CROATIAN PARLIAMENT In terms of Article 88 of the Constitution of the Republic of Croatia, I adopt DECISION ON PROCLAMATION OF THE LAW ON AMENDMENTS TO THE LAW ON FINANCING OF LOCAL SELF-GOVERNMENT AND ADMINISTRATION UNITS I proclaim the Law on Amendments to the Law on Financing of Local Self-government and Administration Units, adopted by the Croatian Parliament at the session on 28th June 2001. Number: 01-081-01-2079/2 Zagreb, June 29, 2001 President of the Republic of Croatia Stjepan Mesić, signed personally LAW ON AMENDMENTS TO THE LAW ON FINANCING OF LOCAL SELF-GOVERNMENT AND ADMINISTRATION UNITS Article 1 In the Law on Financing of Local Self-government and Administration Units of Croatia («Narodne novine»*, No. 117/93, 69/97, 33/00, 73/00, and 127/00), in the name of this Law the words: «self-government and administration» are replaced by words: «and territorial (regional) selfgovernment». Article 2 Article 5 is changed and reads: «County taxes are: 1. Inheritance and Gift Tax, 2. Tax on Motor Vehicles, 3. Vessels Tax, 4. Tax on Entertainment Machines.» Article 3 Article 6 is changed and reads: «(1) Inheritance and Gift Tax shall be paid on real estate, in accordance with law, on cash, pecuniary claims and securities, and on moveable property if their individual market value is higher than 50,000.00 on the day the tax liability is established. (2) Inheritance and Gift Tax shall not be paid if the Value Added Tax is paid on inherited or given movables.» Article 4 Article 7 is changed and reads: «(1) Those liable to Inheritance and Gift Tax are physical and legal persons who, in the territory of the Republic of Croatia, inherit or receive as a gift or acquire property, on other basis without compensation, on which Inheritance and Gift Tax is to be paid. (2) If an heir waives the legacy or surrenders it in the inheritance procedure, the Inheritance and Gift Tax is paid by the person to whom the legacy has been given or surrendered.» Article 8 is erased. Article 5 *Narodne novine The Official Gazette of Croatia
Article 6 Article 9 is changed and reads: «(1) The base for the Inheritance and Gift Tax shall be the amount of cash, and the market value of financial and other property, on the day when the tax liability is established, after the deduction of debts and expenses, which refer to the property for which this tax is paid. (2) The base for the Inheritance and Gift Tax referred to in paragraph 1 of this article, shall be determined by the tax body.» Article 10 is erased. Article 7 Article 8 Article 11 is changed and reads: «(1) The obligation of the payment of Inheritance and Gift tax shall arise at the moment the decision on the inheritance or the decision of the state body or of the court becomes final or at the moment of the receipt of the gift. (2) A gift shall be deemed received at the moment of signing the gift deed, and if no written gift deed is stipulated, at the moment of the receipt of the gift. (3) If the decision on inheritance or the decision of the state administration body or court or the gift deed are not registered or are not registered on time, the tax base shall be determined according to the market value of the property, which is inherited or received as a gift on the date of registration or of disclosure of the tax liability.» Article 12 is erased. Article 9 Article 10 Article 14 is changed and reads: «The Inheritance and Gift Tax shall not be paid by: 1. a spouse, next of kin in the direct line, and the adopted and the adopters of the deceased or the donor, 2. brothers and sisters, their descendents and sons-in-law and daughters-in-law of the testator or donor, if they lived in a common household with the testator at the moment of his or her death or with the donor at the moment of receiving the gift. A common household in terms of this Law implies a joint income-generation and acquisition of property and disposal with income and property, which is inherited or donated, 3. physical and legal persons to whom the Republic of Croatia or the unit of local and territorial (regional) self-government donates, or gives real estate without compensation for the damages or for other reasons related to the Homeland War, 4. the Republic of Croatia and the units of local and territorial (regional) self-government, bodies of state administration and bodies of units of local and territorial (regional) selfgovernment, public institutions, religious communities, endowments and foundations, the Red Cross and other humanitarian organizations established on the ground of special regulations, 5. physical and legal persons when they receive gifts (donations) for the purposes established by special regulations.» Article 15 is erased. Article 11 Article 12 Article 16 is changed and reads: «(1) Those liable to inheritance and gift tax shall submit to the competent tax body the decision on inheritance or the decision of the state administration body or the court or a gift deed, i.e. within 30 days of the day of the finality of the decision on inheritance or of the decision of the state administration body or the court or of the day the gift deed is stipulated. (2) The data referred to in paragraph 1 of this article shall be submitted to the tax body according to the permanent or usual residence or seat of the taxpayer. 2
