Croatia’s government initiated a public consultation for draft legislation in which it plans to amend the VAT Act by raising the annual threshold for mandatory VAT registration from EUR 40,000 to EUR 50,000, aligning with the cumulative inflation rate of 23.7%.
The draft legislation is open for public consultation until 24 October 2024.
This change aims to help about 7,500 businesses affected by inflation opt out of the VAT system, reducing compliance costs.
Starting 1 January 2025, Croatian VAT refunds will be available to non-EU businesses globally, expanding from the current eligibility limited to UK, Switzerland, Serbia, North Macedonia, and Turkey companies. The amendment also abolishes the reciprocity condition for VAT refunds to taxpayers not established within the EU.
Other amendments include deduction of extra VAT charged by the tax authorities for a supply that can be deducted as input tax by the recipient; new EU rules under EU Directive 2020/285 and EU Regulation 904/2010 allow small businesses in other EU countries to exempt their supplies in Croatia from VAT if their annual turnover is below EUR 50,000 in Croatia and EUR 100,000 in the EU; and admission to cultural, sporting, artistic, scientific, educational, or entertainment events and related services will be taxed where the recipient is located.
These changes will take effect on 1 January 2025 after parliamentary approval.
