Payroll guide for Croatia: JOPPD, JLS rates, and employer obligations in 2026

Before or at the start of work, employers must register the employee in mandatory pension insurance with HZMO using the eM-1P form via HZMO Lana. Registration must be completed no later than one day before work starts. Health insurance registration is handled with HZZO through the e-Zdravstveno business portal, typically at the same time or shortly after pension registration.

Employees must obtain a tax card (PK form) from Porezna uprava. The PK records the employee’s personal allowance, municipality of residence, and personal circumstances relevant for calculating monthly income tax withholding. The PK is delivered electronically to the employer and must be used when running payroll. Employees have 30 days to notify Porezna uprava of any change affecting the personal allowance (dependants, disability, change of residence), and the employer must apply the updated PK data in the following payroll run.

Croatian payroll operates monthly. Salaries for a given month are typically paid by the 15th of the following month, and the employment contract must state the pay date. Croatia adopted the euro on 1 January 2023, and domestic payroll operates entirely in EUR.

Croatian payroll follows a fixed calculation sequence each month, with pension contributions deducted before income tax is calculated. The employee’s PK tax card determines the applicable personal allowance, while the income tax rate depends on the employee’s municipality of residence under the local JLS framework.

The calculation follows these 7 steps:

1. Start with the employee’s gross monthly salary.
2. Deduct the 20% employee pension contribution, applying the applicable contribution base, low-income relief where available, and the annual contribution ceiling.
3. Apply the personal allowance shown on the employee’s PK tax card, including any additional allowances for dependants or disability.
4. Calculate the taxable income by deducting the pension contribution and personal allowance from gross salary.
5. Apply the lower and higher JLS income tax rates, using the statutory threshold to determine which portion of income falls into each band.
6. Calculate the employee’s net salary by deducting pension contributions and income tax from gross salary.
7. Calculate the 16.5% employer health insurance contribution, which is paid in addition to the employee’s gross salary and is not deducted from the employee’s pay.

Article 93 of the Labour Act obliges employers to deliver a written salary calculation to the employee within 15 days of payment. The Ordinance on salary calculation content (Official Gazette 68/23, effective 1 July 2023) prescribes the specific fields required on the IP1 (paid salary) and IO1 (paid severance/unused leave) forms. Employers had to align payroll documents with the ordinance by 1 October 2023.

The IP1 must include:

• Employer information (name, address, OIB, IBAN) and employee information (name, address, OIB, IBAN).
• Period for which salary is paid.
• Detailed hours worked and categories of hours for which compensation is due (regular hours, night work, overtime, Sunday and public-holiday work, annual leave, paid leave, sick leave, unjustified absence).
• Types and amounts of payments considered salary under the Labour Act and tax regulations.
• Basis for contribution calculation, contributions for both pension pillars, income, tax advance, personal allowance, tax base, applied rates, and final net salary.

Employers must keep payslip documents for six years, and analytical payroll records permanently. Fines for missing or incomplete payslips range from EUR 920 to EUR 13,270, depending on the employer type.

Croatia uses a two-band progressive income tax on employment income, with the threshold set at EUR 60,000 annually (EUR 5,000 monthly). The rate levels within statutory ranges are set annually by each JLS:

If a JLS fails to adopt a rate decision by 30 November, the statutory fallback of 20% and 30% applies from 1 January of the following year. Payroll must reference either the JLS decision published in Narodne novine or the Porezna uprava rate table before running payroll for each employee.

The basic personal allowance is EUR 600 per month (EUR 7,200 annually) from 2025 onwards. Increases for dependants apply as coefficient multiples:

• First child: 0.5 × basic allowance (EUR 300 per month).
• Second child: 0.7 × basic allowance (EUR 420 per month).
• Third child: 1.0 × basic allowance (EUR 600 per month).
• Fourth child and beyond: coefficient increases progressively.

Disability allowances follow a similar coefficient-based mechanism. The employee declares the allowance through the PK, and the employer applies it in the monthly payroll.

• Young workers under 25: 100% income-tax reduction on employment income up to the annual base of EUR 60,000, exercised via annual assessment. Aged 26 to 30: 50% reduction on the same base.
• First-time employees: Employers may be exempt from the 16.5% employer health contribution for up to one year (and in some cases longer) for employees hired on an indefinite-term contract without a prior pension record. Employee pension contributions remain due.
• Croatian returnees: Five-year income-tax exemption for returning emigrants who resided abroad continuously for at least two years before returning, subject to Income Tax Act conditions.
• Pension recipients: 50% reduction of annual income tax liability on pension income.

Employees pay a total 20% pension contribution on a defined base:

• For employees born after 1 January 1962: 15% to the first pillar (pay-as-you-go) plus 5% to the second pillar (funded).
• For employees born on or before 1 January 1962, the full 20% goes to the first pillar.

The base for the pension contribution follows the low-income relief formula:

• Gross salary up to EUR 700 per month: Base is gross salary minus EUR 300.
• Gross salary EUR 700.01 to EUR 1,300: Base is gross salary minus 0.5 × (EUR 1,300 minus gross salary).
• Gross salary above EUR 1,300: Base is the full gross salary.

The monthly ceiling for 2026 is EUR 11,958 (six times the average gross salary), applicable to both pillars. Contributions do not apply above that base.

Employers pay 16.5% of gross salary to HZZO for mandatory health insurance. There is no cap on the health contribution base, so the 16.5% applies to the full gross without a ceiling. There is no matching employer pension contribution; the pension is fully employee-financed.

Employers with 20 or more employees must employ a prescribed number of disabled individuals, generally at least 3% of total employees. Non-compliance results in a monthly fee of 20% of the minimum gross salary per missing disabled employee. At the 2026 minimum wage of EUR 1,050, the monthly fee is EUR 210 per missing employee.

Employers pay a monthly chamber-of-commerce contribution ranging from EUR 5 to EUR 527, depending on company size.

The standard workflow ties JOPPD submission to the salary payment date:

• JOPPD is submitted on the salary payment date or the next working day.
• Where salary is not paid on time, and the statutory obligation to remit tax and contributions arises, JOPPD is submitted by the last day of the following month.
• After the delayed salary is paid, a corrective JOPPD is submitted no later than the 15th of the month following the payment.

Non-taxable receipts (accommodation reimbursement, certain allowances, benefits in kind reported for the previous month) have a separate deadline of the 15th of the current month. Income received directly from abroad or by employees has an 8-day deadline.

Income tax, pension contributions to HZMO, and employer health contributions to HZZO must be paid by the same deadline as the JOPPD filing (on or before the 15th of the following month for standard monthly payroll) and referenced to the JOPPD report code.

The 2023 ordinance also prescribes NP1 and NO1 forms for unpaid salary, severance, or compensation for unused annual leave. If an employer fails to pay salary on the due date, they must deliver both the IP1 (or IO1) calculation showing entitlements and public charges and the NP1 (or NO1) calculation with account and reference information for enforcement. The NP1 and NO1 forms have the force of enforceable documents.