A “seconded worker” (posted) refers to the case where a worker is sent by the Croatian employer to an EU member state or to a country outside of the EU, to undertake work for the employer over a particular period of time.
The seconding of works to another member state requires filling certain conditions, for instance, that the employer regularly undertakes his business in the host state and that the seconding of the worker to another country does not exceed 24 months.
Prior to seconding a work to EU countries, the employer must obtain an A1 Certificate from the Croatian Pension Insurance Institute which shows that the worker belongs to the welfare insurance system in Croatia and according to the Employer Contributions Act he is obligated to calculate and pay contributions. When doing the payroll, the base for calculating the contribution is done based on the information in the A1 Certificate (A1 Certificate for Work in an EU Member State or A1 Certificate for Work in a Number of EU Member States).
According to international treaties on avoiding double taxation, which have preference over host country provisions, the wages of a seconded work will be taxed in the country of the resident (Croatia), and not in the country in which the worker is sent if all the following conditions have been met:
- The worker resides in another country over a period or periods that do not total more than 183 days over a period of 12 months which begins or finishes during the time of the respective tax year,
- The income is paid by the employer who is not a resident of another country or it is pad in his name,
- The income is not borne by a permanent establishment or permanent headquarters which the employer has in that other country.
If the above stated conditions, are not met, taxes are paid in the country in which the worker is posted and the Croatian employer is obliged to inform the Tax Administration of such matters.