(3) The inheritance and gift tax shall be paid within 15 days of the day of the delivery of the decision on assessment of this tax. (4) The inheritance and gift tax is the revenue of the county according to the permanent residence or usual residence or seat of the heir or donee.» Article 13 Article 13 is changed and reads: «(1) Tax on motor vehicles is paid by legal and physical persons who own registered passenger cars or motorcycles. (2) A passenger car, in terms of this Law, is a motor vehicle intended for the transport of persons, which in addition to the driver's seat, does not have more than eight seats, and whose maximum load does not exceed 250 kilos. (3) A motorcycle, in terms of this Law, is a motor vehicle on two wheels, with a sidecar or without it, and a motor vehicle on three wheels, if its maximum load does not exceed 400 kilos. (4) The motor vehicle tax shall be paid annually according to the engine power expressed in kw and according to the age of the vehicle, i.e.: 1. for passenger cars: If the engine power is PAID IN KUNA over kw to kw up to 2 years from 2 to 5 years from 5 to 10 years 55 300.00 250.00 200.00 55 70 400.00 350.00 250.00 70 100 600.00 500.00 400.00 100 130 900.00 700.00 600.00 130 1,500.00 1,200.00 1,000.00 2. for motorcycles: If the engine power is PAID IN KUNA over kw to kw up to 2 years from 2 to 5 years from 5 to 10 years over 10 years 20 100.00 80.00 50.00 -- 20 50 200.00 150.00 100.00 50.00 50 80 500.00 400.00 300.00 200.00 80 1,200.00 1,000.00 800.00 600.00 Article 14 Article 18 is changed and reads: «(1) Tax on motor vehicles shall not be paid for the vehicles of the Republic of Croatia and of the units of local and territorial (regional) self-government, for the vehicles of the bodies of state administration and bodies of units of local and territorial (regional) self-government, for vehicles of medical institutions, fire-brigades, diplomatic and consular agencies and foreign diplomatic staff and for special vehicles by which the owners perform a registered activity for the transport of the deceased and taxi service. (2) Tax on motor vehicles shall not be paid by persons who have been completely exempt from payment of customs and of the value added tax (transit tax) on the occasion of the purchase of the vehicle.» Article 15 Article 19 is changed and reads: «(1) Tax on motor vehicles is paid according to the decision on tax assessment issued by the competent tax body. (2) When, during a calendar year, the owner of the motor vehicle changes, the new owner shall not pay motor vehicle tax if the tax has already been assessed for the former owner. (3) If, in the course of a calendar year, a new motor vehicle is purchased, the owner of this vehicle shall pay the annual tax reduced for the period of the year prior to the purchase of the vehicle. (4) Motor vehicle tax shall be paid within 15 days of the day of delivery of the decision on assessment of that tax. (5) The county can, by its decision, prescribe that the tax on motor 3
vehicles is paid at the registration of the vehicle. (6) Tax on motor vehicles is the revenue of the county where the payer of this tax has the seat or permanent residence.» Article 16 Before Article 20 the subtitle: «3. Tax on vessels» is replaced by the subtitle: «3. Vessels Tax», and Article 20 is changed and reads: «(1) Vessels Tax shall be paid by legal and physical persons who are vessels' owners. (2) The vessel in terms of paragraph 1 of this article is considered a ship (yacht or small craft) and boat of internal navigation used for leisure, sports or recreation. (3) Vessels Tax shall be paid annually depending on the length of the vessel expressed in meters, whether the vessel has got a cabin or not and on the engine power expressed in kw, i.e.: 1.1 for vessels without a cabin: If the length PAID IN KUNA of the vessel in meters is Engine power (kw) over to to 30 over 30 to 100 over 100 5 7 --- 200.00 400.00 7 10 100.00 300.00 500.00 10 200.00 450.00 600.00 2.2 for motor vessels with a cabin If the length PAID IN KUNA of the vessel in meters is Engine power (kw) over to to 30 over 30 over 100 over to 100 to 500 500 5 7 --- 200.00 300.00 --- 7 10 200.00 400.00 500.00 2,500.00 10 12 300.00 500.00 1,000.00 3,500.00 12 400.00 1,000.00 3,000.00 5,000.00 3.3 for sailing vessels with a cabin If the length PAID IN KUNA of the vessel in meters is Engine power (kw) over to to 10 over 10 over 25 over 50 to 25 to 50 5 7 -- 300.00 440.00 500.00 7 10 200.00 600.00 1,000.00 2,000.00 10 12 300.00 700.00 2,000.00 3,000.00 12 400.00 1,500.00 3,000.00 4,000.00 Article 17 Article 21 is changed and reads: «Vessels tax shall not be paid for vessels which are used to carry out a registered activity and small crafts owned by domiciled inhabitants on islands, which are used for indispensable organization of life and maintenance of property on islands.» Article 18 Article 22 is changed and reads: «(1) Vessels Tax shall be paid according to the decision on tax assessment adopted by the competent tax body in the territory in which the vessel is registered. (2) Vessels tax shall be paid within 15 days of the day of delivery of the decision on assessment of this tax. (3) Vessels tax is the revenue of the county in whose territory the vessel is registered.» 4
Article 19 Before Article 23 the subtitle: «4. Tax on Organization of Entertainment and Sports Events» is replaced by subtitle: «4. Tax on Entertainment Machines», and Article 23 is changed and reads: «(1) Subject to taxation are entertainment machines, which are put in use in entertainment clubs, bars and restaurants, public facilities and other public premises. (2) Under entertainment machines in terms of paragraph 1 of this article are considered the machines used for the organization of entertainment games on computers, simulators, videomachines, pinball machines, darts, billiards, football games, and other similar machines operated by coins, tokens or by charge, by which the player does not win a prize in money, things or rights. (3) Entertainment machines are classified into two groups: 1. group A machines (video games, simulators and other electronic entertainment machines on which the player does not win a prize), 2. group B machines (pinball