Croatia introduced Value Added Tax in 1995. As a member of the EU, (Croatia joined the EU on 1 July 2013) Croatian VAT compliance – registrations, returns, Intrastat, ESLs etc. follow the European Union VAT Directives. Croatia implements these European ‘laws’ into its General Tax Code. The Croatian Tax Administration (CTA) (Porezna Uprava) administers VAT under the authority of the Croatian Ministry of Finance.
Foreign businesses, termed ‘non-resident’ traders, providing goods or services in Croatia to local companies or consumers have to comply with Croatian VAT rules, which may include the obligation to register their business for Croatian VAT. They will then have to follow the Croatian VAT compliance rules, including invoicing and VAT rates, as well as pay over any Croatian VAT due.
Should you register for Croatian VAT
There are a number of trading situations which typically require a foreign business to register with the Croatian tax authorities. These follow the broad EU VAT rules, and include:
- Importing goods into Croatia if the customers is not a Croatian company with a local VAT registration (reverse charge applies).
- Buying and selling goods in Croatia if the customer is not a Croatian company with a local VAT registration (reverse charge applies).
- Holding goods on consignment warehouse in Croatia for longer than three months
- Holding live exhibitions, events or training in Croatia with paid admission.
- Selling goods to Croatian consumers via distance selling (internet, catalogues etc.)
- The self supply of goods.
- Certain leasing services.
Few companies need to VAT register if they are providing services to local Croatian companies, and instead can use the Reverse Charge process. This is based on the 2010 VAT Package changes.
Note that providers of electronic, broadcast or telecoms services to consumers in Croatia only have to VAT register in one EU country under the MOSS scheme to file a single return covering all 27 member states.
There may be further exemptions from the requirement to VAT register in Croatia that you should consider.
Need help with your Croatian VAT compliance?
Researching Croatian VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade.
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