Due to regulations, taxes and business rules which change daily, many entrepreneurs decide to shut down their businesses.
“Madam, if you had tall bar stools with accompanying tables in your pastry shop, then you would not have to have a toilet for your guests.” When Tatjana Rebec, an owner of the La Dolce Vita pastry shop in Velika Gorica, heard that from an inspector who had visited her a few months ago, she was stunned. “Guests who sit on tall stools do not need to go to toilet?” she asked the inspector. The answer she got was that such guests stay for only a limited time, so there was no need for toilet. On the other hand, establishments with low tables and chairs must have separate male and female toilets, reports 24sata.hr on March 19, 2017.
Rebec said that it is difficult to monitor business regulations which change constantly. “Just in the area of the tax rules there have been more than 40 changes in the last three years, which means that every month they amend one tax legislation”, reported the Association of Small and Medium Enterprises. “You cannot change rules in the middle of a game, and very often it happens that an entrepreneur starts a business, and then the rules change. Many eventually give up, and there are many who end up in losses”, said the Association, adding that, for example, an entrepreneur which fails to report an employee one day before they start working can be fined up to 30,000. “We support the registration of employees, but what happens when an employer has no time to report an employee a day before”, asked the Association, adding as an example a company which paid a penalty because they hired a waitress one day before she was originally supposed to start working.
According to the Croatian Chamber of Crafts and Trades, five years ago there were more than 87,000 active entrepreneurs in its sector. Now, there are 11,000 fewer of them. “Entrepreneurs are burdened with a number of taxes, operating costs are high, inspections are too strict, and there is a lot of shadow economy”, said the Chamber.
Entrepreneur Saša Cvetojević said that major problem was avoidance of responsibility among those who should help entrepreneurs. “No one is responsible for anything. For example, an entrepreneur seeking information related to the storage of goods contacts the responsible ministry and asks for information. They send him to one of the agencies, and the agency then sends them to another agency. While trying to find a solution to the problem, they already get a penalty which must be paid”, said Cvetojević.
“It sounds great when someone tells you that you will get subsidies from the state if you hire people registered as unemployed with the Croatian Employment Service, but few know that these incentives are given only after such a worker has been working for you for a year”, said an owner of a small business. The problem is that there might be legitimate reasons why some employees have to be fired before the incentives are paid. “Some workers come drunk or simply do not show up. And what can you do? But, if you do it before the first year is up, there are no incentives”, he said.
Croatian Employers Association says there are about 8,200 active laws in Croatia, accompanied by many more regulations and their amendments. “All in all, we come to a figure of about 20,000 regulations which are in effect”, said the Association.
Ivan Milković, owner of a pancake shop in Zagreb, said that he found himself in problems when he replaced parasols with nice umbrellas in the open area of his shop. “I had to go to a city commission. It is absurd that the appearance of my shop was decided by an architect, a physician and a war veteran. They told me that a veteran must always be included”, said Milković.
Here are just some of the examples of business and other regulations in effect in Croatia:
A pastry chef in a pastry shop is not allowed to taste the cake which he has prepared, because it is strictly forbidden and punishable. He should first issue a receipt for the piece of the cake, pay it, and then eat it outside of the kitchen.
For a drill which can be bought for 150 kuna, a construction company must obtain a test certificate which costs much more than the drill itself. In addition, the certificate must be renewed each year.
Passenger cars register by companies must have a fire extinguisher. Same cars registers by individuals do not have that obligation.
People who do not feed animals or give them enough water to drink can get up to six months in prison. However, for domestic violence, the penalty is just three months in jail.
When a new calf is born, a farmer has to pay income tax. When they sell meat from the same animal, they again pay taxes to the state.
Owner of a jewelry shop says that she has to keep records of working hours and wages in two hardcopies, although she has it all stored in a computer as well.
If a cash register does not have a label that says that the invoice must be issued and that the customer has to take it, businesses face a large penalty.
Transport company has to pay TV license fee for each truck it owns. The same has to be paid by a baker for a small kiosk in which he sells his baked products.