machines, billiards, hockey, football game, darts and other mechanical machines).» Article 20 Article 24 is changed and reads: «Under entertainment clubs in terms of paragraph 1 Article 23 of this Law are considered the premises in which entertainment games on entertainment machines are organized, and whose surface cannot be less than 30m2, and in which must be installed a minimum of 5 entertainment machines.» Article 21 Article 25 is changed and reads: «Payer of the entertainment machines tax is a legal or physical person that puts entertainment machines in use in entertainment clubs, bars and restaurants, public facilities and other public premises.» Article 22 Article 26 is changed and reads: «(1) Entertainment Machines Tax shall be paid in the amount of 100.00 kuna per month. (2) The tax referred to in paragraph 1 of this article shall not be paid for entertainment machines such as billiards, if they have the label of the Croatian Billiards Association posted at a visible place.» Article 23 Article 27 is changed and reads: «(1) Entertainment machines tax shall be paid according to the place where the entertainment machine is put in use. (2) The taxpayer is due, before the entertainment machine is put in use, to submit a monthly application to the competent tax body to issue the control sticker (stamp) to label the machine, according to the place where the machine is used. The taxpayer must enclose with the application for issuing the control sticker (stamp): 1) proof of permit for the performance of the activity of organizing the entertainment game, 2) information about the number and types of entertainment machines put in use, 3) information about the place where each and individual entertainment machine is installed, 4) proof of ownership or of the right to use entertainment machines, 5) proof (certificate) of approval of use according to the Law on standardization, 6) proof of ownership or lease agreement stipulated with the owner or the user of the premises where the entertainment machine is installed, 7) certificate of technical operation issued by an authorized attest house, 8) proof of payment of the entertainment machines tax referred to in Article 26 of this Law. (3) For every registered entertainment machine, and after the payment of tax on entertainment machines, the taxpayer shall get a control sticker (stamp) from the competent tax body. The minister of finance shall prescribe the form, size, contents, color and other elements that a control stamp should contain by a special regulation. (4) The Ministry of Finance shall entrust the printing of stamps in accordance with the prescribed requirements on the procedure of purchase of goods and services and lease of works, to the legal or physical person that can ensure their protection and safety. (5) The competent body of the Tax Administration issues to the taxpayer for every registered 5
entertainment machine a control sticker (stamp) to label the machine, which is valid only for the month in which the registration was made, and tax on machines paid. The costs of issuing the sticker (stamp) shall be charged to the person submitting the application for issuing the sticker. (6) For each subsequent month of the use of the machine on the same location, the taxpayer is due to deliver with the application for issuing the sticker, only the proof of payment of the entertainment machines tax referred to in Article 26 of this Law. When the place of use of the entertainment machine is changed, the taxpayer shall enclose to the application also the proof that the requirements referred to in paragraph 2 of this article are met. (7) In entertainment clubs, bars and restaurants, public facilities and other public premises can only have installed entertainment machines on which the control sticker (stamp) with prescribed information is posted at a visible place. Each machine without the prescribed sticker (stamp) shall be temporarily confiscated. (8) Entertainment machines tax is the revenue of the county according to the place where the entertainment machine is put in use.» Article 24 Article 30 is changed and reads: «Municipalities and cities can introduce these taxes: 1. surtax on the income tax, 2. consumption tax, 3. vacation homes tax, 4. tax on idle lands, 5. tax on unused entrepreneurial real estate, 6. tax on unused construction land, 7. tax on firm or name, 8. tax on the use of public surfaces.» Article 25 After Article 30 the subtitle is added «1. Surtax on the income tax», and Article 30.a, which reads: «Article 30.a (1) Municipality, or city can prescribe the payment of surtax on the income tax to taxpayers, i.e.: 1. municipality at the rate of 10%, 2. city with less than 30,000 inhabitants at the rate of 12%, 3. city with over 30,000 inhabitants at the rate of 15%, 4. the City of Zagreb at the rate of up to 30%. (2) Surtax on the income tax by the provisions of this article is paid at the rate determined by the municipality or city and it belongs to the municipality or city in whose territory is the permanent or usual residence of the surtax payer.» Article 26 Before Article 31 the subtitle: «1. Consumption Tax» is replaced by the subtitle: «2. Consumption Tax». Article 27 Before Article 35 the subtitle: «2. Vacation Homes Tax» is replaced by the subtitle: «3. Vacation Homes Tax», and Article 35 is changed and reads: «(1) Vacation Homes Tax shall be paid by legal and physical persons owners of vacation homes. (2)A vacation home is considered any building or part of a building or an apartment used sporadically or seasonally. (3) In terms of this Law, farm buildings used for storing agricultural machines, tools and other equipment shall not be considered vacation homes.» Article 28 Article 36 is changed and reads: «(1) Vacation homes tax shall be paid from 5.00 to 15.00 kuna per one square meter of usable surface of a vacation home. (2) A municipality or city prescribe the amount of the tax on vacation homes by a decision. 6
