Can I open a flat-rate sole trader and what is the income cap?
Yes — an adult may open an obrt (a sole trader or craft business), and the flat-rate form is the simplest. An obrt is registered in the craft register, most easily online through the e-Obrt system (e-Citizens), and you may start the activity after registration and enrolment in the tax system and opening a business account. Here the main myth about the cap falls: "you may be flat-rate up to 40,000 € (300,000 kn)" no longer applies — from 1 January 2025 the cap for flat-rate taxation and for entering the VAT system rose to 60,000 €. A flat-rate trader pays flat-rate income tax in brackets by annual income (the base is 15% of receipts, and the tax is 12% on it) plus fixed monthly contributions. If you cross 60,000 €, you lose the flat rate and enter the VAT system. You also keep a turnover book and at year-end file the PO-SD form.
📋 The rules
- Who and where: an obrt is registered by an adult with legal capacity in the craft register, online through e-Obrt or at the competent office (Crafts Act).
- Flat-rate cap: an obrt is taxed at a flat rate up to 60,000 € of annual income, which since 2025 is also the cap for mandatory VAT entry.
- Old limit gone: the previous cap of 40,000 € (earlier 300,000 kn) has been replaced by 60,000 €.
- Tax and contributions: a flat-rate trader pays flat-rate tax in brackets (base 15% of receipts, tax 12%) and fixed monthly contributions for pension and health.
- Records: a turnover book is kept, and once a year the PO-SD form is filed with the Tax Administration.
🔓 Exceptions
- Crossing the cap: as soon as a supply takes you over 60,000 €, you become a VAT payer and must register within 8 days (form P-PDV).
- Regulated crafts: regulated crafts require professional qualification or a master craftsman exam; not every activity is available as a flat-rate obrt.
- Alongside a job or pension: an obrt may also be run alongside employment (as a supplementary occupation) or alongside a pension, with a different contribution calculation.
⚠️ Penalties & fines
Opening an obrt is simple, but disorderly business brings fines and hidden costs. Working without registration, or carrying on an activity outside the one registered, counts as unlawful performance of a craft and is fined under the Crafts Act — and here is the kuna trap: part of the fines in the legislation is still expressed in kuna and converted at the fixed rate (1 € = 7.53450 kn). If you cross 60,000 € but fail to register for VAT within 8 days, assessment of VAT with interest and liability follow. A hidden cost is the fixed contribution payable every month, even with no income, so a dormant obrt builds up debt. Failure to issue invoices and missed fiscalisation are further penalised. Before opening, therefore, check the activity, the cap and the duties and keep orderly records.
📎 Official sources
- Croatian Chamber of Trades and Crafts — flat-rate taxation cap of 60,000 € →
- Tax Administration — flat-rate sole traders →
- zakon.hr — Crafts Act →
❓ Frequently asked
What is the income cap for a flat-rate obrt?
Since 1 January 2025 an obrt is taxed at a flat rate up to 60,000 euros of annual income, which is also the cap for entering the VAT system. The old limit of 40,000 euros, once 300,000 kuna, no longer applies, so many traders can stay flat-rate even at a higher income.
How is an obrt opened?
An obrt is registered in the craft register, most simply online through the e-Obrt system within e-Citizens. Registration is followed by enrolment in the tax system and in pension and health insurance, and opening a business account is recommended.
How much tax and contributions does a flat-rate trader pay?
A flat-rate trader pays flat-rate income tax in brackets by annual income, where the base is 15 percent of receipts and the tax 12 percent on it. Alongside the tax, fixed contributions for pension and health insurance are paid every month, regardless of income.
What happens if I cross 60,000 euros?
A supply that takes you over 60,000 euros makes you a VAT payer, and you must report it within eight days by filing form P-PDV. You then lose the right to flat-rate taxation, so income is determined on the basis of business books.
Can I have an obrt alongside a full-time job?
Yes, an obrt can be run as a supplementary occupation alongside employment or alongside a pension. In that case the contributions are calculated differently, because the basic insurance is already covered through the job or the pension.
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