A digital nomad is a third-country national (a person who does not hold citizenship of an EEA member state or the Swiss Confederation) who uses communication technology to work for a foreign company, or for their own company not registered in Croatia, and who does not perform work or provide services for employers in Croatia.
Since a special digital nomad status was introduced into the Croatian tax and immigration system in 2020, together with a provision exempting income earned on the basis of that status from taxation and from the obligation to file a tax return in Croatia, a common question in practice is whether the status also means a complete exemption from all tax obligations in Croatia.
Although the exemption may appear to cover every tax issue, digital nomads still need to consider several open questions, such as their tax residency, a possible obligation to report other income, obligations towards their home country, and tax risks for their employer or their own company.
Who Can Obtain Digital Nomad Status?
Digital nomad status is available exclusively to third-country nationals, meaning persons who do not hold citizenship of an EEA member state or Switzerland. It is granted through a temporary stay for the purpose of residence of digital nomads, issued by the Ministry of the Interior of the Republic of Croatia. The application must include, among other things:
- an employment contract or contract for work with a foreign employer, or the registration of the applicant’s own company not registered in Croatia and proof that the applicant works through it, together with a statement that the work is performed using communication technology,
- proof of sufficient means of subsistence amounting to at least 2.5 times the average monthly net salary in Croatia for the previous year, plus an additional 10% for each family member. The amount changes every year, and according to the Ministry of the Interior it currently stands at EUR 3,622.50 per month, or EUR 43,470 in a bank account for a 12-month stay, or EUR 65,205 for an 18-month stay,
- travel or private health insurance covering Croatia for the entire duration of the stay,
- proof of no criminal convictions from the home country or from the country in which the applicant resided for more than one year before arrival, an address of (intended) residence in Croatia, and a passport valid for at least three months beyond the intended stay.
Under the 2025 amendments to the Aliens Act (Official Gazette NN 40/25), the temporary stay of a digital nomad was extended from 12 to a maximum of 18 months. If the stay is approved for a shorter period, it can be extended by up to six months. A new application for digital nomad status can only be submitted six months after the previous stay has expired.
A digital nomad who has been granted temporary stay may be joined in Croatia by close family members, including an unmarried partner, through the family reunification procedure. An application by a family member submitted before the digital nomad’s stay has been approved will be rejected.
Upon arrival in Croatia, a digital nomad must register their residence with the competent police administration or police station within three days. When extending their stay, they must submit a lease agreement certified by a notary public or a property ownership certificate.
Is a Digital Nomad’s Income Taxed in Croatia?
No, subject to one important condition: the income must be earned specifically on the basis of the acquired digital nomad status.
The Income Tax Act (Article 9) expressly provides that such income is not considered taxable income, which has the following consequences:
- there is no obligation to pay income tax in Croatia on that income,
- there is no reporting obligation (JOPPD form) or reporting to the Tax Administration,
- the exemption applies both to nomads employed by a foreign employer and to those operating through their own foreign company,
- there is no obligation to pay mandatory contributions (pension and health insurance, HZMO/HZZO), because on this basis the nomad does not become an insured person in Croatia, so they must arrange their own health coverage through private or travel insurance.
Does a Digital Nomad Become a Croatian Tax Resident?
Tax residency depends on the length and circumstances of the stay, not on the digital nomad status itself. Croatia has no special residency rules for this category, so the general rules apply.
Under the general rules, an individual becomes a Croatian tax resident if they have a domicile or habitual residence in Croatia, for example:
- if they continuously use an apartment or house in Croatia for at least 183 days,
- if they stay in Croatia for at least 183 days,
- if they have other personal ties to Croatia (family, absence of residency elsewhere, etc.).
Since the digital nomad permit now allows a stay of up to 18 months, the 183-day threshold is very easily exceeded, so a nomad may become a Croatian tax resident even when that was not their intention. In addition, a digital nomad must register their residence in Croatia and, when extending their stay, submit a lease agreement. Family members may also join them in Croatia. All of these circumstances may be relevant when assessing domicile, habitual residence and the centre of vital interests.
If the nomad is at the same time a tax resident of another country with which Croatia has concluded a Double Taxation Treaty, final residency is determined by the tie-breaker rules of that treaty (permanent home, centre of vital interests, habitual abode, nationality). The answer is always individual and depends on the specific circumstances.
If a digital nomad becomes a Croatian tax resident, Croatia in principle acquires the right to tax their worldwide income, not only the income expressly exempted on the basis of the status.
Is a Digital Nomad’s Other Income Taxed in Croatia?
Yes, if the digital nomad is a Croatian tax resident and the income is not the income expressly exempted on the basis of digital nomad status.
For example:
- dividends from a foreign company (e.g. a US company) received by the nomad while staying in Croatia,
- rental income from property in the home country or elsewhere,
- capital gains and interest.
All of the above is taxable in Croatia if the digital nomad becomes a Croatian tax resident, with the possibility of deducting tax paid abroad where the relevant Double Taxation Treaty provides for it.
Do Obligations Towards the Home Country End Upon Arrival in Croatia?
The Croatian tax exemption applies only in Croatia and does not affect obligations in other countries. Before relocating, a digital nomad should check and settle:
- their (non-)residency in their home country, especially if that country taxes its citizens regardless of residency,
- their residency in the country they are moving from directly, if different from their home country,
- existing reporting obligations, which do not end automatically when the status is obtained in Croatia.
Does Working from Croatia Create a Tax Obligation for the Employer or the Nomad’s Own Company?
Yes, in certain circumstances, and this is the issue that digital nomads and employers are least aware of.
Work performed by an individual from Croatia may create a permanent establishment of a foreign company in Croatia:
- if the nomad runs their own company from Croatia (makes business decisions, manages operations), the company may become liable for corporate income tax in Croatia on the portion of profit attributable to activities in Croatia,
- if the nomad works for a foreign employer and has the authority to conclude contracts on its behalf, or to negotiate their essential terms from Croatia, the employer may acquire a permanent establishment in Croatia.
Whether a permanent establishment exists is assessed case by case. It depends on the job description, actual powers and activities, and the provisions of the relevant Double Taxation Treaty.
Most Common Mistakes
In practice, the following situations arise most often among digital nomads and their employers:
- assuming the tax exemption is complete and covers all of the nomad’s income, not just the income earned on the basis of the status,
- failing to check tax residency despite the longer permitted stay (up to 18 months),
- failing to report dividends, rental income or other income earned while the nomad is a Croatian tax resident,
- failing to check obligations towards the home country before relocating,
- the employer or the nomad’s own company being unaware of the risk of creating a permanent establishment in Croatia,
- relying on generic information instead of checking the specific, individual situation.
Conclusion
Croatia is among the first European countries to offer digital nomads a clear legal framework and an express tax exemption for their core income, and the 2025 amendments extended the possible stay from 12 to 18 months, making Croatia even more competitive as a destination. However, the exemption alone does not address tax residency, other income, obligations towards the home country or permanent establishment risk, and these are the issues behind most enquiries today.
If you are planning to move to Croatia as a digital nomad, or you have an employee, client or your own company in this situation, CONEO Croatia’s experts can analyse your tax residency, check whether the conditions for the digital nomad tax exemption are met, and assess the risk of creating a permanent establishment for your company or employer. Contact us for expert tax advice.
