Croatian PM announces tax changes for pensioners, small businesses
Croatian Prime Minister Andrej Plenković attended a session of the Economic and Social Council, where he addressed the topic "Development and the Labour Market in Conditions of Economic Growth, Integration, Technological Transformation and the New Budgetary Period – Challenges and Solutions for a Stable and Successful Republic of Croatia."
During the meeting, Plenković announced changes to Croatia's tax system, which will affect craft businesses, private accommodation providers, and pensioners, CE Report informs via the Croatian government website.
"The measures that will soon enter public consultation concern changes to the tax system for those who are not part of the VAT system. I believe we have reached a good solution," Plenković said, adding that the reforms represent a fair solution that benefits small business owners and craftsmen.
He noted that certain tax loopholes still need to be better regulated but stressed that 75 percent of craft businesses will not face any difficulties under the new tax rules.
The Prime Minister also announced minor changes to the lump-sum tax regime for tourism accommodation providers.
In addition, he said the government plans to abolish income tax on pensions for around 580,000 pensioners.
Employment Growth and Record-Low Unemployment
Plenković highlighted continued employment growth alongside record-low unemployment.
He reported that Croatia currently has 1.8 million insured workers, while the number of unemployed stands at just 61,000.
"Through our many initiatives, deeper integration into the European Union, economic strengthening and investment, we have created a positive trend, doubled GDP and are gradually catching up with countries such as Poland and Portugal in terms of EU development levels," he said.
The Prime Minister also stressed that the government continues to combat inflation through a package of anti-inflation measures focused primarily on limiting energy prices and freezing the prices of selected essential products to protect the most vulnerable citizens.
Wages and Pensions Continue to Rise
Speaking about wages, Plenković said the average monthly net salary in Croatia currently stands at €1,522, while the government's objective is to raise it to €1,600 by 2028.
"That goal is entirely achievable," he said.
He also noted that the median net salary has increased from €658 to €1,319, while the base salary for public-sector employees has been increased by 52.6 percent since 2016 through agreements with trade unions.
The Prime Minister reminded participants that €10.2 billion has been allocated for Croatian pensioners in 2026.
According to Plenković, the minimum pension has increased by 128 percent, while the average overall pension has risen by 104 percent.
"When the annual pension supplement is added, we are moving closer to our goal of an average total pension of between €750 and €800 by the end of this government's third term," he said.
He also announced that the government is opening 18 senior care centres across Croatia.
EU Budget, Industry and Labour Market
Regarding negotiations on the EU Multiannual Financial Framework for 2028–2034, Plenković said Croatia is seeking to ensure that future EU funding continues to help the country catch up with longer-standing EU member states.
He emphasized the importance of preserving funding for traditional EU policies while also securing resources for new priorities.
Looking ahead, the Prime Minister identified digitalisation, artificial intelligence and robotics as key challenges that are transforming labour markets.
He said employers must adapt to technological trends to remain competitive.
Plenković also announced that the government has prepared a new Industrial Strategy to 2034, aimed at creating a digitalised, modern, energy-efficient, green, innovative and export-oriented industrial sector.
He added that the National Industrial Development Plan is worth €3 billion.
The Prime Minister said the government's new Foreigners Act has brought greater order to Croatia's labour market while protecting both domestic and foreign workers.
He also noted that recent legislative amendments have introduced stricter penalties for undeclared work.
Unemployment Among People with Disabilities Falls
During the meeting, the 2025 Annual Report of the Croatian Employment Service was adopted with a high assessment of its performance.
Labour, Pension System, Family and Social Policy Minister Alen Ružić said the Employment Service has expanded far beyond its traditional role.
He highlighted its involvement in developing senior care centres, where the institution serves as the regulatory authority.
Ružić also reported that around 4,000 people with disabilities found employment last year, with more than 400 successfully completing vocational rehabilitation, representing an increase of more than 60 percent in participation in rehabilitation programmes.
He added that unemployment among people with disabilities declined by 13 percent.
Photo Croatian government website
