Constitutional Court rejects request to assess the constitutionality of the law on extra profit

On Friday, the Constitutional Court rejected a request for constitutional review submitted by the Croatian Association of Employers (HUP) against the Law on Additional Income Tax, the so-called tax on extra profit, which came into effect at the end of last year as a crisis measure introduced by the government.

The Government of the Republic of Croatia says the basis for the legislation is drawn from an EU regulation on additional taxation of companies that benefited from the energy crisis and the redirection of their profits towards those most affected by the crisis. In explaining its decision, the Constitutional Court emphasized that the law was a one-time, extraordinary and temporary measure which, in special circumstances in society, ensures the protection of citizens according to the principles of the welfare state. The court went on to note that the legislation was only one of a series of measures that the Government of the Republic of Croatia has adopted in order to prevent further threats to the social and economic security of its citizens.

The court further notes that it is important for the state that large entrepreneurs continue to develop their business activities, which is why new measures are continuously adopted. The justification itself stems from the fact that it is a temporary measure that only affects those who are making a profit. The Constitutional Court assessed that the law is based on the constitutional principles of justice, equality and proportionality, according to which everyone is obliged to participate in the payment of public expenses in proportion to their capabilities.

The Executive Director of the Croatian Employers' Association, Irena Weber, says that the legislation is harmful to the economy and dangerous. However, contrary to the association's objections, the Constitutional Court pointed out that the temporary collection of a special tax is based on a qualified public interest, and the legislator acted within his constitutional powers in implementing the fiscal policy and regulating the tax system in passing the law.

The Constitutional Court reported that by not accepting the association's request, which called for the adoption of a temporary measure to stop the collection of tax on extra profit, the prerequisites for deciding on the proposal to suspend the implementation of the contested law ceased to exist.

Source: HRT