English for Tax Administration 2

1. English for TaxAdministration 2 Lecturer: Miljen Matijašević G10, room 6/I, Tue 11:30-12:30 e-mail: miljen.matijasevic@gmail.com Session8, 6 May 2014

2. Today’s Session • Revisionquestionsandexercises • Personal IncomeTax

3. Revision of the last session Value Added Tax

4. Explain the following terms • input tax • output tax • deductible • legal entity • taxable activity • non-resident • customs clearance • consideration

5. Answer the questions • Who is subject to payment of VAT and who is exempt? • What are the taxable transactions? • What is the taxable base? • What are the rates and what do they apply to? • What rules apply to non-residents?

6. Personal income Tax Unit 5

7. Personal Income Tax • Paid on worldwide income in case of tax residency in Croatia • Paid by resident and non-resident natural persons

8. Resident / non-resident • RESIDENT • Registered residence in Croatia • If he/she intends to stay more than 183 days over a period of two years in Croatia • NON-RESIDENT • Taxed on income earned in Croatia

9. Taxable base – sources of income • Income earned by: • employment(salary) • self-employment • freelance work, crafts, agriculture, forestry • property and property rights • Renting real estate, intellectual property rights • capital • insurance • other income • Management board fees, income earned by sportsmen, referees, translators, tourist workers, etc.

10. Taxable base • Income tax not levied on: • Interest on savings in hard currency and HRK • Dividends on shares • Gains from the disposal of financial property • Various kinds of social care • Gifts and inheritance • Etc.

11. Taxable base • Total income minus personal allowances • Personal allowances: • Non-taxable income HRK 26,400 per year • monthly allowance HRK 2,200 • Dependentsandchildren • Disabledmembersofthefamily • Etc.

12. Areas of Special Interest • Residents of those areas have special tax breaks • Higher personal allowances • Income tax exemption of earnings from agriculture and forestry • Higher depriciation rates for long-term capital invested in property

13. Tax Rates • Income tax brackets:

14. LOCAL SURTAX • Charged in certain municipalities on the total amount of calculated tax • E.g. Zagreb - 18 %

15. Non-taxable Benefits • Employers may give employees benefits not subject to taxation • If these exceed the prescribed limit, the excess is fully taxable (contributions, income tax, surtax) • Contributions – to health and pension insurance

16. Benefits in Kind • Subject to income tax • Valued at the market value, including VAT • Use of business buildings, cottages, dwellings and means of transportation provided by the employer, • Low interest on loans granted by the employer (taxable base – the difference between a rate of 4 % and the rate applied) • Gifts and entertainment provided by the employer, and • Shares received from the employer.

17. Key vocabulary freelance work crafts hard curency personal allowance depreciation tax brackets contributions

18. Practice • Do the exercises on p. 17-18 in your coursebook

19. Thank you for your attention!