Tax benefits for persons with disabilities
Find out which tax benefits are available to persons with disabilitiesThere is a number of provisions on tax benefits for persons with disabilities in tax regulations, in particular in the Income Tax Act and the Value-Added Tax Act.
Pursuant to the Income Tax Act, these benefits are:
- Non-taxable donated receipts for medical needs, as follows: surgery, medical treatment and procurement of medications and orthopaedic aids, costs of transport and accommodation in healthcare institutions, etc., but only if the aforementioned services or goods were not covered by mandatory, supplementary, additional or private health insurance or paid at the expense of the natural person
- Tax-exempt aid for care of disabled war veterans —this also includes aid for care of disabled war veterans and family members of the Croatian veterans who died, were imprisoned or went missing in the Homeland War, and the receipts of persons with disabilities (surgery, medical treatment and procurement of medications and orthopaedic aids, etc.), except for salaries and pensions
- Financial rewards for winning medals are also not considered income —these are financial rewards paid from the state budget or budgets of units of local and regional self-government for medals won at the Olympics, Paralympics, Deaflympics, as well as world and European championships for persons with disabilities
- Non-taxable portion of the income (basic personal allowance)—can be increased by 1.5 of the personal allowance basis for each dependent member of the immediate family and each child, if these are persons who were issued a decision, pursuant to special regulations, whereby it was established that they were 100% disabled due to one disability and/or which are entitled, pursuant to special regulations and due to their disability, to an allowance for assistance and care or to personal disability pension, for each dependent member of the immediate family and every dependent child. In this case, the basic personal allowance is increased by 497,71 EUR (HRK 3750) per month. Furthermore, the basic personal allowance can be increased by 0.4 of the personal allowance basis for each taxpayer or their dependent member of the immediate family and child who were issued a decision, pursuant to the regulations on pension insurance, protection of members of the armed forced and civilians disabled in war, social care and education and other special regulations, whereby it was established that the percentage of their disability or handicap was less than 100%. In this case, the basic personal allowance is increased by 132,72 EUR (HRK 1000) per month.
- Disabled war veterans are exempt from tax on income from employment—they are not required to pay tax on income from employment and pensions in proportion to their level of disablement.
- Incentives for hiring persons with disabilities—taxpayers of income tax who are self-employed can have their income additionally reduced in a tax period for the amount of the salaries and contributions on salaries paid for new employees. Taxpayers can exercise their right to reduction of their income for the salaries and contributions on salaries paid for new employees for one year from the date of hiring them and they can exceptionally exercise their right to reduction of their income for the salaries and contributions on salaries paid for new employees who are persons with disabilities for three years from the date of hiring them.
Pursuant to the Value-Added Tax (VAT) Act, the benefits pertain to:
- Medical equipment, aids and other devices at the rate of five percent—VAT is not calculated and paid at the lower five percent rate for medical equipment, aids and other devices which are used as help in treatment of disabilities exclusively for the disabled person’s personal use, which equipment, aids and devices are prescribed by the Ordinance on Orthopaedic and Other Medical Aids of the Croatian Health Insurance Fund.
For more detailed information on benefits for persons with disabilities and the necessary authentic documents to exercise the aforementioned rights: