The aim of this research was to analyse the position of NGOs and OCGs in the tax system of the Republic of Croatia and in EU Member States, and, by using comparative analysis and the legislative framework in which they work, to propose some solutions which could be used in Croatia. OCGs and their status are not defined in the Croatian legal system, and the results of the research will also serve as a basis for a law to be drafted.
The systematic regulation of the status of organizations working for the common good will have multiple positive effects. Apart from giving credit to the community of organizations dealing with issues of common importance, differentiating them from other NGOs will make it possible to distribute more fairly and more effectively the funds they are allocated by the central government and local authorities, and it will also increase responsibility for disposal of public money.
Tax incentives or exemption are the generally accepted model for supporting NGOs in all EU countries, although their forms and scope differ from one country to another. In the system of benefits for NGOs, OCGs have a special place as their purpose and the goals of their activities have significance for the general/joint/public benefit.
In this wide range of various tax incentives, Croatia is no exception. In the basic tax laws (profit, income, VAT, trade in real estate, inheritance and donations acts), NGOs are given significant tax benefits. These are also contained in some other laws (customs and specific duties acts). For their effect to be greater, their application needs to be encouraged.