GENERAL VAT RULES IN CROATIA

Croatia’s Value Added Tax ("PDV") system is in line with the provisions of the EU VAT directive, as the country has been a member of the European Union since July 1, 2013. Businesses operating in Croatia must comply with EU-wide  VAT rules and specific national regulations established by the Croatian government.

 

a) VAT rates

Croatia applies a standard VAT rate of 25%, one of the highest in the EU. However, reduced VAT rates are applied to certain goods and services to support specific sectors and reduce the cost of essential items for consumers.

 

The current VAT rates in Croatia are as follows:

• 25% Standard Rate – Applicable to most goods and services.

• 13% Reduced Rate – Applicable to services such as hotel accommodation, newspapers, restaurant services (excluding alcoholic beverages), etc.

• 5% Reduced Rate – Applicable to items like bread, milk, basic food items, books, medical equipment, certain medications, cinema tickets, etc.

• 0% Rate – Supply and installation of solar panels on private residential buildings, residential premises, and public buildings used for activities of public interest, as well as the supply and installation of solar panels in the vicinity of such buildings and premises.

 

b) VAT registration

For Domestic Businesses:

VAT registration is mandatory for businesses based in Croatia when the value of supplies in the previous or current calendar year exceeds €60,000. In some cases, domestic businesses must obtain a VAT ID number (e.g. providing or receiving services to/from the EU). Businesses falling below this threshold may voluntarily register for VAT.

 

For Non-Resident Businesses:

There is no threshold for non-resident businesses. They must register for VAT before conducting taxable activities in Croatia, regardless of turnover. Please refer to common VAT triggers for more details. 

 

Applications for VAT registration must be submitted to the Croatian Tax Authorities. The application should include all relevant documents requested by the Tax Authorities. Once submitted, it typically takes up to two weeks to receive a Croatian VAT number. 

 

Additionally, a fiscal representative must be appointed by non-European companies as required by the Croatian Tax Authorities. The representative must be a local company that acts on behalf of the non-European business and assumes joint liability to ensure compliance with all VAT obligations. On the other hand, European companies are not required to appoint a fiscal representative.

 

c) VAT reporting

After the registration process, a taxable person is required to submit monthly VAT returns (in some cases there is a possibility for quarterly VAT reporting) detailing all outgoing and incoming invoices in the relevant period. 

 

The deadline for submission of monthly VAT returns is the 20th day of the month following the reporting month while payment obligation for VAT is the last day of the month following the reporting month.

 

If a taxable person received purchase invoices in the reporting month, it is required to submit form URA (book of incoming invoices) along with a VAT return by the 20th day of the month following the reporting month.

 

Additionally, intra-community acquisitions and supplies, as well as services provided to or received from an EU-registered taxpayer, have to be reported in a European Commission (EC) Sales and Purchase List, submitted by the 20th day of the month following the reporting month.

 

Further, depending on the VAT balance from incoming and outgoing invoices, the VAT return may result in either a VAT liability or a VAT prepayment position.

 

In the case of a VAT prepayment, the taxpayer has the following options:

• Use the prepayment as an advance for the next VAT reporting period,

• Request a VAT refund from the Tax Authorities,

• Transfer the VAT prepayment to another taxpayer's VAT account

 

d) VAT refund

There are several methods available for reclaiming Croatian VAT, depending on whether the company is established in Europe or outside Europe and whether it holds a Croatian VAT number. The practical formalities for obtaining a VAT refund vary according to these factors.

 

Companies registered for VAT in Croatia

If a company holds a Croatian VAT number, a refund application must be submitted in accordance with local regulations and within the prescribed timeframe. For any given period, if the deductible VAT amount exceeds the VAT due, the taxpayer is entitled to request a refund of the overpaid VAT among other previously mentioned possibilities.

 

When a refund is requested, the Croatian Tax Authorities are required to process the refund within 30 days from the date of submission of the VAT return. However, if an audit procedure is initiated, the refund must be processed no later than 90 days from the audit start date.

 

Companies established in the EU without a Croatian VAT number

For companies based in EU countries that do not hold a Croatian VAT number, VAT refund applications must be submitted electronically through the Tax Authority of the company's country of residence, in accordance with the procedures outlined in Directive 2008/9/EC.

 

Companies established outside of the EU without Croatian VAT number

For companies based outside of the EU that do not hold a Croatian VAT number, the 13th Directive applies. The application must be completed in the required form and submitted to the Croatian Tax Authorities by the 30th of June of the current year for the previous year.

 

Additionally, it is important to note that a VAT refund for companies based in the EU/outside of the EU is not possible if their transactions carried out in Croatia trigger VAT registration obligations in Croatia. 

