Croatia: VAT Application Threshold Increase

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In 2021 set of Croatian tax reforms the one in regards to Value added tax stands out as the current HRK 7.5 million threshold of the taxation procedure according to the collected fees has been increased to HRK 15 million. Taxpayers who did not make deliveries of more than HRK 15 million in 2020 can calculate and pay the VAT obligation on the basis of collected fees from January 2021.

In addition, the possibility of applying the VAT accounting category to imports from third countries is being expanded. It will be considered that VAT has been paid upon import if the taxpayer entered in the register of VAT payers declares it as an obligation in the VAT return. For such method of calculation and payment of VAT the Customs Administration has previously, with fulfilled conditions, issued an approval through the customs declaration on the payment of VAT upon import through a VAT return.

Some of the changes will be applicable from July 2021 such as the VAT exemption for small consignments imported into the European Union with a value of less than EUR 22 that will be abolished. When selling goods at a distance of up to HRK 1.135, by a non-EU taxpayer using an electronic interface to a non-EU taxpayer, the supplier will be considered a taxpayer who allows the sale via an electronic interface and will be obliged to charge VAT at the time of sale.

Moreover, from 1 July 2021, the application of a special taxation procedure to the supply of services and distance selling of goods to non-taxable persons in other Member States shall enter into force. Until this change, for example, Croatian taxpayers who supply goods to natural persons residing in other Member States had to register for VAT after exceeding a certain delivery threshold in each of those countries. The application of this procedure avoids the need for this registration, and VAT is declared and paid in Croatia, although it is still calculated at the rate valid in the country to which the delivery is made.

Other changes worth mentioning are also extension of the existing special taxation procedure for telecommunications services, radio and television broadcasting services and electronically performed services and application of new special taxation procedures for taxpayers who provide services to non-taxpayers or sell goods at a distance or make certain deliveries on the domestic market.

For further information, please contact Petra Dzankic, our Accountant and Payroll Assistant in Zagreb, at petra.dzankic@eurofast.eu.

Eurofast is a regional business advisory organisation employing local advisors in over 23 cities in South East Europe & Middle East . The Organisation is uniquely positioned as one stop shop for investors and companies looking for professional services in South East Europe & Middle East.

19/4/21