Last updated: 19 July 2023
Insurance Premium Tax in Croatia
Under the Freedom of Services (FoS), Croatia currently levies an Insurance Premium Tax (IPT), Compulsory Health Insurance Contributions (CHIC) and Fire Brigade Charge (FBC) on the premium amounts of insurance policies written by EU and EEA insurance companies.
In Croatia, IPT only applies to selected classes of business such as motor coverage, which includes the mandatory Motor Third Party Liability insurance policies. Only the latter policies are subject to CHIC. FBC is applicable only to fire premium amounts.
Read on to understand the different IPT requirements and classes of business in Croatia.
Insurance Premium Tax (IPT)
There are currently two different IPT tax rates in force for motor insurance policies in Croatia:
- Motor Hull Insurance policies are subject to an IPT rate of 10%
- Mandatory Motor Third Party Liability insurance policies are subject to an IPT rate of 15%
Motor vehicle IPT is an insured-borne tax that is required to be reported monthly and payable within 15 days following the end of the month. There is an annual Motor IPT Report obligation too, which must be submitted on 31 January following the end of the reporting year.
Compulsory Health Insurance Contributions (CHIC)
This contribution is payable to the Croatian Institute of Health Insurance but must be disclosed quarterly to the Croatian Tax Office. In addition, the annual return must be submitted to the Tax Office by 30 April.
Until 31 March 2023 the rate of the contribution rate was 4%. The rate was raised to 5% as of 1 April 2023.
Fire Brigade Charge (FBC)
The Act on Firefighting governs the fire brigade regime in Croatia. The FBC rate on fire insurance premiums is 5%.
The law does not include a definition for the fire premium. Sovos gained clarification on the definition of the fire premium from the Croatian Financial Services Supervisory Agency (HANFA), the body which supervises FBC. HANFA indicated there is no specific definition of the fire premium, but the insurance company should determine this amount on a case-by-case basis.
The declaration on the fire premium is due annually, by the end of February following the payment year. The return should be submitted to the Croatian Firefighter Association.
There is no set date in the law for the payments, but payments are said to be due at least quarterly.
5% FBC payments should be split and sent to:
- 30% to the bank account of the Croatian Firefighting Association
- 30% to the special bank account of 20 county Firefighting Associations and/or the city of Zagreb
- 40% to the special account of the 500+ Firefighting Associations of the municipalities or cities where the insured property is located
If you would like to settle this tax compliantly:
Firstly: You need to know the postcode of the property. But what is the postcode of an immovable property?
Secondly: You need to match a county with a postcode. This would not be too challenging as the first two digits of the five-digit Croatian postcode reveal the county’s name if you search Croatian postcodes online.
Thirdly: You need to know your local firefighting organisation’s name and bank account number or, if these organisations have established an association, the association’s name and bank account number. That is difficult but not impossible if you know where to look.
Finally: In the annual return you need to list each payment you made in the previous year.
Following the complaint method might be time-consuming if the insurance firm has written multiple fire businesses in Croatia. Because there is no minimum contribution threshold, even EUR 0.01 cent FBC should be paid to the local firefighter’s organisation or association (i.e., 40% of FBC)
Sovos has developed a robust system to settle your Croatian fire brigade charges. We have also established a constructive relationship with the Croatian Firefighters Association and HANFA.
Please contact our representative for information, or if you would like to appoint Sovos as your IPT representative in Croatia.