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Value Added Tax (hereinafter: VAT): information on the general rules, rates and exemptions, registering for and paying VAT, obtaining a refund
Value Added Tax Act prescribes the following VAT exemptions:
exemptions for certain activities of public interest
exemptions for other activities
exemptions for supply of goods within the European Union (EU)
exemptions for acquisition of goods within the EU
exemptions for certain transport services
exemptions on importation
exemptions on exportation
exemptions for supply of services on movable property
exemptions related to international transport
exemptions for certain supplies equated to export
exemptions for mediation services
exemptions for transactions relating to international trade
Exemptions for certain supplies equated to export include, among other things, supplies of goods or services within the framework of diplomatic and consular agreements, supply of goods and services for the European Union, the European Atomic Energy Community, the European Central Bank or the European Investment Bank or organizations founded by the European Union, supply of goods or services for international bodies which have been recognized as such by the Republic of Croatia Diplomats.
When supply of goods refers to the goods carried out by passengers in personal luggage, exemption is applied solely under the following conditions:
a) the passenger does not have permanent or habitual residence in the European Union territory,
b) the total value of the supply is greater than EUR 100.00 including VAT,
c) the goods are transported outside the European Union prior to the expiry of the three-month time limit after the month in which the supply was carried out and
d) there is proof of export, i.e. invoice and form approved by the customs office in whose territory the goods were taken out of the European Union.
Registering for and paying VAT, obtaining a refund
Entering the VAT Register
Legal persons with headquarters, and natural persons with permanent residence or habitual residence in the home territory, whose supply of goods and services in the previous or current year exceeded EUR 60,000.00,
Taxable persons without headquarters, permanent residence or habitual residence in the home territory which are obliged to pay VAT in the Republic of Croatia for supplied goods or services if they do not apply the special taxation procedure for small taxable persons in the Republic of Croatia or if the conditions for that have not been met.
Submitting VAT returns and paying VAT
VAT is declared through VAT return submitted until the 20th of the month following the end of the taxation period (on a monthly or quarterly basis),
VAT is paid until the last day of the month following the end of the taxation period (on a monthly or quarterly basis).
VAT refund
- The taxable person entitled to the deduction of input tax in the taxation period, in the amount greater than the tax liability, is entitled to a refund of this difference or to carry forward the amount of excess VAT payment to the following taxation period. If the taxable person applies for refund of the excess VAT payment, the Tax Administration is obliged to execute the refund within 30 days from the date the VAT return was submitted, within 90 days at the latest from when tax inspection was initiated.
- The taxable person without headquarters in the EU territory, a permanent establishment in the EU territory from where supplies were made, without a permanent or habitual residence in the EU territory, is entitled under the prescribed conditions to a VAT refund calculated for movable goods and services supplied by other taxable persons in the Republic of Croatia or calculated when importing goods into the Republic of Croatia.
The taxable person without headquarters in the Republic of Croatia, but in another Member State, is entitled to VAT refund calculated for goods and services supplied by other taxable persons in the home territory or goods imported to home territory, under the proscribed conditions.
Taxation of services supplied to non-taxable persons and distance sales of goods
Since 1 July 2021, the provisions concerning the following special taxation procedures have been in application:Special taxation procedure for services supplied by taxable persons without headquarters within the European Union
Special taxation procedure for distance sales of goods within the European Union, for supplies of goods within a member state made by electronic interfaces facilitating those supplies and for services supplied by taxable persons established within the European Union but not in the Member State of consumption
Special taxation procedure for distance sales of goods imported from third territories or third countries
Special procedure for submitting VAT returns and paying VAT on importation.
It is only an option to use the above-mentioned procedures, and not an obligation for taxable persons.
Apart from the special procedure for submitting VAT returns and paying VAT on importation, the said special procedures are applied through electronic OSS system (One Stop Shop) or IOSS (Import One Stop Shop).
Useful links:
Renting a motor vehicle
Renting a motor vehicle: Tax treatment of means of transport for private use.
Note: Value threshold in the amount of EUR 53,089.12 in relation to the deduction of 50% of input tax for passenger cars was eliminated as from 1 January 2019, and the term: “means of transport” was changed into: “passenger cars”.
- place of supply of short-term rental of means of transport
The place of supply of short-term rental of means of transport, under the provisions of Article 23 of the VAT Act, is the place where those means of transport are actually made available to the service recipient. Short-term renting is continuous possession or use of means of transport during a period of up to 30 days. In this case, the service recipient is not important, and if the means of transport is made available to the recipient in the Republic of Croatia, the place of supply of services is deemed the Republic of Croatia, and the supply is liable to taxation in the Republic of Croatia.
The place of rental of means of transport other than short-term rental to a non-taxable person is the place where that person has headquarters, permanent or habitual residence. Therefore, if the recipient of long-term rental of means of transport (more than 30 days) is not a taxable person and does not have headquarters or permanent or habitual residence in the Republic of Croatia, the service is deemed supplied and liable to taxation at the place where the recipient has headquarters, permanent or habitual residence.
Restrictions have been laid down as regards the right to 50% of input tax deduction calculated for acquisition or rental of passenger cars, including the acquisition of any goods or services related to these goods. Passenger cars are motor vehicles intended for transport of persons and comprising no more than eight seats in addition to the driver's seat (M1 category motor vehicles).
The said restriction is not applied if those are passenger cars used for driver training, vehicle testing, service, business activity of passenger and goods transport, transport of deceased persons, renting or if they are acquired for further sale and N1 category motor vehicles with the tariff designation 8703 of the Customs Tariff and if they are not subject to taxation under a special regulation regarding special tax on motor vehicles.
Purchase and sales of motor vehicle in another Member State
View of tax liabilities of the acquirer of new and used means of transport from other EU Member States and vehicles not regarded as means of transport: Tax liabilities of the acquirer.
Competent authority and regulations
Ministry of Finance, Tax Administration
Boškovićeva 5
10 000 Zagreb
+385 1 480 9000
Info: pisitenam.porezna-uprava.hr
Value Added Tax Act (Official Gazette 73/13, 148/13, 143/14, 115/16, 106/18, 121/19, 138/20, 39/22, 113/22, 33/23, 114/23., 35/24. and 152/24.)
Date of update: 8 January 2025
