In order to join the EU, numerous changes and improvements are taking place to ensure widespread harmonization of the Croatian legislation with the EU rules and regulations.
The new VAT Bill will be adopted by the Parliament in June 2013 and should come into force on the date of Croatian accession to the European Union i.e. 1 July 2013 and implement the EU VAT System Directive 2006/112/EC into the Croatian legislation. Further to this, we would like to highlight the following provisions:
VAT on intra-community acquisitions (ICA) shall become chargeable upon issue of the invoice, or if invoice has not been issued, it should be charged no later than 15th day of the month following the month in which the acquisition occurred.
Supply of goods to final customers within the EU will be taxable in Croatia, unless the value of the supply in question exceeds the distance selling threshold prescribed by the respective Member State. The proposed threshold for Croatia is HRK 270,000 (approximately EUR 35,700).
As of 1 January 2015, the supply of land for construction will no longer be VAT exempt.
Invoices for the intra-community supply of goods should be issued no later than 15th day of the month following the month in which the sale occurred. In case the supplier fails to issue the invoice by the set date, the acquirer is obliged to self-assess the VAT by the same date. Such rule does not apply to other supplies. Simplified invoice for the supply of goods and services not exceeding HRK 700 (approximately EUR 90) has been introduced. It will also be possible to issue collective invoices for several supplies made in the same month.
As of 1 January 2015, the current cash accounting scheme will be cancelled – VAT payers subject to personal income tax will no longer be able to postpone the VAT payment to the period, in which consideration is collected from the buyer.
VAT identification number.
VAT identification number will comprise prefix HR followed by Personal Identification Number (OIB) which contains eleven digits.
Taxpayers that supplied goods and services (including VAT) with a total value not exceeding HRK 800,000 (approximately EUR 106,000) in the previous year will have to apply monthly reporting if they make supplies within the EU, otherwise they can apply quarterly reporting. Besides the current monthly/quarterly VAT returns that have to be submitted by the 20th day of the month following the end of the accounting period, and the annual VAT returns that have to be submitted by the end of February of the subsequent year, taxpayers may have to submit the following reports by the 20th day of the month following the end of the accounting period:
- EU acquisition list – report on ICA of goods and services,
- EU sales list – collective report for ICS of goods and services.
VAT refund to non EU-taxpayers.
The deadline for VAT refunds to foreign taxable persons that are seated outside the EU has been extended from six months to eight months from the date on which the Croatian Tax Authorities receive the refund request. Request for refund has to be filed by 30 June of the calendar year that follows the year which the request pertains to. Current procedures relating to VAT refund to foreign taxpayers will apply related to refund of VAT incurred by EU-taxpayers until 1 July 2013.
EU customs regulations.
Croatian Parliament has adopted the Act on implementing customs laws of the EU. The main objectives of the Act are:
- Ensuring that provisions of the Community Customs Code that confer rights to autonomously regulate certain customs areas to member states (such as representation before customs authorities, conducing customs supervision, powers of customs authority in certain cases, etc.) are duly implemented in Croatia;
- Introducing national provisions that are referred to by the Community customs regulations, such as repossession and sale of goods, interests, waiving of ownership rights in favour of the state; and
- Regulating areas that are not subject to the provisions of the Community customs regulations, such as offences and applicable penalties and fines.
The Act together with other EU and national regulation will ensure full integration of Croatia to the Customs Union as envisaged by the Treaty of Lisbon.
The new Excise Duties Act regulates the system of excise duties levied on alcohol, alcoholic beverages, tobacco products, energy products and electricity (excise goods) produced in Croatia, supplied into Croatia from another Member State or imported into EU.
- The excise duty on most categories of energy products and electricity is changed in order to further harmonize with Council Directive 2003/96/EC and new exemptions are introduced so the fiscal burden on the excise duty payer will not increase significantly;
- There were no major changes concerning taxation of alcohol and alcoholic beverages and tobacco products.
Under the new Excise Duties Act, suppliers of electricity to final customers, and when importing or entering these products for own purposes, as well as producers of electricity using electricity for their own purposes, become excise taxpayers. This provision is adequately applied for natural gas, coal, coke, lignite.
In accordance with the Trade Act, once Croatia becomes member of the EU, the provision on representative offices will no longer be applicable to the legal founders from the EU member state. The Ministry of Economy has published on its web pages that all representative offices of EU founders currently registered in Croatia should be transformed into branches or companies as otherwise they will be automatically erased from the register of representative offices in Croatia with 1 July 2013.
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