Ad 1) VAT Act

Below a short summary of the amendments:

• Reduction of VAT rate from 25% to 13%- preparation and service of food and desserts in and out of restaurant – IMPORTANT – reduced rate not applicable to service of beverages
• Application of Directive (EU) 2018/1910 of the European Council from 4^th December 2018 on amendment of Directive 2006/112/EC – moving of goods is not considered as delivery, more precise definition of chain transactions– IMPORTANT – reduced rate not applicable to service of beverages
• Taxation according to fees collected – new census 7.500.000,00 HRK
• Correction of tax base due to subsequent credit note to foreign customer - customer is obliged to inform the supplier in written form of non-application (via portal) for VAT refund
• Tax payers who carry out deliveries of public interest (health services – medical care services, dental medicine, social welfare services, educational services, services in culture….) and are registered as trading companies or trades, from 1^st January 2020 are rendering services that are exempted from VAT – IMPORTANT – obligation to correct input tax deduction for economic goods that are used for carrying out exempted deliveries

Ad 2). Personal Income Tax Act

• Increase of personal allowance to 4.000 HRK
• Tax relief –
• Entitlement on relief after determination of annual personal income tax in special procedure or by filing form DOH
• Possibility of tax-free settlement of costs for additional and supplementary health insurance for employees, up to a certain amount based on credible documents

Ad 3) Corporate Income Tax Act

• Extension of application of CIT rate of 12% on all tax payers who achieved total revenue of 7.500.000,00 HRK

Ad 4) Act on Fiscalization in Cash Transactions

• Supporting documents containing payment data will be recorded in the fiscalization system and they will be linked in the program of the tax office with the issued and fiscalized invoice.

Ad 5) Act on Special Tax on Motor Vehicles

• Exemption from payment of administrative fee for relatives in ascending line acquiring a used motor vehicle based on a gift contract under the condition that this vehicle has been registered on the name of the person making the gift.

Ad 6) General Tax Act

• Use of tax advantages against the Act´s purpose:
  • A tax payer using the tax system by using those organizational forms that are taxable with the lowest tax rates and that have not been intended for a certain tax payer group, will be considered to use tax advantages against the Act´s purpose, especially when;
  • 1. an employer concludes for a job that has the characteristics of employment other ways of job performance with the employee or uses other organizational forms that are taxable by lower tax rates
  • 2. an entrepreneur frequently changes the organizational form of business operations, resp. for each contracted job one organizational form is used which is shortly afterwards substituted by another that is taxable by lower tax rates
  • 3. an entrepreneur uses related companies with the sole purpose of using lower tax rates because of avoidance of tax payment or reduction of tax obligation

Ad 7) Act on Administrative Cooperation in the Field of Taxation

• Obligation of reporting of cross-border tax arrangements
• Responsibility for reporting – agent or relevant tax payer within 30 days
• For data between 25^th June 2018 – 1^st July 2020 – delivery until 31^st August 2020; followed by quarterly reporting
• Reporting type – system ePorezna – JPPU – completion of form in Croatian language

Due to the large number of changes we have tried to highlight the most important ones. If you would like to learn more about the upcoming changes, please email us and we will send you a detailed overview of the legal changes which were also presented at the “Business breakfast” by our employees and counselors of the Ministry of Finance, Tax office.