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Financial Participation

Neither employee share ownership nor profit-sharing schemes are promoted by financial incentives in Croatia. The privatisation laws were important for the development of employee share ownership schemes in Croatia.

In the course of the transformation and privatisation process in Croatia from the 1990s onwards some employees have participated in their companies financially. During the first privatisation phase employees of a company had the opportunity to buy shares in it on favourable terms. The discount was at least 20% with 1 percentage point added for every year of preceding employment at the same company. The highest possible discount was 60%, which was deducted from the market price. If the shares were paid for in cash there was an additional discount of 10% and payment could be extended up to five years. Despite these favourable conditions many employees bought no shares in their company or only that portion available to them at a discount. One reason for this was the poor economic shape of many Croatian companies at this time. Promotion of workers’ financial participation was gradually phased out and the second law on privatisation of 1996 contained no favourable conditions for employees. After the end of the privatisation phase the incidence of employee share ownership schemes in Croatia fell further and at present is at a low level by European comparison.

With regard to profit-sharing schemes there are no specific legal regulations in Croatia and no (tax) incentives for companies to promote such schemes or for employees to demand them.1 Large enterprises in particular, however, nevertheless offer their managements profit-sharing schemes. When it comes to taxation profit-sharing schemes are dealt with as part of income in Croatia and taxed accordingly.

Cooperatives

Cooperatives are regulated primarily by the Law on cooperatives of 1995, contract law and company law. 2 In Croatia a cooperative must comprise at least three natural persons and, in principle, every member of the cooperative has a vote at the cooperative general meeting. Cooperative members are responsible for the cooperative’s liabilities only to the extent of their share. Personal liability for members is fundamentally ruled out. The profits of cooperatives are distributed to members in accordance with the agreements entered into. The employees of a cooperative are generally not members of the cooperative in Croatia.

Wilke, Maack and Partner (2014) Country reports on Financial Participation in Europe. Prepared for www.worker-participation.eu. Reports first published in 2007 and fully updated in 2014.