The American Chamber of Commerce in Croatia (AmCham) has published recommendations for further reduction of the tax burden, including introduction of a non-taxable bonus for working from home, state agency Hina reported on Thursday, citing AmCham's press release.

AmCham recommends introducing a non-taxable fixed monthly remuneration for the cost of equipment and materials needed to work from home or some other separate place of work that is considered a worker’s private space.

AmCham Executive Director Andrea Doko says that a non-taxable monthly remuneration for the cost of working from home has been recognized by many neighboring countries.

In Slovenia, monthly non-taxable compensation for work from home amounts to 5 percent of salary, but not more than 5 percent of the average Slovenian salary. If the Slovenian model were used in Croatia, it would amount to 330 kuna (€44) per month, calculated based on the average salary in Croatia, which in 2020 totaled 9,181 kuna gross (€1,225), or around 6,555 kuna net (€875), AmCham said.

It said that as a result of the tax reform and more favorable taxation of optional bonuses for employees, many companies began implementing optional remuneration of their employees by allocating or purchasing equity to increase their competitiveness on the European market and retain their employees.

“There is a growing interest among limited liability companies to provide their employees with the more favorable treatment of participation in the company’s capital. In order to fully achieve favorable tax treatment for all companies in the same way, including companies structured as limited liability companies, it is necessary to amend the regulations in order to unequivocally ensure more favorable tax treatment for the allocation of shares and to encourage the implementation of equity plans in these companies as well,” Doko Jelusic said.

AmCham recommends that the Personal Income Tax Act be amended to clearly prescribe that, apart from the allotment or purchase of own shares, the allotment and acquisition of an interest in a company is also considered to be income from capital.