As you probably know, from 01st March, 2012, it was introduced taxation on paid profit (shares in profit and dividends) and advances of profit, at a rate of 12%. It is not a completely new and unfamiliar taxation because up to now the payment of profits realized in the period 2001-2004 was taxable, the first rate of 15%, and later at a rate of 12%. The new rules include the taxation of retained profit from 01st January, 2000 onwards, and the profits are paid after 01st March, 2012. Exactly this provision brought confusion and revolt among a large number of owner-entrepreneurs who have over the past years paid out only a small part of the profit, while the rest are temporarily left to their companies in order to amortize problems with slow billing and non-billing with their savings for old age. Just these entrepreneurs who pay their bills on time and that we consider as the reliable business partners, employers, taxpayers and so on. On the other hand, those who regularly paid their profits and through advances, leaving their creditors at the mercy of the current solvency of their companies and justifying its delay in the payment of a difficult situation, now they have quite rightly a reason to smile with satisfaction. From the hungry country is obviously difficult to expect to be fair to those who actually represent a prototype of Croatian entrepreneurship (this sounds really naive). The cherry on top was an article published in Lider that you probably have read or have heard about it ... without further comment. With taxation of payment of profits it was established: a) The Law on Personal Income Tax - for natural persons, owners of shares and shareholders and b) The Law on Profit Tax - for foreign legal entities. Payment of profits to natural persons According to the new Law on Personal Income Tax (in fact it is about the Law on Amendments to the Income Tax Act, OG 22/12), paid profit or dividend represents capital income is taxable at the rate of 12%, and the surtax. The same applies to the payment of the advance profit. Payer shall calculate and pay tax and surtax of profit (a company, a craftsman in the system of profit). The tax is paid at the same time with profits, and at the latest by the end of the month in which there has been a payment of profit (as second income). Example of calculation of payment of profit to a natural person: The owner made the decision on the payment of profit in the amount of 10.000,00 HRK. The surtax of 18%.

Amount of profit for the payment (gross)	10.000,00
Tax	1.200,00
Surtax	216,00
Total tax and surtax	1.416,00
Net amount to be paid	8.584,00

  From the calculation is evident that the payer (company or craft) in the budget will have to pay 1.416 HRK, while the remaining 8.584 HRK to the account (giro or current). The paid tax and surtax does not represent the cost of the company but already paid part of the profits. If a natural person-owner ie. a shareholder is paid in a single year up to 12.000,00 HRK of profit, he/she is entitled to claim a refund of tax and surtax on the way to submit an annual income tax return (as was the case with tax benefits). However, in this case it has to be included in the Application and all your other incomes, so the question of profitability of such decisions on a case-by-case basis. If to the owner are paid advances of profits that exceed the amount of net profit at the end of the year, the person is required to return the company overpaid advances. Otherwise, the amount of the overpayment is considered taxable income from capital at a rate of 40%. If a shareholder is a foreign natural person, tax on paid profit is calculated as domestic natural person if the country of residence of that person does not have an Agreement on avoidance of double taxation which regulates the lower rate. Payment of profits to legal persons If a domestic legal entity is a shareholder in another legal person, then the payment of profit is not taxable. In this case there was no legal changes. If a foreign legal person is shareholder in the domestic legal entity, then the Law on Tax on Profit  provides that the payment of profits is taxed on the profit withholding, at the rate of 12%. If the country where the foreign company is resident, there is a signed Agreement on avoidance of double taxation, then the provisions of that contract are applying. The principle of the calculation is the same as it is for natural persons but without surtax. Tibor Jankač