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Global Payroll Team
Written by Global Payroll Team
Last updated May 7, 2026
Expert Reviewed
Payroll in Croatia
Tax in Croatia
Immigration in Croatia

Croatia map

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Mercans offers complete payroll, PEO and HR services in Croatia

A business-oriented environment with a multilingual workforce and an attractive geostrategic location, Croatia offers foreign investors opportunities across a number of key sectors. These include ICT, manufacturing, automotive, food and pharmaceuticals, logistics, tourism and business services. As an EU and euro area member, Croatia continues to provide a stable framework for international business.

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Doing Business in Croatia

There are a number of strategic investment projects supported by the government which can enable quicker implementation. These are in areas such as mining, energy, transport, infrastructure and electronic communications. Domestic and foreign companies are generally allowed to operate under equal conditions, while Croatia also applies the EU foreign direct investment screening framework where relevant.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Croatia is straightforward. Choose how your company operates from a range of entity types that suit your individual circumstance.

Banking

Banking Hours: 8:00 am to 4:00 pm from Monday to Friday.

Working Week

The normal full-time working week in Croatia is 40 hours, usually worked from Monday to Friday.

Labor Law

The main piece of legislation governing the employment relationship is the Labour Act. Other laws, including immigration and occupational health and safety rules, may also apply depending on the employee and work arrangement.

Main Industries

ICT, tourism, chemicals and plastics, machinery, fabricated metal products, pharmaceuticals, food processing and logistics

GDP Growth

3.4%

Dates & Numbers

dd/mm/yyyy

Official State Name

Republic of Croatia

Population

3.87 million

Capital

Zagreb

Major Languages

Croatian

Currency

Euro

Internet Domain

.hr

International Dialing Code

+385

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Croatia
Donji grad, HR
3:49 pm, May 13, 2026
18°C
clear sky
42 %
Wind Gust: 0 mph
Clouds: 0%
Sunrise: 5:27 am
Sunset: 8:17 pm

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Payroll

Under Croatian law, severance pay for each year of employment with the same employer cannot be lower than one third of the average monthly salary earned by the employee in the three months prior to termination, provided the employee has at least two years of continuous service and the dismissal is not due to the employee’s conduct.

It is acceptable to provide employees with online payslips.

Payslip

Employees are entitled to receive paid annual leave of at least 4 weeks.

Annual Leave

For ordinary sickness, the employer generally covers the first 42 days of sick leave, after which reimbursement rules through the Croatian Health Insurance Fund apply.

Sick Leave

Employees are entitled to maternity leave until the child is 6 months old, and statutory paternity leave also applies.

Maternity & Paternity Leave

An employer is generally required to provide at least 2 weeks’ notice of termination in the case of regular notice, with longer periods based on service.

Employee Termination

There are no provisions mandated by law regarding the 13th month salary.

13th month salary

1050 EUR gross per month

Minimum Wage

Overtime must be compensated with increased salary, and overtime is generally limited to 180 hours per year, exceptionally 250 by collective agreement.

Overtime

Employees paid monthly are generally entitled to one third of their average monthly pay for each year of employment after at least two years of continuous service, subject to the statutory conditions.

Severance Pay

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Tax and Social Security

A foreign worker pays tax in Croatia if they are a resident taxpayer, while non-residents are taxed on Croatian-source income. Social security contributions are generally calculated from an individual’s gross income, with pension contributions borne by the employee and health insurance contributions borne by the employer.

Tax

The Income Tax Act differentiates between resident and non-resident taxpayers. Corporate income tax is generally 10% or 18% depending on annual revenue. Personal income tax rates are set by local self-government units within statutory ranges, while the standard VAT rate is 25%.

≤ 18%

Corporate Income Tax

≤ 33%

Personal Income Tax

25%

Sales Tax

25%

VAT

Social Security

The Croatian social security system provides for pension contributions which are borne by the employee but withheld by the employer from gross salary. The system also provides compulsory health insurance, calculated on top of gross income and borne by the employer.

36.5%

Social Security Rate

16.5%

Social Security Rate for Employers

20%

Social Security Rate for Employees

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Employment Law

Employment law stipulates minimum standards on working time, rest periods, remuneration, annual leave, health and safety and termination. Croatian law also guarantees posted and foreign workers the protections required by law where applicable.

Employment Agreement

Employment agreements must be made in writing. Although bilingual versions are acceptable, one of the languages used should be Croatian. Such an agreement must include specified information such as place of work, the parties, start date, duration of work and other mandatory terms.

Working condition

There are restrictions in place in terms of working hours. Overtime work is an exception which an employee must provide on an employer’s request in certain circumstances, but it generally cannot exceed an extra 10 hours a week.

Leaves

There are minimum paid holiday entitlements. National holidays and periods of temporary inability to work are not included in annual leave. If an employee waives their right to annual paid leave or accepts payment in lieu except on termination, this is considered null and void.

Employment termination

The minimum notice period that an employer must provide an employee depends on the employee’s length of uninterrupted service. Where there is extraordinary termination, no notice period applies.

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2 weeks

Minimum notice period for terminating an employee

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14 days

Total number of public holidays

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40

Working hours per week

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7 days

Total number of days for Compassionate & Bereavement Leave

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Immigration

Third-country nationals may work in Croatia on the basis of a residence and work permit or a work registration certificate. They may work only for those employers and on those jobs for which the relevant authorization has been granted.

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Residency permits

An EU Blue Card is a residence and work permit for highly qualified third-country nationals. Standard temporary stay is generally granted for up to one year, while an EU Blue Card in Croatia is generally issued for two years, or for the shorter contract period plus three months where applicable.

Work Permit Validity

Up to 1 year, or 2 years for an EU Blue Card

Required Documents

A copy of the applicant’s passport

Applicant’s passport-size photo

Proof of the applicant’s ability to support themselves while in Croatia

Evidence of the applicant’s health insurance cover

An employment contract for the applicant

Proof of the applicant’s academic qualifications and skills

Evidence of the employer’s business registration

Compliant, reliable, error-free and touchless payroll in Croatia

Build the best team and hire top talent compliantly in Croatia. Get in touch with Croatia payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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    FAQs

    What is an Employer of Record (EOR) in Croatia and how does it support foreign companies?

    An Employer of Record (EOR) in Croatia legally employs staff on behalf of foreign companies. It manages employment contracts, payroll, taxes, social security, and compliance with local labor laws, allowing companies to hire employees quickly without establishing a local legal entity.

    Why should businesses use an EOR instead of setting up a legal entity in Croatia?

    Using an EOR avoids the time and costs of setting up a local company. It provides fast market entry, reduces administrative work, ensures legal and tax compliance, and is ideal for businesses testing the Croatian market or hiring a small team.

    How does payroll outsourcing in Croatia help with compliance and local tax regulations?

    Payroll outsourcing ensures accurate salary processing, tax filings, and social security contributions according to Croatian law. It reduces compliance risks, avoids penalties, and provides expertise on local labor and tax regulations.

    Can an Employer of Record in Croatia hire employees and manage work permits for international companies?

    Yes, an EOR can legally hire employees for foreign companies and manage work permits. It handles HR operations, payroll, and compliance with local labor and immigration laws, enabling smooth operations without a local entity.

    What are the main benefits of using EOR and payroll services in Croatia for global expansion?

    EOR and payroll services enable faster hiring, local compliance, reduced legal and financial risk, and access to market expertise. They allow companies to expand into Croatia efficiently while focusing on business growth.

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