Accountancy in Croatia

>> Audit Requirements in Croatia

Requirement and thresholds

Companies in Croatia are obliged to keep records and prepare annual financial statements in accordance with the Croatian Financial Reporting Standards (CFRS) issued by the National Committee for Financial Standards and in accordance with International Financial Reporting Standards (IFRS).

Small and Medium-sized Enterprises (SMEs) are required to report in accordance with national standards (CFRS) which are based on International Financial Reporting Standards (IFRS). There are no possibilities for simplified or abridged accounting requirements for SMEs. Large enterprises, the definition of which also includes companies listed on a regulated market and financial institutions, together with other Public interest entities are required to draw up their accounts in accordance with full IFRS. The classification criteria (thresholds) used to define SMEs are in line with those set out in the 4th Company Law Directive.

According to the Croatian Accounting Law micro enterprises are those companies which indicators do not exceed two of the following thresholds:

  • Total assets of HRK 2,600,000
  • Total revenues of HRK 5,200,000
  • Average number of employees during the year – 10.

Small enterprises are those companies that are not micro enterprises and which indicators do not exceed two of the following thresholds:

  • Total assets of HRK 30,000,000
  • Total revenues of HRK 60,000,000
  • Average number of employees during the year – 50.

Medium-sized enterprises are those companies that are not micro or small enterprises and which indicators do not exceed two of the following thresholds:

  • Total assets of HRK 150,000,000
  • Total revenues of HRK 300,000,000
  • Average number of employees – 250.

Large enterprises are those that exceed two of the above-mentioned thresholds and banks, insurance companies, investment funds, leasing companies, pension funds and some other special purpose companies.

External auditing of financial statements is defined by the Croatian Accounting Law and Croatian Auditing Law. According to the Croatian Accounting Law, companies that are obliged to have an annual external audit of standalone and consolidated financial statements are:

  • Public interest entities and large and medium-sized companies which are not public interest entities
  • Companies which are parent companies of large and medium-sized groups if they are not obliged to have an annual external audit according to the first condition
    • Joint stock companies, limited partnership companies and limited liability companies which indicators, in the business year which precedes the audit year, exceed two out of three of the following thresholds: Total assets of HRK 15,000,000
    • Total revenues of HRK 30,000,000
    • Average number of employees during the business year is 25
    • All joint stock companies – public limited companies and limited partnerships
    • Companies which were in the process of mergers and divisions acting as acquiring companies or new entities

 

According to Croatian Accounting Law, the fiscal year equals the calendar year. However, the same law allows the fiscal year to differ from the calendar year if this is arranged by other regulations or for the purposes of entrepreneurs.

When the fiscal year equals the calendar year, corporate income tax returns have to be delivered to the tax authority not later than 30 April of the following year.

All companies are obliged to deliver their annual financial statements and auditor’s report to the Financial Agency (FINA) for purpose of public disclosure by 30th June of the following year. Annual consolidated financial statements have to be delivered by 30th September of the following year.

Requirement for consolidation

The consolidated accounts of groups of companies are regulated by the Accounting Act. The Act stipulates that any entity required to prepare consolidated accounts shall do so in accordance with the applicable reporting framework.

The accounting Act defines in details sizes of the groups, consolidation requirements and consolidation exemptions.

Small groups are those groups which consolidated indicators of the parent company at the balance sheet date do not exceed two of the following thresholds:

  • Total assets of HRK 30,000,000
  • Total revenues of HRK 60,000,000
  • Average number of employees during the year – 50.

 

Medium-sized groups are those groups that are not small groups and which indicators of the parent company at the balance sheet do not exceed two of the following thresholds:

  • Total assets of HRK 150,000,000
  • Total revenues of HRK 300,000,000
  • Average number of employees – 250.

 

Large groups are those that exceed two of the above-mentioned thresholds.

Parent companies of the small groups are not required to prepare annual consolidated financial statements unless their small group includes public interest entity.


Latest version updated 5th April 2019

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