Subscribe to our newsletter

Croatia: 2024 Sets Record Budget

Croatia entered 2024 with a record budget. Specifically, budget expenditure for the current year is estimated to total €32.6 billion, while budget revenues are planned to amount to €28.5 billion.

VAT remains the main “filler” of state coffers, with the state planning to collect €11 billion in VAT this year. However, excise duties are also extremely important on the revenue side. The state plans to collect around €2.5 billion in excise duties this year, which is up 3.9% on last year.

Budget documents don’t state specifically how much the state plans to collect from which form of excise duty. However, excise duties have long been a rewarding source of income for the state treasury, particularly since Croatia joined the EU. They are calculated on “popular” goods, in particular fuels, tobacco products and alcohol, and thus impact their retail prices.

According to Eurostat data for 2023, prices of alcoholic beverages in Croatia are as much as 23.3% above the EU average.

Tobacco products are still slightly cheaper than the EU average, by around 30 per cent. However, it is noteworthy that tobacco product prices vary greatly by type – with rolling tobacco somewhat cheaper in Croatia, cigarette prices don’t differ markedly from those in neighbouring Slovenia.

For now, the average Croatian consumer only enjoys savings when paying for fuel, and that’s largely because the government limits the final prices of petroleum derivatives as part of its anti- inflationary measures. As such, the highest permitted price of petrol per litre in Croatia at time of writing was €1.43. According to the Croatian Auto Club (HAK) and specialised portals, this is cheaper than in all surrounding countries with the exception of BiH, where fuel prices remain still slightly lower than in Croatia.

Manufacturers of both tobacco and petroleum products have warned for years that high excise duties inflate their retail prices greatly.

Analysis of the Croatian Employers’ Association showed that excise duty accounted for 21% of the retail price of fuel per litre in 2022. The tobacco industry has made similar complaints.

A consequence of this, until recently, has been many Croatian consumers heading to surrounding countries to buy these goods cheaper, especially crossing into BiH for fuel and cigarettes. However, the state put a stop to this in terms of tobacco by limiting the possibility of importing cigarettes from non-EU countries to just two boxes per person.

It also no longer pays off to cross the border to purchase petrol. All the more so since joining the Schengen zone has also brought stricter border controls resulting in long queues at border crossings.

The Croatian state shows no intention of reducing excise duties. This is evident in the published budget plans for 2025 and 2026, according to which excise duty revenues should continue to rise.

Must Read