(3) A municipality or city prescribe the amount of the tax on vacation homes depending on the place, years, condition of infrastructure and other circumstances of importance for the use of the vacation home.» Article 29 Article 37 is changed and reads: «(1) Vacation homes tax shall not be paid on vacation homes, which cannot be used. (2) Vacation homes referred to in paragraph 1 of this article imply the vacation homes, which cannot be used because of war destruction and natural disasters (floods, fire, earthquake), and old age and neglect. (3) Vacation homes tax shall not be paid for vacation homes during the time when displaced persons and refugees are accommodated in them. (4) Vacation homes tax shall not be paid for summer resorts owned by the unit of local and territorial (regional) self-government, which serve for the accommodation of children younger than 15. (5) By the decision of a municipality or city, other exemptions from payment of vacation homes tax can be prescribed for economic and social reasons.» Article 30 Article 38 is changed and reads: «(1) The calculation and way of payment of vacation homes tax are established by the decision of the municipality or city. (2) Vacation homes taxpayers must deliver information about vacation homes to the competent tax body, which refer to the place where these buildings are located, and to the useable surface. (3)The data referred to in paragraph 2 of this article need to be delivered by 31st March of the year for which the vacation homes tax is assessed. (4) The vacation homes tax shall be paid within 15 days of the day of delivery of the tax assessment decision. (5) The vacation homes tax belongs to the municipality or city in whose territory the vacation home is located.» Article 31 After Article 38 the subtitle «4. Tax on Idle Lands», and Articles 38.a, 38.b, 38.c, 38.d, 38.e, subtitle «5. Tax on unused entrepreneurial real estate» and Articles 38.f, 38.g, 38.h, 38.i, 38.j, 38.k, and subtitle «6. tax on unused construction land» and Articles 38.l, 38.m and 38.n, are added, which read: «4. TAX ON IDLE LANDS Article 38.a (1) Owners and lessees shall pay the tax on idle lands if they fail to cultivate of this land for a year. (2) Under idle lands referred to in paragraph 1 of this article is implied the land, which by its size, class and culture can be cultivated or brought to agricultural production, but is not cultivated by the owners or lessees of this land. Article 38.b The tax base for idle lands is the surface of idle land expressed in hectares. Article 38.c (1) The tax on idle lands shall be paid per one hectare of idle land in the amount: 1. on plow-land up to 500.00 kuna a year, 2. on vegetable gardens up to 800.00 kuna a year, 3. on orchards up to 1,000.00 kuna a year, 4. on olive-groves up to 1,000.00 kuna a year, 5. on vineyards up to 1,000.00 kuna a year, 6. on meadows up to 250.00 kuna a year. (2) A municipality or a city prescribe the rate for tax on idle lands by their decision. (3) A municipality or a city prescribe the rate for tax on idle lands depending on location, size, class, culture and other circumstances of importance to the use of idle lands. 7
Article 38.d (1) Tax on idle lands shall not be paid on the land, which is temporarily assigned for management to the municipality or city. (2) A municipality or a city can by their decision prescribe the exemption from payment of tax on idle lands depending on site (mountain, hills), size, class and culture of land, and due to the work incapacity of the taxpayer for old age or disease. Article 38.e (1) The calculation and way of payment of tax on idle lands are established by the decision of the municipality or city. (2) Payers of tax on idle lands must deliver to the competent tax body the data on the place, size, class and culture of the land, which is cultivated. (3) The data referred to in paragraph 2 of this article must be delivered by 31st March of the year for which the tax is assessed. (4) The tax on idle lands shall be paid within 15 days of the day the decision on tax assessment is delivered. (5) The tax is the revenue of the municipality or city in whose territory the idle land is located. 5. TAX ON UNUSED ENTREPRENEURAL REAL ESTATE Article 38.f (1) The tax on unused entrepreneurial real estate shall be paid on real estate used for carrying out an entrepreneurial activity (production and other business premises), which are not being used. (2) Under unused entrepreneurial real estate referred to in paragraph 1 of this article are considered the real estate in which the activity is not performed for a year. Article 38.g The payer of tax on unused entrepreneurial real estate is a physical and legal person, owner of the real estate. Article 38.h The base of the tax on unused entrepreneurial real estate is the useable surface of the real estate expressed in square meters. Article 38.i (1) Tax on unused entrepreneurial real estate is paid from 5.00 to 15.00 kuna per square meter of the useable surface of entrepreneurial real estate. (2) A municipality or a city with its decision prescribes the rate of the tax for unused entrepreneurial real estate. Article 38.j (1) Tax on unused entrepreneurial real estate shall not be paid on real estate, which are temporarily entrusted for management to the municipality or city. (2) The tax on unused entrepreneurial real estate shall not be paid on real estate, which have the characteristic of a cultural asset according to the Law on protection and preservation of cultural assets («Narodne novine», No. 69/99). (3) A municipality or