 

e) VAT options in Croatia

VAT group registration: 

Croatia has not introduced any VAT grouping rules.

 

Domestic Reverse Charge (Art. 194 of EU VAT Directive):
Foreign companies that are not registered for VAT in Croatia and supply goods within Croatia or perform land-related services in Croatia are not required to register for VAT purposes if the recipient is a Croatian VAT payer. This is in line with Article 194 of the EU VAT Directive.

 

Distance Selling:

The threshold for exemption is EUR 10,000 per year, as in other EU Member States. OSS (One-Stop Shop) scheme is applicable for businesses making cross-border sales within the EU. Additionally, as of 2025, there is another possibility for small enterprises in the EU to apply SME scheme under certain conditions.

 

Call-Off Stock:
Croatia follows the EU-wide simplified rules for call-off stock.

 

Cash Accounting Scheme:
This option is available only to Croatian taxpayers when the total value of goods supplied and services provided in the previous year does not exceed EUR 2 million.

 

Import VAT Deferment:
This option is available to all Croatian VAT payers, including foreign companies registered for VAT purposes in Croatia, provided they have the right to full input VAT deduction.

 

Local Reverse Charge:
The local reverse charge mechanism applies when both the supplier and the recipient are registered for VAT purposes in Croatia. It applies to construction work, the supply of used materials, the transfer of allowances to emit greenhouse gases, and, in certain conditions, the supply of immovable property (when the option for taxation is applied).

 

f) Other - FAQ

Is it necessary for a foreign taxpayer registered for VAT in Croatia to keep VAT books?

Yes, foreign taxpayers registered for VAT in Croatia are required to maintain detailed VAT books. These records must be sufficiently detailed to ensure the correct application of VAT and to enable inspection and control by the Croatian Tax Authorities.

 

Can a foreign taxpayer registered for VAT purposes in Croatia submit a quarterly VAT return?

No, foreign taxpayers registered for VAT purposes in Croatia are generally required to submit monthly VAT returns.

 

Exception: Quarterly VAT returns may be submitted only by domestic taxpayers that meet specific criteria. These companies must have no transactions with EU taxpayers (either incoming or outgoing) and their total value of goods supplied and services provided in the previous year must not exceed EUR 110,000. This exception does not apply to foreign taxpayers registered for VAT purposes in Croatia.

 

Are foreign taxpayers registered for VAT in Croatia legally obliged to submit Intrastat reports?

Yes, foreign taxpayers registered for VAT in Croatia are required to submit Intrastat reports if the annual exemption threshold for 2025 is exceeded.

 

The threshold values for Intrastat reporting are:

• Flow 1 – Arrivals: €450,000 - goods brought into Croatia from another Member State

• Flow 2 – Dispatches: €300,000 - goods sent out of Croatia to another Member State

 

Please note that Intrastat is the system for collecting information and producing statistics on the trade in goods between countries of the EU.

 

What are the invoicing rules in Croatia?

Invoices must contain the following details:

• Invoice Number and Date of Issuance,

• Company names, addresses, and personal identification numbers or VAT identification numbers of both the supplier and the recipient,

• The quantity and common trade name/type of the goods or services supplied,

• The date of goods/service delivery or advance payment if different from the invoice issuance date,

• The unit price (excluding VAT) or total consideration for goods/services categorized by VAT rate,

• Any discounts or rebates, to the extent not included in the unit price,

• Applicable VAT Rate,

• The VAT amount categorized by VAT rate unless a special scheme applies,

• The total consideration including the VAT amount,

• Reference to the relevant section of the VAT Act or EU Directive for any applicable VAT exemptions,

• Reference to any special margin scheme, if applicable

• The phrase “prijenos porezne obveze” or “reverse charge” must be included if the recipient is liable for VAT.

 

Further, invoice amounts must be expressed in Euro (EUR). However, amounts can also be displayed in another currency as an additional reference. The middle exchange rate of the Croatian National Bank (or the European Central Bank in exceptional cases) must be used for conversion to EUR on the date VAT becomes chargeable. The same rule applies to VAT returns.

 

Additionally, invoices need to be issued in the Croatian language in general, however, another language may be additionally used (i.e. bilingual invoice may be issued).

 

Is Croatian VAT recoverable on all expenses?

No, Croatian VAT is not recoverable on all expenses. VAT incurred on purchases, imports, or intra-community acquisitions of goods and services can be reclaimed by the Croatian VAT payer if the expenses relate to taxable activities and appropriate documentation is provided.

 

Additionally, input VAT cannot be recovered on representation costs. Also, 50% of input VAT cannot be deducted for the purchase or rental of personal vehicles, including related goods or services such as maintenance and fuel, unless the vehicle is used exclusively for business purposes.