Croatia faces debate over excess‑profit tax and business‑environment challenges

The Croatian Employers' Association (HUP) warned on Thursday that a proposed 50 % tax on excess profit margins could deter both domestic and foreign investment. The measure would compare a company’s gross profit in 2026 with the average of the three preceding years, allowing a 15 % deviation for productivity gains. It would apply only to firms earning more than half of their revenue in Croatia and would exempt companies that have grown through investment in technology, automation, R&D, energy efficiency or expansion. HUP officials said the tax would “punish entrepreneurial risk” and could weaken the country’s competitiveness.

In a separate analysis, HUP highlighted Croatia’s mixed performance in the IMD World Competitiveness Ranking 2026. While the country ranked 53rd overall and topped the tourism revenue and service‑export indicators, it fell to 65th out of 70 in business efficiency, 56th in productivity, and 65th in labour‑market performance. HUP called for improvements in organisational capacity, knowledge management and management practices to translate strong export and tourism results into broader economic growth.