At the 10th session of the Croatian Parliament held on November 21, 2018, a series of amendments and additions to the tax regulations were adopted, as a continuation of tax reform.

Hereinafter, we are writing about amendments to the VAT Act, published in the Official Gazette No. 106/18 and which are mostly applied since 1 January 2019:

Article 75 paragraph 2 is abolished, which stipulates that the transfer of tax liabilities is not applied in the case where the delivery is carried out by a taxpayer who has no headquarters, residence or habitual residence in the country and has a Croatian VAT identification number. This means that companies registered for VAT purposes in Croatia on their outgoing invoices from January 1, 2019 must charge value added tax for the supply of goods and services taxable in Croatia. Furthermore, the obligation to submit the INO PPO form (supply of goods and services referred to in Article 75, paragraph 2) is abolished.

Domestic transfer of tax liabilities applies to the supply of concrete steel and iron and concrete and iron products (reinforcement).

VAT rates of 13% apply for delivery of:

- live animals: cattle, pigs, sheep, goats, horses, donkeys, domestic poultry, rabbits and bunnies;

- fresh or chilled meat and edible slaughter products of: cattle, pigs, sheep, goats, horses, asses, domestic poultry, rabbits and bunnies;

- fresh or chilled sausages and similar products, of meat, meat slaughtered products or blood;

- live fish;

- fresh or chilled fish, molluscs and other aquatic invertebrates;

- fresh or chilled crabs: lobsters, lichens, prawns;, shrimps;

- fresh or chilled vegetables, roots and tubers, including maize dried vegetables;

- fresh and dried fruit and nuts;

- fresh poultry eggs, in shell;

A 13% rate applies to services and related copyrights of authors, composers, and artist performers who are members of the appropriate collective rights association exercising this activity by special regulations in the field of copyright and related rights and with the prior approval of the central state authority responsible for intellectual property.

A 5% rate applies to all medicines that are approved by the competent body for medicines and medical products.

Applying a reduced VAT rate to books of professional, scientific, artistic, cultural and educational content, textbooks for pedagogical education, primary, high school and higher education.

Entry into the VAT system is required during the year if deliveries worth more than HRK 300,000.00 are made.

In the case of doubt as to the justifiability of the VAT identification number, the Tax Administration of the taxpayer to whom the VAT identification number is assigned introduces the possibility of requiring from the tax payer to submit a VAT payment instrument for a maximum period of 12 months.

The calculated payment of value added tax (Article 76, paragraph 8 of the Law on VAT) at the import of machinery and equipment only applies to imports of tangible fixed assets. The delivery value exceeds one million kuna.

Harmonization with the requirements of the European Commission with regard to the abolition of input VAT deduction for passenger cars (regardless of value, 400.000 HRK) and the right to input VAT for vessels and aircraft.

Harmonization with Council Directive (EU) 2017/2455 of 5 December 2017 amending Directives 2006/112 / EC and 2009/132 / EC with regard to the simplification of certain obligations with regard to value added tax for the supply of services and the sale of goods on distance, for the special taxation procedure for telecommunications services, radio and television broadcasting services and electronically performed services performed by taxpayers based in the European Union or in the Republic of Croatia but without a head office in the Member State of consumption within the European Union. Tax threshold 77.000,00 HRK.

In addition to the VAT registration filed electronically, a record of received invoices will also be filed (misdemeanour provisions if the taxpayer does not submit a special record of the received invoices or if he does not provide all the necessary data).

Value coupons - the Minister shall, by means of an implementing regulation, prescribe what is not considered as a coupon and the form of a coupon.

 Reduction of the general VAT rate to 24% from 1 January 2020.