a city can prescribe the exemption from payment of tax on unused entrepreneurial real estate in case of the force majeur, natural disasters or if there are other obstacles to their use. Article 38.k (1) Calculation and way of payment of tax on unused entrepreneurial real estate is established by a decision of the municipality or city. (2) The payers of the tax on unused entrepreneurial real estate must deliver the data on unused entrepreneurial real estate to the competent tax body. (3) The data referred to in paragraph 2 of this article must be delivered by 31st March of the year for which the tax is assessed. (4) The tax on unused entrepreneurial real estate is paid within 15 days of the day the decision on assessment of this tax is delivered. (5) The tax is the revenue of the municipality or city on whose territory the unused entrepreneurial real estate is located. 8
6. TAX ON UNUSED CONSTRUCTION LAND Article 38.l (1) Legal and physical persons owners of the unused construction land shall pay tax on unused construction land. (2) Under unused construction land referred to paragraph 1 of this article is implied the land, which is located within the range of the construction area of the settlement on which, in accordance with the physical plan, buildings for housing, business and other purposes, can be built, and on which no structure is constructed. Unused construction land also implies the land on which there exists a temporary construction for whose construction there is no need to obtain the approval for construction as well as the land on which the remains of the previous construction are located. Article 38.m (1) Tax on unused construction land is paid from 1.00 to 5.00 kuna per square meter of unused construction land. (2) The municipality or city prescribes the rate of the tax on unused construction land by its decision, depending on the location, size and other circumstances relevant for the use of unused construction land. Article 38.n (1) The calculation and way of payment of the tax on unused construction land is established by the decision of the municipality or city. (2) The payers of the tax on unused construction land must deliver the data on the place and size of unused construction land to the competent tax body. (3) The data referred to in paragraph 2 of this article must be delivered by 31st March of the year for which the tax is assessed. (4) Tax on unused construction land shall be paid within 15 days of the day the decision on tax assessment is delivered. (5) The tax is the revenue of the municipality or city in whose territory the unused construction land is located. Article 32 Before Article 39 the subtitle «3. Advertisement Tax» and articles 39, 40 and 41 are erased. Article 33 Before Article 42 the subtitle: «4. Tax on firm or name» is replaced by the subtitle: «7. Tax on firm or name», and Article 42 is changed and reads: «(1) Payers of tax on firm or name are legal and physical persons who are payers of profit tax or income tax and who are registered for the performance of activities. (3) Persons referred to in paragraph 1 of this article that comprise business units (stores, plants, workshops, sales places), are the payers of the firm tax for each business unit. (4) Payers of firm tax who are not performing the activity shall not pay firm tax. (5) Tax on firm or name shall be paid in the annual amount determined by the municipality or city, and cannot exceed 2,000.00 kuna for each firm or name. (6) The municipality or city shall regulate the calculation and way of payment of the tax on firm or name by its decision. (7) The tax on firm or name is the revenue of the municipality or city in whose territory is the taxpayer's seat or permanent or usual residence. If the payer of firm tax is composed of business units, the firm tax for the business unit is the revenue of the municipality or city in whose territory the business unit is located.» Article 34 Before Article 43 the subtitle: «5. Tax for the Use of Public Surfaces» is replaced by the subtitle: «8. Tax for the Use of Public Surfaces», and Article 43 is changed and reads: «(1) Tax on use of public surfaces shall be paid by legal and physical persons using public surfaces. (3) The tax referred to in paragraph 1 of this article shall be paid in the amount, in the way, and under the conditions prescribed by the municipality or city. (4) What is considered a public surface is prescribed by the decision of the municipality or city.» Article 45 is changed and reads: Article 35 9
«(1) Shared taxes are: 1. income tax, 2. profit tax, 3. capital transfer tax. (2) The revenues referred to in paragraph 1 item 1 and 2 of this article are shared among the state, municipality, city and county. (3) The revenues referred to in paragraph 1 item 3 of this article are shared among the state, municipality and city. (4) The revenue from income tax is allocated as follows: 1. In the territory of the municipality, or city, which does not finance decentralized expenses of primary schools according to a special law the share in the income tax is the following: a) 32% share of the municipality or city b) 8% share of the county increased by the additional share of income tax referred to in item 7 of this paragraph, c) 21% share of the position for equalization grants for the decentralized functions, d) 29.20% share of the state. 