage in the event of an accident.
Life insurance: Life insurance is another voluntary benefit employees can choose, providing financial security for their families in case of unexpected events.

These voluntary benefits allow employees to customise their coverage based on their lifestyle and preferences, helping to improve their overall well-being and job satisfaction.

Additional employee perks in Croatia

Employee perks are non-financial benefits that can make a workplace more enjoyable and improve overall job satisfaction. While these perks are not always guaranteed by law, they can play a crucial role in creating a positive company culture.

Some common employee perks in Croatia include:

Company cars: Offering company cars to employees, especially for management or executives, is a common perk in Croatia. This can be an attractive benefit for employees who need to travel for work or simply want a company-provided vehicle.
Mobile phones: Similar to company cars, providing mobile phones or allowances for business use is another valuable perk, particularly for employees who are frequently on the go.
Performance-related bonuses: These bonuses are commonly offered to reward employees for meeting or exceeding targets. These bonuses can be a great motivator and help retain high-performing individuals in your team.

Offering such employee perks helps create a supportive and engaging work environment, improving employee morale and fostering loyalty.

Compliant, seamless payroll and benefits in Croatia and beyond

Getting payroll and benefits right is not just a legal issue. Every country also has its own customs, norms, and expectations about employee compensation. And if your operations aren’t in line with your workers’ expectations, they may not stick around for long.

Thankfully, we know what we’re doing. When you work with CXC to engage workers in Croatia, we’ll handle everything from tax withholding to employee bonuses on your behalf.

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