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The new Act On Accounting was published in the Official Gazette Number 78/15 on
17th July 2015, this is a consequence of the Accounting Directive 2013/34/EU which has come into force. The most significant changes of the Act shall enter into force on 01st January 2016 and are as follows:
1. The Classification of undertakings and the definition of the conditions for the classification of undertakings
New and different classifications of undertakings have been stipulated for:
- micro entities,
- small entities,
- medium sized and
- large entities.
According to the new Act, the term micro entities refer to all undertakings which only fulfil two (2) of the three (3) listed conditions:
- a balance sheet total up to 2,6 million HRK (Croatian kuna)
- net turnover up to 5,2 million HRK (Croatian kuna)
- the average number of employees does not exceed 10 during the financial year
Small entities are undertakings which fulfil only two (2) of the three (3) listed conditions:
- a balance sheet total up to 30 million HRK (Croatian kuna)
- net turnover up to 60 million HRK (Croatian kuna)
- the average number of employees does not exceed 50 during the financial year
Medium sized entities are undertakings which fulfil only two (2) of the three (3) listed conditions:
- balance sheet total 150 HRK (Croatian kuna)
- net turnover till 300 HRK (Croatian kuna)
- the average number of employees does not exceed 250 during the financial year
Large entities are undertakings which fulfil all the above mentioned indicators in at least two of the three listed conditions as well as banks, savings banks, building societies, etc.
Net turnover refers to the amounts derived from product sales and service provisions after deducting sales rebates, value added tax and other taxes directly linked to turnover.
2. Accounting documentation and issuing of invoices
Furthermore, the Act stipulates that each accounting document must be authentic, orderly and prepared in such a way as to ensure a timely monitoring with the signature of the responsible person. However, invoices which serve as accounting documents and were released/given by the authorised person, do not need to be signed if they:
- contain all elements required by tax regulations and
- include the name and surname of the person responsible for its issuance.
Electronically issued invoices (e-invoice) or electronic records are explicitly permitted by the new Act which has not been the case so far. This implementation will lead to a substantial improvement of e-business.
3. Storage of business records and accounting documents
Changes have been made as well in terms of deadlines for the storage of accounting documents and records. The retention period so far was at least 7 (seven) years and it has been extended to at least 11 years now, as follows:
- payroll lists, i.e. records of employee earnings that are paid by mandatory contributions, must be kept permanently,
- accounting documents are based on the data which are entered into the journal, general ledger and subledger must be kept for at least 11 years,
- business books or journals and general ledgers as well as subledgers must be kept for at least 11 years.
4. Certified accountant for the business
The Act includes a provision that "if an entrepreneur entrusts their accounting services and accounting functions to other legal entities or individuals, these must be licensed for performing such activities on the basis of a special law". It stipulates that an entrepreneur is solely responsible for all these activities, and also that the audit done by the supervisory authorities is carried out smoothly. This obligation of licensing shall enter into force on 01st January 2018 and the deadline for getting the license for providing accounting services to other legal entities and individuals is 31st December 2017.
5. Yearly financial statements
Deadlines for closing the business books or due date for submission of yearly financial statements for publication is reduced to no later than 30th April of the following year for the previous year, which is now in compliance with the deadlines for the submission of the report for statistical and other purposes, and the Tax Administration.
The responsibility for the preparation and publication of financial statements is extended, where are, except persons authorized to represent the undertaking, the financial statements are required to be signed by all board members (directors), and all executive directors. In addition to the board of directors, all members of the supervisory board are responsible for the financial statements under their legally prescribed responsibilities.
According to Act balance sheet is now called "statement of financial condition".
6. Stocktaking of assets and liabilities
The stocktaking during the year is omitted and it has to be obligatory carried out at the end of the business year.