2. In the territory of the municipality, or city under special state care (Law on Territories under Special State Care, «Narodne novine» No. 44/96, 57/96, 124/97 and 73/00.) in the period determined by Article 14.a of the mentioned Law, which does not finance the decentralized functions of primary education according to a special law, the share in income tax is the following: - A municipality or city referred to in Article 4 paragraph 1 and 2 item a), and in Article 5 paragraph 1 of the mentioned Law is: a) 32% share of the municipality, or the city, increased by the share of the income tax of the state by 60% ceded to the municipality or to the city in terms of Article 14.a of the mentioned Law, b) 8% share of the county, c) 0% share of the position for the equalization grant for decentralized functions, d) 0% share of the state. - A municipality or city referred to in Article 4 paragraph 2 item b) and c), and in Article 5 paragraph 2 of the mentioned Law is: a) 32% share of the municipality, or city, increased by the share of income tax of the state ceded to the municipality or city in terms of Article 14.a of the mentioned Law, b) 8% share of the county, increased by an additional share of the income tax referred to in item 7 of this paragraph, c) 21% share of the position for equalization grant for the decentralized functions, d) 29.20% share of the state, deducted by the share of the income tax of the state ceded to the municipality, or to the city in terms of Article 13.a of the mentioned Law. 3.In the territory of a municipality, or a city on the island, which does not finance the decentralized functions of primary schools according to a special law, the share in the income tax amounts to: a) 32% share of the municipality or city, increased by the share of the income tax of the state in the amount of 29.20% ceded to the municipality or city that stipulate the agreement on joint financing of the capital project of interest for the development of the island, b) 8% share of the county, increased by the additional share of the income tax referred to in item 7 of this paragraph, c) 21% share of the position for equalization grant for the decentralized functions, d) 0% state share. 4. In the territory of the city, which finances the decentralized functions of primary schools according to a special law, the share in the income tax amounts to: a) 32% share of the city increased by the additional share of the income tax referred to in item 7 of this paragraph, b) 8% share of the county, increased by the additional share of the income tax referred to in item 7 of this paragraph deducted by the share of the income tax for primary schools, c) 21% position for equalization grant for the decentralized functions, d) 29.20% of the state. 10
5. In the territory of the City of Zagreb, which finances the decentralized functions according to a special law, the share in the income tax amounts to: a) 45% share of the City of Zagreb increased by the additional share in the income tax referred to in item 7 of this article, b) 21% share of the position for equalization grant for the decentralized functions, c) 24.20% share of the state. 6. In the territory of the city under special state care referred to in Article 4 paragraph 2 items b) and c) and in Article 5 paragraph 2, of the Law on Areas under Special State Care («Narodne novine» No. 44/96, 57/96, 124/97 and 73/00) in the period established in Article 14a of the Law on Areas under Special State Care, which finances the decentralized functions of primary schools according to a special law, the share in the income tax amounts to: a) 32% share of the city increased by the share of the income tax share of the state ceded to the city in terms of Article 14.a of the mentioned Law, and by the added share of the income tax referred to in item 7 of this paragraph, b) 8% of the county increased by the added share of the income tax referred to in item 7 of this paragraph, deducted by the share of the income tax for primary schools, c) 21% of the share of position for the equalization grant for the decentralized functions, d) 29.20% share of the state deducted by the share of the income tax of the state devolved to the city in terms of Article 14.a of the mentioned Law. 6. The city, county and the City of Zagreb for the decentralized functions according to the special law are entitled to the additional share in the income tax for the functions, i.e.: Primary schools 2.9% Secondary schools 2.0% Social welfare - social welfare centers 0.4% - retirement homes 1.6% Health care - investment maintenance of institutions owned by the counties 2.5% - health care of uninsured persons 0.3% - health care of members of agricultural households over 65 years of age 0.1%. (5) The share of the municipality and city in the profit tax amounts to 20%, of the county 10%, and of the state 70%. (6) The share of the municipality and city in the capital transfer tax amounts to 60%, and of the state 40%. (7) Shared taxes belong to local and territorial (regional) self-government in the percentages established by this Law realized in their territory. (8) The division of shared taxes referred to in this article is applied to the payments and returns of these taxes.» Article 36 After Article 45 the Articles 45.a, 45.b and 45.c are added, which read: «Article 45.a (1) Funds are allocated from the position of the equalization grant for the decentralized functions in the State Budget of the Republic of Croatia to cover the public expenditures in the area of primary and secondary schools, social welfare and health-care, which are devolved to the unit of local and territorial (regional) self-government by a special law. (2) The Government of the Republic of Croatia by its decree establishes the way of calculating the amount of the equalization grant for the decentralized functions of the unit of local self-government and territorial (regional) self-government. (3) The revenues from the position of equalization grants, which were not used during the budget year remain in the balance of the budget as a reserve in order to enable the payment of grants in the subsequent year if the planned revenues are not realized. (4) The unit of local and territorial (regional) self-government responsible for the devolved functions shall, in the year 2001 and 2002, transfer funds realized from the increased share in the income tax and from the equalization grant to every institution proportional to the expenditures of this institution in 1999. (5) The unit of local and territorial (regional) self-government in the year 2003 can divide the resources realized from the increased share in the income tax and from the equalization grants to the 11
