Help! Question on Croatian Company.

[dennyt]

My wife is the properly registered director of a Croatian company (d.o.o) which runs 2 retail shops. Obviously in the first years of trading, new businesses struggle to make a profit and she has drawn very little from the Company by way of salary.
We have a book-keeper who used to have an English speaking employee and now no longer does. She has listed my wife's salary as 6,000 kuna per month which for the reasons given above, it has never reached. Accordingly social insurance payments are very high. Unfortunately it is proving very difficult to explain this point.
Does anyone know what the minimum salary is a director can declare? Or alternatively can anyone point us to a web site which can shed any light on it or to an English speaking adviser (reasonable charges). We are located in the general Zadar region.
Thanks in advance

[irac]

Whoever you initially bough through will surely give you a dig out. But the minimum to declare is 100kns a month.

[hansel]

The information I have is:
company director needs to be employed at a certain level of qualification, which is a minimum secondary school which than reflects in the minimum salary. At the moment that is (increased from the beginning of this year) 2600 Kuna neto. When you add all other payments, pension, health insurance, tax payments etc. in total it goes up to around 4000 Kuna depending on you circumstances regarding the tax.
6000.00 in your case seems too high and not necessary.

Irac I wouldn’t agree with your 100 Kuna a month. Where did you get it from? We are talking living in Croatia and working for your own company.

[irac]

hansel, it is the legal minimum and once written in a contract okay. The director doesn't have to work, the company must have some sort of employee, bookeeper, waiter etc, so you need to make sure you comply with local laws and also that you don't kill yourself with overpaying on taxes etc.

[dennyt]

Thanks for the replies so far, which show by the very fact they don't agree, how difficult this question is to seek a definitive answer to. Just to expand a little, the company has 2 Croatian employees on average wages and my wife concentrates on the buying side.She spends no more than 12 to 16 hours a week on it.
irac mentioned that the guy who sold to us might tell us, but the businesses were started from 2 vacant shops but have passed the inspections and have the necessary permits.
The book-keeper seems to say that the director must always earn more than the employees but this seems odd to me because surely it depends upon their respective duties.
Anyway, thanks a lot for your interest to irac and Hansel

[mambo]

What Hansel states is correct. The salary of the director is indeed based on the level of education, so never say that you have a University degree, it will cost you dearly.

One good thing though, you may be in the books for 2600 Netto, but you are not obliged to actually take the money from the account. You are only obliged to pay the social securities based on this salary, the salary itself can remain in the company as a loan.

I had the same discussion with our bookkeeper, I am not registered in this country and don't get a salary here (get it from Holland), therefore I am not an employee and cannot deduct any expenses. Had to register myself for the lowest salary possible and that is what I did.

[Carol]

it might seem odd ... but it is true nevertheless. The director must earn more than the average employee and there is a state provided formula for setting pay (factoring in eductaion and no. of years experience) and also for annual pay rises. NB Performance in the job is not a factor.
Makes you realise why minimal government involvement in busienss is considered a good thing for a country's economy.

[Ribaric]

I find this quite stunning. Output, performance, proft margin, viability, order book.... all irrelevant?

The fact that a director is required by law to have an income in the first place! Too much government is right.

[dennyt]

Okay, I think now at last I am beginning to see the picture. Thanks Carol and Mambo for your interest. We have asked so many people, includings Croats and they didnt seem to have any idea how it all figured out. I think our next step will be to insist that my wife's salary is brought down to a level just above the average of the two employees as Carol indicates and because my wife hasn't drawn this money, to do as Mambo suggests and put it in the books as a loan.
In the meantime she will not be mentioning her education at all. It reminds me of Fawlty Towers "Don't mention the War" In Croatia "Dont mention your education unless you want to pay more taxes!" Thanks again.

[dennyt]

Ribaric...Thats exactly how I see it too. If someone had said this to me in passing conversation, I would have doubted it but now with experienced people contributing who confirm it to be the case, I see its true. So you can be an inept director but if you had a good education, well thats not any problem at all. Thanks for your contribution!

[Graham - Bosmere]

I just wonder if maybe the translation might have something to do with some of the above although I am no expert on language or business law in Croatia.

Director = Direktor
Manger = Direktor

Therefore a manager earning more than staff makes a little more sense, but there again I might be off on a tangent again.....