Croatia introduces a windfall tax across all sectors


Following the EU Regulation 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices (Regulation), the Croatian Government has drafted legislation for a general corporate windfall tax.

The Government claims that, due to the structure of the economy and the fact that the Regulation’s measures only cover part of the relatively small energy sector, the Regulation’s purpose could not be achieved. They therefore proposed a general corporate windfall tax as a solidarity measure better suited to the current economic conditions.

The windfall tax would be levied on all Croatian companies subject to corporate tax that have a revenue of over HRK 300 mil/ app. EUR 40 mil in 2022. Any profit higher than 20% of the average taxable profits generated in the four fiscal years 2018-21 would be taxed at a rate of 33%.

The windfall tax applies independently of and in parallel with corporate tax. Taxpayers obliged by the Regulation to pay a solidarity contribution will not be subject to the windfall tax.

The windfall tax is only expected to apply to the fiscal year 2022 and will affect around 200 tax-paying companies, mostly in the wholesale and retail, manufacturing, financial and insurance, and construction industries.

The Corporate Windfall Tax Act is currently undergoing public consultation and is expected to enter into force on 31 December 2022 the latest.