institutions inside the group of individual activity, but the division must be based on a plan published at least 2 months before it is adopted. The division cannot decrease the funds for an individual institution for more than 10% of its budget from the previous year. (6) The unit of local and territorial (regional) self-government, in 2004, can still allocate the resources realized from the increased share in the income tax and from the equalization grant to institutions within groups of individual activities, but the division must be based on the plan published at least 2 months before it is adopted. (7) If from the additional share in the income tax more funds are realized than the amount they are entitled to, in terms of the decree referred to in paragraph 2 of this article, for the function, the Ministry of Finance can use the surplus to decrease the grants in accordance with other functions, in the year for which the funds are allocated for, or for the subsequent year. (8) The amount of the equalization grants for each year are established on the ground of the decree referred to in paragraph 2 of this article, and it is provided in the state budget of the Republic of Croatia for a certain year. Article 45.b (1) The representative body of a municipality or city with over 8,000 inhabitants can adopt a decision that it will finance the expenditures of primary schools established on the ground of the decree referred to in Article 45.a paragraph 2 of this Law, and that it will ensure for pupils from another municipality or city to attend primary schools under the condition that these municipalities or cities participate in financing these expenditures. (2) Several municipalities or cities, which together have a minimum of 8,000 inhabitants, can decide to jointly perform the functions for primary schools in their territory under the condition that the representative bodies of all cities and municipalities: - establish that the function of primary schools can be performed with the resources established on the ground of the decree referred to in Article 45.a paragraph 2 of this Law, - make the decision on the right to attend primary schools for pupils who do not have permanent residence in the territory of these municipalities or cities under the condition that the units of territorial (regional) self-government where these pupils have their permanent residence participate in financing the expenses, - make the decision to establish a joint body for the purpose of performing the services of purchase, accounting and financial reporting. Article 45.c (1) Shared revenues of the state, municipality and city are the revenues from the agreed annual fees for concessions, in terms of the Law on Concessions («Narodne novine», No. 89/92), i.e.: 1. for taking mineral and thermal waters, 2. for withdrawing waters for public water supply. (2)Revenues from paragraph 1 of this article are divided between the state, municipality and city in whose territory the right to take mineral and thermal waters and withdrawing waters for public water supply is exercised so that: 1. the share of the municipality and city in the revenue from the concession fees for taking mineral and thermal waters amounts to 50%, and of the state 50%, 2. the share of the municipality and city in the revenue from the concession for withdrawing waters for public water supply amounts to 30%, and of the state 70%.» Article 37 Articles 46, 47, 83, 84, 85 and 86 are erased. Article 38 Article 89 is changed and reads: «A fine in the amount between 500.00 and 25,000.00 kuna shall be imposed for an offence: 1. a legal or physical person who does not submit the data for tax assessment for inheritance and gifts (Article 16 paragraph 1 and 3), 2. a legal or physical person who does not calculate or does not pay consumption tax in the prescribed period (Article 32, paragraph 3), 3. a legal or physical person who does not submit the data for tax assessment on vacation houses (Article 38 paragraph 2 and 3), 4. a legal or physical person who does not submit the data for tax assessment on idle lands (Article 38.e, paragraph 2 and 3), 12
5. a legal or physical person who does not submit the data on tax assessment on unused entrepreneurial real estate (Article 38.k, paragraph 2 and 3), 6. a legal or physical person who does not submit the data necessary for the assessment of the tax on unused construction land (Article 38.n paragraph 2 and 3). (2) For the offence referred to in paragraph 1 of this article the responsible person in legal person shall be fined with the amount between 1,000.00 to 10,000.00 kuna.» Article 39 After Article 89 Article 89.a is added, which reads: (1) A fine in the amount of 5,000.00 to 50,000.00 kuna will be imposed for an offence on: 1. a legal or physical person who puts into use the entertainment machines contrary to the provision of Article 23 paragraph 2 of this Law, 2. a legal or physical person who illegally issues or prints control stamps contrary to Article 27 paragraph 3 and 4 of this Law, 3. a legal or physical person who puts into use an entertainment machine without the control sticker with the prescribed data issued by the competent tax body (Article 27 paragraph 7). (2) A fine between 