Board member of a limited liability company: insurance obligation and the contributions many miscalculate
Special rules on contributions apply to board members of commercial companies — and this is precisely where owners of smaller companies most often end up paying more than they expected, generally a year later, by decision of the Tax Administration. The rules apply to board members, executive directors and liquidators of commercial companies and to managers of cooperatives, and they differ depending on whether the person is employed, where they are employed, and on what basis they are insured.
Insurance obligation: who must be insured
In pension insurance, board members, executive directors and liquidators of commercial companies and managers of cooperatives are subject to compulsory insurance if they are not insured on another basis. In health insurance, board members, executive directors, liquidators and managers of cooperatives are subject to compulsory insurance if they are not compulsorily covered by health insurance on the basis of work for another legal or natural person in Croatia or another EU Member State. No contributions are payable for unemployment insurance.
Three situations — and three different persons liable for contributions
Who bears the contributions depends on the board member's basis of insurance. The first situation: the board member is not employed anywhere and is insured precisely on the basis of board membership — in which case they are themselves liable to pay the contributions, on a monthly base determined by a factor of 1.0 — for 2026 that is EUR 1,993.00 per month. A word of caution here: if the company were to reimburse them for these outlays, such a payment is treated as other income, with contributions and tax.
The second situation: the board member is insured on another basis — they are employed by another employer, who accounts for contributions on the agreed salary, at least on the minimum wage, or they are insured as a self-employed person and pay the contributions for their own insurance themselves. The third situation: the board member is employed by the company in which they were appointed — in which case the company is the person liable to account for and pay the contributions, on at least a monthly base determined by a factor of 0.65, with the base determined proportionally in the case of part-time work.
Employed in your own company: the salary may be below the minimum, the contributions may not
The board member and the company agree the level of salary in an employment contract or a management contract. The Minimum Wage Act does not apply to board members, executive directors and liquidators — but only if they are the sole employees in the company. Their salary may then be below the minimum wage, but contributions are nevertheless accounted for on the base prescribed for an employed board member. If, alongside the board member, the company also has other employees, the board member is entitled to the minimum wage.
Specifically, for 2026: if the agreed salary of a full-time employed board member is equal to or lower than EUR 1,295.45, contributions are accounted for on a base of EUR 1,295.45 per month; if the salary is higher, contributions are based on the agreed salary. For part-time work, the proportional part of that base applies — and a higher base cannot be set optionally. In practice this means that on a salary of, say, EUR 1,050.00 gross — the minimum wage for 2026 — the company does not account for contributions on the salary, but on the prescribed base of EUR 1,295.45.
The annual assessment: the decision that surprises many
Alongside the monthly bases there is also an annual base for contributions: the average monthly salary in Croatia multiplied by a factor of 0.65 and by 12 months, which for 2026 amounts to EUR 15,545.40. If less has been paid in contributions for a board member during the year, on all bases of insurance, than would be accounted for on the annual base, the board member pays the difference themselves. The difference is established in a separate procedure by the Tax Administration after the end of the year, which serves a decision — the annual liability so established is final, and is payable within 15 days of service of the decision.
Two rules from the source material are worth highlighting in particular. First, contributions paid on other income and other activity are not credited against the annual liability. Second, the liability is established according to the prescribed base regardless of the number of companies in which the person is a board member — more positions do not mean more bases. A typical example from practice: a board member employed part-time in their own company, with contributions on 50 per cent of the base, will pay the difference up to the full annual base themselves under the annual assessment. The same applies to a board member of company A employed by employer B on the minimum wage — if the annual total of bases is below the prescribed one, they pay the difference themselves.
Who is not assessed for the annual difference
The annual base is reduced proportionally for periods in which the contribution obligation was dormant — sick leave at the expense of the Croatian Health Insurance Fund, maternity and parental leave — and where the person was covered by insurance for a period shorter than the calendar year, for instance where the company was established during the year. The obligation to pay the difference will not be established for a board member who is a pension beneficiary, other than a beneficiary of a disability pension due to partial loss of working capacity, nor for a board member of a newly established company which has not carried on any activity since registration and has no turnover on its account — which, according to the practice of the Tax Administration, is evidenced by a statement of inactivity. Nor is it established for a person who already pays contributions under a decision of the Tax Administration as an uninsured board member, on a base with a factor of 1.0.
Foreign nationals on the boards of Croatian companies
Foreign nationals who are board members of companies with a registered office in Croatia are not insured in Croatia if they are insured in another EU Member State, the EEA or Switzerland — the evidence being an A1 certificate, which may also be issued retrospectively. For countries with which Croatia applies a social security agreement, the obligation depends on a certificate from the competent authority of that country. Those who cannot obtain such a certificate, and nationals of third countries, must be insured in Croatia — regardless of whether they are insured in their own country.
Conclusion
The status of board member brings its own rules on contributions at three levels: the insurance obligation, the monthly base and the annual assessment. The most expensive mistake is assuming that contributions are taken care of simply because someone is employed somewhere — the annual base applies to everyone, and the Tax Administration's decision arrives afterwards, with a short payment deadline. If you are a board member and are unsure whether your payments satisfy the annual base, checking before the year ends leaves room for correction — feel free to get in touch.
Amounts updated for 2026 in line with the Regulation on the Minimum Wage and the Order on Contribution Bases, verified in July 2026; re-check for later years. This article is informational in nature and does not constitute tax advice for any individual case.