Difference between Gross 1 and Gross 2
Both terms sound similar, and both amounts differ significantly from your Net salary, but the difference between them is crucial for the functioning of the tax and pension-health system.
1Gross 1 (Your salary)
The amount from which all deductions that belong to the worker (such as pension contributions) are calculated.
- Stated in the employment contract
- Pension is paid from it
- Taxes to the state are paid from it
- After these deductions, Net salary remains
2Gross 2 (Employer cost)
The amount that, in addition to Gross 1 salary, includes levies that directly burden the employer.
- Not necessarily stated in the contract
- Includes Gross 1 + Contributions "ON TOP OF" salary
- Primarily covers health insurance (in Croatia it is e.g. 16.5%)
- Shows the actual money the employer loses from the company account to pay the worker's salary.
Simple difference formula
The easiest way to remember it:
Note on insurance: It is interesting to note that "you pay" for your pension by setting aside a part of your Gross 1 (contributions from salary), while your health insurance is paid by your employer (contributions on top of salary), making Gross 2 larger. The result of these levies makes an essential administrative difference between these two terms in salary calculation.