5,000.00 and 20,000.00 kuna will be imposed on a legal or physical person owner of the machine or owner, or user of the premises in which the entertainment machines are put in use contrary to the provision of Article 27 paragraph 7 of this Law. (3) For the offence referred to in paragraph 1 and 2 of this article the responsible person in the legal person will be fined with the amount between 1,000.00 and 10,000.00 kuna. (4) Until the final decision on offence referred to in paragraph 1 item 1 and 3 of this article, the competent body will ban further organization of entertainment game with a decision. (5) The decision on ban of organization of games on entertainment machines is enforced by putting a seal on it and by temporary confiscation of these machines until the first instance procedure is finalized. (6) The costs of temporary confiscation of the machine referred to in paragraph 5 of this article will be charged on the owner of the machine.» Article 90 is erased. Article 40 Article 41 (1) A county, municipality or city can, by its decision, except for exemptions set forth in this Law, can prescribe other exemptions and relieves from payment of county, municipal or city taxes. (2) A county, municipality or city must adopt their decision by which they prescribe the tax rate and the way in which it will be paid within three months of the day this Law enters into force. (3) A county, municipality or city must deliver their decisions referred to in paragraph 1 and 2 of this article to the Ministry of Finance, Central Office of the Tax Administration within eight days of the day it is adopted. (4) The proposal of the budget of a county, municipality or city in its explanation must also contain the evaluation of the amount of each introduced tax and the evaluation of the costs of identifying, charging, enforcement, control and record per each introduced tax. Article 42 (1) The tasks related to determining and charging of county and municipal or city taxes except for the surtax on income tax are performed by the competent county and municipal or city bodies. (2) The tasks related to establishing and charging surtax on income tax are performed by the Tax Administration. (3) Exceptionally from paragraph 1 of this article the tasks related to determining and charging county taxes and municipal or city taxes for the year 2001 shall be performed by the Tax Administration in terms of the Law on Financing the Units of Local Self-government and Administration («Narodne novine», No. 117/93, 69/97, 33/00, 73/00 and 127/00). (4) The tax administration can perform the tasks related to determining and charging county, municipal or county taxes referred to in paragraph 1 of this article based on regulations adopted by the representative body of the unit of territorial (regional) or local self-government or another competent body with prior agreement of the minister of finance. (5) From the part of shared taxes, which belong to the units of local and territorial (regional) selfgovernment, for the costs of determining, charging, enforcing, control and record of these taxes, 1% belongs to the state budget. These funds shall be used to improve the work of the Tax Administration. 13
Article 43 (1) The unit of local self-government and the units of territorial (regional) self-government, which takes over the financing of the decentralized functions in accordance to a special law is due to harmonize its budget for the year 2001 in terms of Article 5 of the Law on Budget («Narodne novine», No. 92/94) not later than 30th September 2001. (2) Equalization grants based on the decree referred to in Article 45.a paragraph 2 of this Law will be allocated from the state budget after the harmonization of the budget referred to in paragraph 1 of this article. (3) Prior to the harmonization of the budget referred to in paragraph 1 of this article, the reallocation of established funds can be done above the percentage established in Article 25 of the Budget Act («Narodne novine», No. 92/94) for the execution of decentralized functions according to a special law. Article 98 is erased. Article 44 Article 45 Throughout the text of the Law on Financing the Units of Local Self-government and Administration («Narodne novine», No. 117/93, 69/97, 33/00, 73/00 and 127/00) the words: «a district with special self-governmental position» in a respective grammar case, are erased, and the words: «units of local self-government and administration» in a respective grammar case, are replaced by the words: «units of local and territorial (regional) self-government» in a respective number and grammar case. Article 46 (1) The Croatian Government is obliged to adopt the decree referred to in Article 45.a of this Law within 30 days of the day when this Law enters into force. (3) The minister of finance is obliged to adopt the regulation referred to in Article 27 paragraph 3 of this Law as well as the decision on printing the stamps in accordance with Article 27 paragraph 4 of this Law within 90 days of the day this Law enters into force. Article 47 The minister of finance is authorized to adopt enforcement regulations, upon need, for the application of the provisions of this Law. Article 48 The Committee for Legislation of the Croatian Parliament is authorized to establish and publish the final draft of the Law on Financing of Units of Local Self-government and Administration. Article 49 This Law enters into force on the day it is published in «Narodne novine», and is effective as of July 1, 2001, with the exception of provisions of Articles 23, 24, 25, 26, 27 and 89.a, which are effective as of January 1, 2002. Class: 015-01/01-01/03 Zagreb, June 28, 2001 CROATIAN PARLIAMENT Speaker of the Croatian Parliament Zlatko Tomčić, signed personally 14