22:06 / 14.02.2022.

Author: Katja Miličić

Who is a “tax resident”? Tax chief explains which foreign income earners could be affected

Božidar Kutleša

Božidar Kutleša

Foto: Dnevnik / HRT

The Tax Administration has been urging Croatian nationals living and working abroad to report their foreign income in Croatia even if they have paid income tax in the country where they are working.

This has left many people confused about their tax status and some have been notified they owe tax authorities here tens of thousands of kuna in taxes even though they already paid their taxes abroad.

Božidar Kutleša, the head of the Tax Administration explained some of the finer details of the rules during an appearance of the evening news program Dnevnik on Wednesday.

Kutleša said a “tax resident” is a Croatian citizen who has both residency, domicile, and “narrow life interests” in Croatia.

“Having a piece of real estate does not equal residency in Croatia, even if that property is a rental,” Kutleša said.

If a Slovenian national purchases a property in Croatia, that person is definitely not a resident of Croatia, Kutleša said. When an entire family leaves Croatia, they are no longer considered residents, especially if this occurred prior to 2016.

“They have no obligations nor will the Tax Administration charge them for any taxes. From 2016 onwards, they should regulate their status, that is, deregister their residency in the Republic of Croatia by filling out the TI form,” said Kutleša.

Croatia has agreements on double taxation avoidance with 66 countries. He also said that deregistering with the Ministry of Interior was not enough and advised the procedure should be repeated with the Tax Administration.

Asked why the Tax Administration was taking action now in cases where the income was earned six years ago, Kutleša said the data received from tax authorities in other countries was late and had to be processed.

“I emphasize that this applies only to residents who live and whose life interests are closely related to the territory of the Republic of Croatia. All those who have not been with their families in the Republic of Croatia for a long time, the Tax Administration will not be contacting them or charging them any additional taxes,” said Kutleša.

He also said that all information on this topic is accessible on the website of the Tax Administration, but if people have additional questions they can contact the clerks at the offices of the Tax Administration.

Opposition MPs on both the right and left say this is the wrong way to treat people, especially a group that the Government is hoping lure back home.

"This continues to reveal the stepmother-like manner in which our institutions treat their own citizens. I urge our governing institutions to change their mindset. Enough of this harassment of our own people!" said Stjepo Bartulica of the Homeland Movement.

SDP leader Peđa Grbin doubts this is legal.

"If one of the basic factors in calculating taxes is where you live, then if you live abroad, in say Germany, you work full time and cannot spend much time in Croatia, then we have to ask whether this method of calculating taxes is legal and in line with EU law,” Grbin said.

Nikola Grmoja of Most said the Government was attacking the very people it was trying to convince to return.

"It is clear that Minister Marić is trying to fill the state's coffers, probably to compensate for all these measures, but he's targeting those who are weakest but have the potential to be the backbone of our economy," Grmoja said.

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