Amendments to the Companies Act

The Act on Amendments to the Companies Act entered into force on 11 April 2019.

Key issues regulated by the Act on Amendments to the Companies Act:

• Possibility of remote incorporation of limited liability companies (d.o.o.) and simple limited liability companies (j.d.o.o.). These amendments and additions to the Act allow for all activities related to entry in the court registry to be done remotely (using modern communication technologies).
• Obligation of entry of business activities in the main book of the court register is abandoned, except for business activities registered and conducted by consent of the relevant authorities. The business subject (except for public limited companies) is determined by a special decision. When establishing a company this is an additional document required by the founder. However, a subsequent change of the business activity is greatly facilitated as company members can make a decision on a change (supplement) of the activities that the company will deal with; no change of the Articles of Association is necessary, the new decision on the business activity has just to be submitted to the register court.
• Shortened procedure of termination of companies without liquidation.
• Prior to entry of a company into the court register, each founder (for limited liability companies / d.o.o.s) must pay at least one quarter of the stake for the assumed business share in cash, whereby the total amount of all payments in cash must not be less than one quarter of the share capital (f.ex. 5.000,00 HRK), unless otherwise prescribed by law. The cash contribution must be paid entirely (f.ex. the remaining amount of 15.000,00 HRK for minimum permitted share capital) within one year following the date of entry of the company into the court register. 
• The term of sole trader is abolished by these amendments and additions.

Thus, let the remote incorporation of companies begin!

Tax, investment and employment incentives

The Act on investment incentives (Official Gazette 102/15, 25/18, 114/08) refers to projects aiming at strengthening the competitiveness of activities in the area of production and processing, development and innovation, business support and higher value-added services ensuring ecologically safe business activities and one or more goals:

• Addition of new equipment and modern technologies

• Higher employment and education of employees
• Development of products and higher value-added services
• Increase of business competitiveness
• Equal regional development in the Republic of Croatia

The Act on investment incentives provides the following benefits:

• Tax benefits
• Employment benefits
• Benefits for justified specialisation costs
• Benefits for capital costs of investment projects

The tax rate might be lower than the legally prescribed rate by at least 50%, and if the investment is high enough, you might even not pay profit income tax at all. Thus, the effect is reflected not only in the tax rate, but in the incentives themselves, both for the employees and for the investments.

If you plan investments into or digitalisation of your business, feel free to contact us. We will check to what benefits you might be entitled to and calculate their effects for you.

Act on State Aids for research and development projects (R&D)

By publishing the Ordinance in the Official Gazette 09/2019 all preconditions have been met and the process of planning of research and development as well as the calculation of tax effects can be started. This measure is in the responsibility of the Ministry of Economy, Entrepreneurship and Crafts, and applications are filed to this Ministry. The Act aims at increasing investments of the private sector into R&D and the number of entrepreneurs investing in R&D, as well as stimulating co-operation between entrepreneurs and organizations for research and enhancement of knowledge about R&D projects, whereby R&D comprises creative and systematic work aiming at increasing the knowledge base – including knowledge about humanity, culture and society – and creation of new applications of the existing knowledge.

All entrepreneurs are entitled to this aid, regardless of their type, i.e. micro/small, medium and large entrepreneurs.

If you are not sure what costs are acceptable and how much the tax effect will ultimately be, then contact us and our staff will be happy to help you.

Commencement of State Inspectorate

As of 1 April 2019 the State Inspectorate commenced its work as a central body of state administration.

Inspection activities within the responsibility of the State Inspectorate are pursuant to articles 5 – 28 of the Act on the State Inspectorate (Official Gazette 115/08) carried out in the following areas: market, sanitary, animal husbandry, agriculture, hunting, forestry, crop protection, tourism, mining, pressure vessels, energy, hazardous chemicals management, labour, construction, environment protection and water.

Inspection activities in the area of tax (CIT, VAT, withholding tax, personal income tax) remain under the jurisdiction of the Tax office, Ministry of finance.

Registry of real owners

The registry of real owners is one of the key novelties in the amendments of the Money Laundering and Terror Financing Act that has been enacted in April this year with the obligation of the Ministry of Finance to publish the accompanying Ordinance by the end of the year.

The Ordinance on the Registry of real owners (Official Gazette 53/19) prescribes the manner and deadlines of entry of data on real owners in the Registry.

Deadlines for entry of data into the Registry are as follows: for legal entities and trusts from 3 June 2019 to 31 December 2019, and for associations: from 1 July 2019 to 31 December 2019.

Entry of data into the Registry of real owners using the WEB application with digital certificate.