Croatia levies a value-added tax (VAT) on the supply of most goods and services in the country, including intra-community supplies and imports. The standard rate of VAT is 25%. There are also reduced rates of 13% and 5%, and certain supplies are exempt. Exports are zero-rated.

Reduced Rate 13% Supplies Include:

Hotel and similar accommodations (catering and restaurant services were also included under the 13% rate but migrated to the standard rate from 1 January 2017);
Water (excluding bottled) and electricity supplies;
Child car seats; and
Preparation and serving of meals and desserts inside and outside a catering facility (effective 1 January 2020).

Reduced Rate 5% Supplies Include:

Bread;
Milk;
Edible oils and fats (effective 1 April 2022);
Baby food and processed grain food for small children (effective 1 April 2022);
Fresh meat, fish, fruits, vegetables (effective 1 April 2022);
Certain agricultural supplies and animal food (effective 1 April 2022);
Certain cultural events and tickets, including museums, theatres, concert (effective 1 April 2022);
Butter and margarine (effective 1 April 2022);
Supply of natural gas, district heating, firewood, pellets, briquettes, and wood chips (effective 1 April 2022 until 31 March 2025);
Certain books and scientific journals;
Certain newspapers and magazines unless used for advertising only; and
Certain pharmaceuticals and medical products.

Exempt Supplies Include:

Postal services;
Hospital and other health care services;
Social care services;
Financial and insurance services; and
Real estate transactions (effective 1 January 2015).

Registration Threshold

The VAT registration threshold in Croatia is EUR 60,000 (increased from EUR 40,000 effective 1 January 2025), although a taxable person may voluntarily register. Existing registered taxpayers as on 1 January 2025 can request deregistration by 15 January 2025. If registered voluntarily, the taxpayer must remain registered for at least 3 years.

Effective 1 January 2019, small enterprises (i.e., enterprises whose registration threshold is not met) established in Croatia are not required to charge VAT or claim input tax credit. Small enterprises exceeding the VAT registration threshold are required to register for VAT immediately.

There is no threshold for non-residents without an establishment in Croatia, and registration is required prior to making any taxable supplies in the country.

Effective 1 January 2025, a new VAT exemption scheme applies for eligible small-scale businesses, whereby a taxable person established in another EU Member State can apply the VAT registration exemption in Croatia if their annual turnover in Croatia does not exceed the registration threshold and their annual turnover in the EU does not exceed EUR 100,000. Further, small businesses established in Croatia can request the application of the exemption in other EU Member States if their annual turnover in the EU does not exceed EUR 100,000 and their annual turnover in the other State does not exceed the relevant threshold in that State.

Returns and Payments

The monthly VAT returns are required to be filed electronically by the 20th day of the following month. In certain cases, where the taxpayers do not have any transactions with EU taxpayers and wherein the aggregate value of goods supplied and services provided in the previous year does not exceed EUR 110,000 (EUR 106,178.25 until 31 December 2023), the returns can be submitted quarterly. The VAT payment is required to be made before the last day of the month following the end of the tax period.

Effective 1 January 2024, payment service providers offering payment services in the EU are required to monitor the payees of cross-border payments and transmit information on those who receive more than 25 cross-border payments per quarter to the administrations of the Member States.

Digital Supplies

VAT on Distance/Electronic Sale of Goods

Effective 1 July 2021, Croatia has implemented the new EU VAT rules for e-commerce transactions for supplies made to non-taxable persons. The following are the key changes under the new rules:

The distance sales threshold of EUR 35,000 (applicable until 30 June 2021) is abolished and the destination principle for distance sales of goods applies instead. Thus, supplies are subject to VAT in the Member State of the recipient, regardless of the supplier’s distance sales volume;
In order to reduce the administrative burden on smaller businesses, a simplification option is introduced for smaller businesses with annual sales not exceeding EUR 10,000, which allows the accounting of VAT according to local rules. Hence, the VAT is collected in the Member State where the seller is established or where transportation starts;
A One Stop Shop system (OSS) is introduced for domestic sale of certain goods and intra-EU distance sales of goods to customers within the EU. Under the OSS, an opportunity is given to the taxpayer to register in one EU Member State (referred to as the Member State of Identification) and report all sales to customers across the EU in a single, consolidated VAT return. The VAT on consignments imported from outside the EU with a value not exceeding EUR 150 can be reported through a new special scheme viz. Import One Stop Shop (IOSS); and
For goods imported from outside the EU, the current import exemption for low value goods (below EUR 22) ceases to apply. Therefore, VAT at the appropriate rate becomes due on such imports in the EU.

VAT on Electronic Supply of Services

As per the place of supply rules, electronically supplied services, telecommunications, and broadcasting services to consumers located in the EU Member States are, in general, taxable at the customer’s location irrespective of whether the customer is a taxable person (B2B) or a consumer (B2C). As an exception to this rule, effective 1 January 2019, electronic services provided to a non-taxable person (B2C) are taxable at the location of the supplier, provided the total amount of consideration received for the relevant services does not exceed EUR 10,000 (HRK 77,000 until 31 December 2022). Effective 1 July 2021, under new EU VAT rules for e-commerce transactions, the OSS is introduced wherein an opportunity is given to the taxpayer to register in one EU Member State (referred to as the Member State of Identification) and report all sales to customers across the EU in a single, consolidated VAT return. The following schemes are available within the OSS:

The non-Union scheme for taxable persons that have no establishment within the EU; and
The Union scheme for taxable persons that have an establishment within the EU (but are making supplies to Member States in which they are not established).

Until 30 June 2021, taxpayers had the possibility to opt for the use of the Mini One Stop Shop (MOSS) for supply of telecommunication, broadcasting and electronic services in order to minimize their tax compliance burden.

Electronic services include:

Website supply;
Web-hosting;
Distance maintenance of programs and equipment;
Supply of software and updating thereof;
Supply of images, text and information and making available of databases; and
Supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events, etc.

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