Taxation of foreign pensions
The Republic of Croatia has concluded agreements for the avoidance of double taxation with many countries. Pursuant to most of these agreements for the avoidance of double taxation, pensions are taxed only in the country of residencePensions of residents of the Republic of Croatia acquired abroad are considered employment income and are taxed in the same manner as stipulated for pensions acquired in Croatia, unless there an agreement for the avoidance of double taxation has been concluded with the country which is providing the pension to the retiree. In this case, such an agreement takes precedence over Croatian legislation and it precisely regulates the issue of sharing or granting the exclusive right to taxation.
You can find the list of the countries with which the Republic of Croatia has concluded an agreement for the avoidance of double taxation and the procedure of residency determination for tax purposes on the Tax Administration website.
Agreements for the avoidance of double taxation
Procedure of residency determination for tax purposes
Obligations of recipients of pensionsAll taxpayers who are retirees with a foreign pension, whether this pension is taxed or not, are obliged to apply for entry in the register of tax payers by submitting the RPO form to the Tax Administration branch office competent for their place of permanent or habitual residence (the form can also be submitted by a proxy) within eight days from the date when they start receiving this income. Aside from the RPO form, they also have to enclose authentic documents on the income received (the decision or certificate of pension, a bank statement for the account to which pension has been paid to, etc.).
Retirees also have to obtain their tax card in the Tax Administration branch office competent for their place of permanent or habitual residence or on the e-Tax Administration portal for the purpose of using their personal allowance or non-taxable portion of their income in the calculation of the advance tax payment in the course of the year.
Advance tax payments and reportingAdvance tax on pension income is calculated at a rate of 20% of the monthly tax base (after the personal allowance deduction) up to the amount of 3.981,68 EUR (HRK 30,000) and at a rate of 30% of the monthly tax base above the amount of 3.981,68 EUR (HRK 30,000) The advance tax on pension income calculated in this manner is then reduced by 50%.
Taxpayers who receive a pension from abroad or who receive it abroad pay their advance tax on pension income pursuant to the decision of the Tax Administration until the last day of the month for the current month; that is, they pay it quarterly, until the last day of each quarter, if their monthly advance tax on pension income and income surtax does not exceed 13,27 EUR (HRK 100).
If you are a taxpayer who receives a foreign pension or who also receives a Croatian pension abroad, the Tax Administration will take into consideration the Croatian pension and bonus payments from the foreign pension payer when calculating your advance tax on foreign pension income.
Until 31 January of the current year, taxpayers have to report a change in the foreign pension amount for the previous year which is 20% higher or lower than the amount of foreign pension based on which the Tax Administration issued its decision. The Tax Administration will carry out its procedure and issue a new decision on the established monthly tax advance and the difference of tax which needs to be paid or refunded for the previous tax period. Taxpayers have to pay the difference of tax to be paid within 15 days from the date of decision delivery.
Taxpayers who receive a pension from abroad or who receive a pension abroad which is exempt from taxation pursuant to an international agreement do not have to submit the INO-DOH form.
Taxpayers who are retirees with a foreign pension can request exemption from payment of advance income tax or income tax in Croatia in the course of the year based on the received foreign income if they are simultaneously paying advance income tax or income tax in a foreign country with which the Republic of Croatia does not have an applicable agreement for the avoidance of double taxation or if they receive pension from a country with which the Republic of Croatia shares the right of pension taxation under the existing agreement for the avoidance of double taxation. In order for the taxpayer who is a retiree with a foreign pension to obtain the aforementioned exemption, they have to notify the Tax Administration of this in a written statement within eight days from the first receipt in the current year.
In this case, the retiree has to submit the INO-DOH form until 31 January of the current year for the previous year for the purpose of calculation of their tax liability, with the possibility of including the tax paid abroad in this calculation if they deliver a certificate from a foreign tax authority on the tax paid abroad together with the form or subsequently, but no later than 30 November of the current year for the previous year.
To find out more detailed information about taxation of foreign pensions: