UK company hiring in Croatia after Brexit: permits, contracts and pay

For a British company, the main effect of Brexit on Croatian hiring is that both the business and its UK-passport staff are now outsiders to the EU rules Croatia applies. Before 2021, a London firm and a Zagreb firm sat in the same single market. Today a UK company that wants a person on Croatian payroll is treated much like any other employer from outside the Union.

One practical casualty is a route the Tax Administration (Porezna uprava) describes for employers based in another EU state. Such an employer, with no Croatian branch, can register for an OIB at the Zagreb regional office, pay Croatian contributions and file the monthly JOPPD report itself, while the staff pay their own income tax advances. The guidance is written for EU employers. A company whose seat is in the UK should not assume it fits, and even for those it covers, permanent-establishment and labour-law consequences need specialist advice.

The second casualty is free movement for people. A British national who wants to live and work in Croatia now falls under the Aliens Act (Zakon o strancima) as a third-country national, with a stay and work permit, a labour market test or an exemption, and employer conditions to meet. That turns a simple relocation into a hiring project with a timeline.

Three set-ups are open to a UK business, and the choice mostly turns on headcount: one or two people in Croatia point one way, a planned team of fifteen another.

Founding a Croatian limited company. A d.o.o. needs share capital of at least €2,500, with a quarter of each cash contribution paid before registration; a j.d.o.o. can be founded on as little as €1, but it is capped at 5 members and 1 director and must set aside a quarter of each year’s profit as reserves until those reach €2,500. Formation runs through the court register, and EU citizens can do it online with an eID, whereas non-EU founders, which now includes British ones, must go through a notary. After that come the bank account, HZMO and HZZO registration, the tax register and payroll.

An employer of record. Here we take the employer’s seat on the Croatian side: we sign the Croatian employment contract, register the employee for pension and health insurance before the first working day and run payroll in euro. Direction of the work, the targets and the rhythm of the team all stay with you in the UK. Our outline of how an EOR works in Croatia lists who handles what, while Employer of Record Croatia gives the short version of the service.

A freelancer contract. Tempting for a first person, risky if the role looks like a job. Art. 10(2) of the Labour Act presumes employment whenever the work bears its hallmarks, and an amendment in force since 7 July 2026 brought service contracts of that kind expressly within the undeclared-work rules.

A candidate with existing Croatian or EU work rights can start far sooner than a relocating UK national, because the second needs a permit decided by the Ministry of the Interior (MUP). Plan the two very differently.

Normally the process opens with a labour market test (test tržišta rada) run by HZZ, the Croatian Employment Service, at the employer’s request. Its report arrives within 15 days; after that the employer has a 90-day window to file, and MUP’s 90-day decision clock (which it may stretch by 30) only starts once the file is complete. The permit then lasts for the contract term, up to 3 years. Shortage occupations on the HZZ list skip the test.

The HZZ opinion is only positive if the employer meets conditions that a newly formed UK-owned d.o.o. will struggle with: at least one Croatian, EEA or Swiss employee who has held a full-time, open-ended contract throughout the past year, €100,000 or more paid into a company’s accounts over the preceding 12 months, and no tax debts. These rules come from the 2025 and 2026 amendments to the Aliens Act, which our guide to work permits in Croatia sets out in full.

Some UK staff avoid the test altogether. Article 110 of the Aliens Act exempts 32 categories, including key personnel of companies, intra-corporate transferees and highly qualified workers who meet EU Blue Card conditions. A Blue Card needs a contract of at least 6 months, a degree-level qualification (or, for ICT roles, equivalent experience) and a salary above a threshold tied to the previous year’s average Croatian wage; MUP decides within 60 days.

A UK hiring manager will recognise most of a Croatian contract, but several defaults are firmer than at home. The Labour Act (Zakon o radu) requires the contract in writing, with a copy in the employee’s hands before the first day, and it lists twelve compulsory items.

• Open-ended is the assumption. A fixed-term contract needs a stated objective reason and is limited to 3 years and 3 successive contracts.
• Probation is optional and may not exceed 6 months; ending employment for failed probation still needs at least a week’s notice.
• A full-time week is at most 40 hours. Overtime needs a written request, is capped at 180 hours a year, and must not push the week past 50 hours.
• Four weeks of paid holiday is the floor, which comes to 20 days across a Monday-to-Friday year, and 2026 adds 14 public holidays on top. Unused leave can be carried only until 30 June of the next year.
• Hours worked on a Sunday carry a supplement of no less than 50%; other supplements follow the contract or collective agreement.

