OTHER INCOME
A trademan can stay as a lump sum trader if he does not earn annual income over HRK 300,000.00. If you earn more than the stated amount, you must switch to a trade where the tax is determined according to the business books or choose another business form, such as a company.
Tracking receipts on the business accounts is easy, but what happens if you have a lump sum trade and also receive income from other activities, such as renting apartments, residential or commercial space? How are all these receipts added up and how does this affect entry into the VAT system? Can you still be a flat-rate trademan if you earn more than HRK 300,000.00 from all activities together?
See below what happens to VAT and taxes if you cross the threshold from doing more business?
1. Flat trade and landlord flat rate
You have a flat trade and at the same time you rent rooms and apartments. If by doing both activities you earn less than 300,000.00 kn you do not enter the VAT system and continue to be a lump sum. However, if you earn more than HRK 300,000.00 in both activities together, then you enter the VAT system.
| # | Amount | VAT entry | Tax |
|---|---|---|---|
| Tradesman lump sum | 180,000.00 | NO | trade - lump sum (as long as receipts from trade are below HRK 300,000) |
| Flat rate landlord | 60,000.00 | NO | rent - flat rate (as long as rental receipts are below HRK 300,000) |
| # | Amount | VAT entry | Tax |
|---|---|---|---|
| Tradesman lump sum | 200,000.00 | YES | trade - lump sum (as long as receipts from trade are below HRK 300,000) |
| Flat rate landlord | 120,000.00 | YES | rent - flat rate (as long as rental receipts are below HRK 300,000) |
2. Lump sum turnover and other income
An example of another income is working under a copyright agreement. If you earn less than HRK 300,000.00 in trade and for another income of more than HRK 300,000.00, you can remain a lump sum in the trade because you did not earn over HRK 300,000.00 in it, and you will only charge VAT on other income contracts.
| # | Amount | VAT entry | Tax |
|---|---|---|---|
| Tradesman lump sum | 180,000.00 | YES | trade - lump sum (as long as receipts from trade are below HRK 300,000) |
| Other income | 320,000.00 | YES | other income - taxes calculated by the business books, not sum lump |
3. Flat rate turnover and rent of business premises
You have a lump sum business and at the same time you are engaged in renting
business premises. If you exceed HRK 300.00.00 of receipts,
you enter the VAT system and keep business books in the trade, ie you can no longer be a
flat-rate trademan.
You have a lump sum business and at the same time you are engaged in renting business premises. If you exceed HRK 300.00.00 of receipts, you enter the VAT system and keep business books in the trade, ie you can no longer be a flat-rate trademan.
| # | Amount | VAT entry | Tax |
|---|---|---|---|
| Tradesman lump sum | 200,000.00 | YES | trade - keeps business books |
| Office space rental | 310,000.00 | YES | rent - keeps business books |
| # | Amount | VAT entry | Tax |
|---|---|---|---|
| Tradesman lump sum | 200,000.00 | YES | trade - lump sum (as long as receipts from trade are below HRK 300,000) |
| Office space rental | 150,000.00 | YES | lease - taxes paid based on the settlement from the tax office |
4. Flat trade and rental of residential premises
| # | Amount | VAT entry | Tax |
|---|---|---|---|
| Tradesman lump sum | 200,000.00 | NO | trade - lump sum (as long as receipts from trade are below HRK 300,000) |
| Rental of living space | 120,000.00 | NO | lease - taxes paid based on the settlement from the tax office |