LOCAL VAT MEASURES FOR FOREIGN COMPANIES IN CROATIA
Croatia had simplification measures applicable for call-off stock arrangements up to 31/12/2019. If conditions were met, foreign companies were not required to register for VAT purpose locally.
Since 01/01/2020, the European simplification regime for call-off stock arrangements ("2020 Quick Fixes") entered into force and is to be applied by all Member States. This implies that all other possible national arrangements regarding call-off stock arrangements are mute and, if they provide for divergent rules, should be viewed as not in line with EU Law.
Simplification measures applicable for call-off-stock arrangements in Croatia up to 31/12/2019 have been withdrawn and replaced by the new European simplification VAT regime in respect of call-off stock accordingly.
Triangulation can be applied when the middleman (B) is VAT registered for others supplies in the 3rd country (Member State of destination)?
No
Triangulation regime ABC cannot be applied when the middleman B is also VAT registered in Croatia [Member State C].
Triangulation can be applied when the chain transaction involves four or even more parties?
No
The simplification measure can only operate in a classic triangulation situation. If there are more than three companies involved, the strict legal position will have to be respected and registration may be required in at least one other Member State depending on the precise circumstances.
Chain transactions refer to successive supplies of goods which are subject to a single intra-Community transport. The intra-Community movement of the goods should only be ascribed to one of the supplies, and only that supply should benefit from the VAT exemption provided for the intra-Community supplies. The other supplies in the chain should be taxed and may require the VAT identification of the supplier in the Member State of supply.
However, the divergent approach amongst Member States in the application of these exemptions for cross-border transactions has created difficulties and legal uncertainty for businesses.
Optional reverse charge for supply of goods?
Yes
Reverse charge is applicable to all supplies of goods carried out by a taxpayer not established in Croatia provided the customer is a taxable person or a non-legal person but registered for VAT purposes and having a VAT identification number in Croatia. In case the foreign supplier is VAT registered in Croatia, domestic reverse charge is no more applicable.
Optional reverse charge for supply of services
Yes
Reverse charge is applicable to all supplies of services carried out by a taxpayer not established in Croatia provided the customer is a taxable person or a non-legal person but who is registered for VAT purposes and having a VAT identification number in Croatia. In case the foreign provider is VAT registered in Croatia, domestic reverse charge is no more applicable.
Optional reverse charge (art. 194 of the VAT Directive)
Member States in which the VAT is due may provide that the person liable for the payment of VAT is the person to whom the goods or services are supplied where the transaction is carried out by a taxable person who is not established in the country in which the VAT is due.
VAT Warehousing implemented in Croatia?
Yes
Croatia has introduced VAT warehousing regime applicable under specific conditions.
VAT Directive
Member States may exempt the importation of goods and the supply of goods which are intended to be placed under warehousing arrangements other than customs warehousing.
Is it possible for a company to pay the import VAT via the periodical VAT return?
No
Postponed accounting via the VAT return is not possible in Croatia. VAT on importation should be paid by the deadline stipulated for the payment of import duties in compliance with customs regulations.
N.B.: In order to improve the cashflow of the taxpayers during the COVID-19 crisis, postponed VAT accounting for imports in Croatia is temporarily applicable until 31 December 2020.
VAT DIrective
Member States may provide that VAT on importation does not need to be paid at the time of importation on condition that it is entered as such in the VAT return to be submitted.
VAT OBLIGATIONS IN CROATIA
How is the tax period determined in Croatia?
Monthly
Your company has to report its VAT position by filing periodical VAT returns on a monthly basis [standard tax period]. Quarterly reporting period is not possible for non-established taxpayers registered for VAT in Croatia.
When should periodical VAT return be filed?
Periodical VAT returns must be filed by electronic means via "ePorezna" to Croatian VAT authorities before the 20th day of the month [20 of N+1] following the accounting period [month] to which it relates.
VAT Directive
The tax period shall be set by each Member State at one month, two months or three months. Member States may, however, set different tax periods provided those ones do not exceed one year. The VAT return shall be submitted by a deadline to be determined by Member States. That deadline may not be more than two months after the end of each tax period.
Is this requirement laid down in the country and what is the filing deadline?
As from 01/01/2015, filing annual VAT return is no longer required.
VAT Directive
Member State may require taxable persons to submit a return in respect to all transactions carried out in the preceding year. That return shall provide all the information necessary for any adjustments.
Are quarterly filings allowed by the country and what is the filing deadline?
The recapitulative Statement [ESL ] must be drawn up for each calendar month. ESL should be filed by electronic means via "ePorenza" by the 20th day of the month after the end of the reporting period [month]. Filing the Statement on a quarterly basis is not possible.
VAT Directive
The recapitulative statement shall be drawn up for each calendar month. However, Member States, in accordance with the conditions and limits which they may lay down, may allow taxable persons to submit the recapitulative statement on each calendar quarter where the total quarterly amount of intra-EU supplies of goods does not exceed either in respect of the quarter concerned or of any of the previous four quarters the sum of € 50.000 or its equivalent in national currency. The recapitulative statement shall be submitted within a period not exceeding one month.
What is the payment deadline?
The VAT due should be paid by the end [last working day] of the month following the accounting period. Your company should pay the difference in VAT according to the annual VAT return by the deadline for the submission of the annual VAT return [by the end of February of the following year].
Are interim payments required?
Interim payments are not required.
VAT Directive
Any taxable person liable for the payment of the VAT must pay the net amount of the VAT when submitting the VAT return. Member States may, however, set a different date for payment of that amount. Member States may require interim payment to be made.
Is any VAT credit automatically carried forward or refunded?
Where, for a given period, the amount of deductions exceeds the amount of VAT due, the taxable person is entitled to a refund or to carry forward the excess of the VAT paid forward to the following accounting period. Where a taxable person applies for a refund of the excess of the VAT paid, the tax administration is obliged to refund the difference within 30 days from the date of submission of the VAT return but no later than within 90 from the day auditing procedure has been instituted.
VAT Directive
Where, for a given tax period, the amount of deductions exceeds the amount of VAT due, the Member States may, in accordance with conditions which they shall determine, either make a refund or carry the excess forward to the following period. However, Member States may refuse to refund or carry forward if the amount of excess is insignificant.
VAT OVERVIEW IN CROATIA
What is the local name of the tax?
Porez na dodanu vrijednost [PDV]
What is the structure of the VAT number?
Croatian VAT numbers have 13 characters [HR + 11 digits].
VAT Directive
Member States must apply a standard VAT rate [not lower than 15%] which must be the same for the supply of goods and for the supply of services. Member States may apply either one or two reduced rates [not lower than 5%] only to supplies of goods or services as listed in the Annex III of the VAT Directive.
VAT rates
Croatia applies a standard VAT rate of 25% and two reduced VAT rates: 5% and 13% [10% before 01/01/2014].
HRK 270,000
see various thresholds applied in the EU
Any VAT question for Croatia?
We offer you the opportunity to discuss the subject during a free videoconference.