Notice and severance also run on statutory scales rather than whatever the contract says. Minimum notice starts at 2 weeks in the first year and reaches 3 months after 20 years, and most employer dismissals after two years bring severance (otpremnina), worth at least one third of a month’s average pay for every completed year with the employer years. Our page on ending employment in Croatia covers the grounds and procedure.

Croatian payroll has run in euro since 1 January 2023, so a UK employer carries currency exposure on every salary, but the payroll arithmetic itself is short. On top of gross, the employer adds exactly one contribution: 16.5% for health insurance, and the base for it is never capped. The employee pays 20% into pensions, on a monthly base that cannot exceed €11,958 in 2026, and income tax at the rates of their city or municipality after a personal allowance of €600 a month.

Applied to a hire in Zagreb on €3,500 a month: approximately €2,294 reaches the employee each month, and the employer’s annual outlay is approximately €48,930 before any EOR charge. Move the same person to the coast and the net rises: roughly €2,327 in Split, €2,360 in Rijeka, both cities having picked lower 2026 rates. For the full gross-to-net and cost build-up, see what a Croatian hire costs an employer.

The employer pays no pension contribution of its own; pensions come entirely out of the employee’s gross. Tax-free extras are common, though: meal money of no more than €1,200 annually, occasional bonuses such as regres (the summer holiday allowance) and the božićnica up to €700 a year combined, and a home-working allowance of up to €70 a month. The EOR service is charged separately, from €599 per employee per month, and does not scale with pay.

Croatian income tax follows residence: anyone whose home (prebivalište) or habitual residence is in Croatia counts as a Croatian tax resident, while non-residents pay Croatian tax on Croatian-source income alone. A UK national who relocates to work for you will normally become a Croatian resident, and Croatian payroll withholds tax on that basis.

Social security is a separate question with its own decision-maker. Rulings on which country’s social security system covers a cross-border worker come from HZMO, the pension insurance institute. Ask it, or have your EOR ask it, before you agree that a person will split time between Manchester and Split, because a wrong assumption means contributions paid to the wrong system.

Once the year closes, the Tax Administration squares each person’s tax on its own initiative and, if anything is owed either way, sends a provisional assessment no later than 30 June. For a salaried employee with a steady monthly pay under the €5,000 threshold, the monthly withholding usually matches the annual figure, so the year ends without a refund or a bill.

Using an EOR moves the Croatian employer duties off your desk, but the employee still works for your business every day, and several things only you can do well. The first is the job itself. You decide the role, the objectives, the reporting line and the way performance is judged, and Croatian law does not care whether that management happens from Leeds or from Zagreb.

The second is information. Payroll in Croatia is calculated from facts: hours, leave, sick days, bonuses and allowances. Approve leave promptly, tell the EOR about overtime the same month it happens, and agree bonuses in writing before they are paid, so the monthly JOPPD report reflects what actually happened.

The third is behaviour that the Labour Act regulates even when the manager sits abroad. Overtime needs a written request, a new rota must reach staff seven days or more before it starts, and 12 hours of daily rest are protected. Employees are also entitled not to be reachable during rest periods and leave, unless something urgent arises or it has been agreed. A UK manager sending Friday-night requests can create a problem that payroll alone cannot fix.

• brief the EOR on the role, pay and preferred start date before the offer
• keep job descriptions current, since the contract has to name the job
• route leave approvals and overtime through one agreed process
• decide early whether you will offer tax-free extras and at what level
• involve the EOR before any disciplinary step or dismissal conversation

Q01We have no Croatian company. Can our UK business still put someone on Croatian payroll?+

A.Yes. An EOR can be the Croatian employer on paper, handling the contract, insurance registration and euro payroll, while your managers run the work. Setting up a Croatian limited company is the alternative, and British founders have to complete that formation before a notary.

Q02Do British citizens need a work permit for Croatia after Brexit?+

A.A UK national without existing Croatian residence rights is a third-country national under the Aliens Act and generally needs a stay and work permit from MUP, either after an HZZ labour market test or under an exempt category such as key personnel or the EU Blue Card.

Q03From first step to decision, how slow is a Croatian permit?+

A.Budget for months rather than weeks. The labour market test alone takes up to 15 days to report, then MUP has 90 days from a complete file, with a possible 30-day extension; the Blue Card track is shorter, with a 60-day deadline.

Q04Roughly what will a Zagreb salary of €42,000 cost us in total?+

A.For a Zagreb employee on €42,000 gross a year, approximately €48,930 including the employer’s 16.5% health contribution. Take-home pay comes to roughly €2,294 a month.

Q05Is notice in Croatia similar to the UK?+

A.Croatia sets statutory minimums by length of service, beginning at 2 weeks for someone with under a year of service; the employer also needs a justified reason to dismiss. Severance is usually owed after two years.