Full Breakdown
Croatia Unveils Anti-Inflation Package Targeting Excess Profits, Flat-Rate Businesses and Pensions
5/29/2026, 5:28:33 AM
Background & Context
Croatia’s inflation hit 5.4% in April 2026, among the EU’s highest, amid geopolitical tensions and an energy price shock. The HDZ-led government unveiled the anti-inflation package ahead of elections after a 500% tax hike on landlords last year.
Anti-Inflation Package Overview
The plan taxes excess profits at 50% for medium- and large firms whose margins exceed the three-year average by over 15% (?1,740 firms). Flat-rate taxes for sole traders rise sharply: earnings €50-60k face an 82% increase, and tourism accommodation fees climb 43-50%. Pension income tax is abolished for over 540,000 retirees, saving €180 million. The package adds €1.3 billion in budget savings, a wage freeze until Q1 2027, and a moratorium on administrative price hikes.
Key Figures
Finance Minister Tomislav Coric presented the plan. The ruling HDZ backs it. Opposition includes Hana Matic, vice-president of Save Small Landlords, and Dražen Jovic, president of the Independent Croatian Trade Unions (NHS). Former Prime Minister Jadranka Kosor also commented.
Data Snapshot
Inflation was 5.4% in April 2026. The government cites roughly 130,000 private accommodation providers, though other reports list 110,000. Flat-rate sole traders rose from 27,500 in 2017 to about 101,000 by end-2025. The excess-profit tax targets around 1,740 firms. Pension relief covers over 540,000 retirees.
Official Statements & Responses
Coric said the package seeks to curb price growth, cut the deficit and bring inflation to 2% by year-end, emphasizing the excess-profit tax and pension relief. Jovic welcomed the profit tax but warned a public-sector wage freeze could shift inflation costs onto workers.
Criticism & Opposition
Matic called the accommodation tax hike “arrogant and shameless,” accusing the government of ignoring landlords after last year’s 500% increase and warning further rent cuts could harm tourism revenue.
Verbatim Quotes
- “Excessive profit margins, where they exist, will be taxed at a rate of 50 per cent,” — Tomislav Coric, Finance Minister
- “This is an arrogant and shameless move by people who do not understand the sector.” — Hana Matic, Vice President, Save Small Landlords
- “The unions unanimously support the introduction of a tax on excess profits. This is something the NHS has been advocating for years,” — Dražen Jovic, President, Independent Croatian Trade Unions
- “Yes, the time for belt-tightening is coming. Some of us warned that it would, especially during the pre-election period, when money was being handed out left and right,” — Jadranka Kosor, former Prime Minister
Conflicting Reports & Gaps
Sources differ on the number of private accommodation providers—130,000 versus 110,000—and on flat-rate tax details, with one report giving percentage hikes and another listing fixed euro amounts, leaving exact liabilities for mid-range earners unclear.
What’s Next
The tax changes and pension relief start in early 2027, with the wage freeze lasting until the end of Q1 2027; analysts will monitor inflation trends and the package’s impact on the upcoming parliamentary election.
