Value-added tax (VAT)
The Croatian VAT system is in line with the provisions of the European Union (EU) VAT Directive.
VAT is payable on sales of goods and supply of services, import of goods, and intra-Community acquisition of goods.
Croatia has not introduced any VAT grouping rules.
The general VAT rate is 25%.
A reduced rate of 13% is applicable for:
- Organised stays (accommodation or accommodation with breakfast, full or half board, in all kinds of commercial hospitality facilities).
- Periodical newspapers and magazines of a publisher that has a statute of media and newspapers and magazines for which there is no obligation of adoption of the statute of media according to a special law (with the exception of those that consist entirely of advertisements or are used mainly for advertising purposes, and those wholly or mainly consisting of video or music content).
- Edible oils and fat of animal and vegetable origin.
- Child seats for cars, children’s diapers, and children’s food and processed cereal-based foods for infants and small children.
- Water delivery, except for water in bottles and other packaging on the market, in terms of public water supply and public drainage system according to a special law.
- Concert tickets.
- Supply of electric energy to another supplier or end user, including fees related to that supply.
- Public service of mixed municipal waste, biodegradable municipal waste, and separate waste collection according to a special law.
- Urns and caskets.
- Seedlings and seeds.
- Fertilisers and pesticides and other agrochemical products.
- Products that are mainly used as a food for animals, except for food for pets.
- Supply of live animals: cattle, pigs, sheep, goats, horses, donkeys, domestic poultry, and rabbits.
- Supply of fresh or chilled meat and edible slaughter products of: cattle, pigs, sheep, goats, horses, donkeys, domestic poultry, and rabbits.
- Supply of fresh or chilled sausages and similar meat products, meat slaughtered products, or blood.
- Supply of live fish.
- Supply of fresh or chilled fish, mollusc's, and other aquatic invertebrates.
- Supply of fresh or chilled crayfish: lobster, lard, and shrimp.
- Supply of fresh or chilled vegetables, roots, and tubers, including maize dried vegetables.
- Supply of fresh and dried fruit and nuts.
- Supply of fresh poultry eggs, in shell.
- Services and related copyrights of writers, composers, artists and holders of phonogram rights who are members of the relevant organisations performing this activity under special regulations in the field of copyright and related rights and with the prior approval of the central state authority in charge of intellectual property (IP).
- Preparing and serving meals and desserts inside and outside the catering facility according to special regulations.
A reduced rate of 5% is applicable for:
- Bread and milk, including baby food used as a substitute for mother’s milk.
- Books of a scholarly, scientific, artistic, cultural, and educational character, as well as school textbooks (primary, secondary, and tertiary education, on all kinds of media).
- Certain medicines and medical equipment and accessories.
- Scientific journals.
- Cinema tickets.
- Daily newspapers of a publisher that has a statute of media (with the exception of those that consist entirely of advertisements or are used mainly for advertising purposes and those that consist entirely of video or music content).
Taxpayers have to electronically file monthly VAT returns by the 20th day of the following month. Exceptionally, taxpayers who do not have any transactions with EU taxpayers (inbound or outbound) and whose aggregate value of goods supplied and services provided in the previous year does not exceed HRK 800,000 can submit the VAT return quarterly.
Any annual adjustments are made in the VAT return for December, which is the last monthly VAT return in a financial year.
In addition, both intra-Community acquisitions and supplies, as well as services provided to or received from an EU-registered taxpayer, have to be reported in a European Commission (EC) Sales and Purchase List, submitted by the 20th day of the month following the reporting month.
Where the amount of input tax credits exceeds the entity’s VAT liability, a taxpayer is entitled to a refund of the difference or may choose to use the difference as a VAT prepayment.
The Record on incoming invoices has to be submitted electronically by the 20th day of the following month in case the taxpayer received incoming invoices bearing Croatian VAT.
VAT payers are defined as entrepreneurs that supply goods or perform services in Croatia. An ‘entrepreneur’ is any person that continuously and independently performs any economic activity. In addition to those that may be regarded as ‘normal’ taxpayers, domestic enterprises receiving services from foreign enterprises and legal entities and individuals that issue invoices or receipts including VAT without authorisation are also liable to pay VAT.
Companies have to obtain a Croatian VAT ID number in case of EU acquisition of goods in Croatia and EU supplies of goods from Croatia. Export also triggers VAT registration obligation.
Domestic companies performing or receiving services to/from the European Union also have to obtain a VAT ID number.
Foreign companies (not registered for VAT in Croatia) that supply goods within Croatia or perform land-related services in Croatia do not have to register if the recipient is a Croatian company or holds a Croatian VAT ID number, since Croatia has implemented Art. 194 of the VAT Directive.
A domestic taxpayer is required to enter into the VAT system when the value of supplies in the previous or current calendar year exceeded HRK 300,000. Voluntary registration is also possible.
Reclaiming of input VAT is granted to EU-registered VAT payers. No tax representative is required.
Entrepreneurs registered in third countries can apply for a VAT refund, provided reciprocity agreements are in place and a tax representative is used.
Determination of VAT base
The VAT base for the supply of goods and services is the consideration that includes everything that the supplier has received or is supposed to receive from the buyer or a third person in connection to the supply, including the subventions directly related to price of goods and services supplied.
Where no consideration is provided, for instance where goods are exchanged, the VAT base is considered to be the market value of the goods or services. The VAT base of imports is the customs value as prescribed by customs regulations, increased by customs duties, import duties, special taxes, and other fees paid during customs clearing.
VAT-exempt supplies include insurance services; rental of residential property; granting of credits and credit guarantees; transactions related to bank accounts; interest; investment fund management; winnings from special games of chance in casinos, slot machine clubs, and other forms of gambling; supplies of domestic and foreign legal tender, securities, and shares; and supply of land (other than construction land).
Other exemptions, for example, include the following:
- Services and deliveries of goods by public institutions in the field of culture, such as museums, galleries, archives, libraries, theatres, religious communities and institutions, primary and secondary schools, universities, and student catering and boarding institutions.
- Postal services.
- Public radio and television activities.
- Medical services, including services conducted by doctors, dentists, nurses, physiotherapists, and biochemistry laboratories engaged in private practices; services of medical care performed in healthcare institutions; and services performed by social care institutions and child and adolescent care institutions.
- Services closely linked to sports.
- Supplies (transfers) of real estate (land, buildings, parts of buildings, housing premises, and other structures), with the exception of 'newly built buildings'. 'Newly built buildings' subject to VAT are buildings that have not been used for more than two years. Buildings not subject to VAT are subject to real estate transfer tax (RETT).
Croatian customs legislation and policies have been fully harmonised with the EU legislation. Goods imported from non-EU countries are subject to import customs clearance, and goods exported from the EU customs territory must be declared for export customs clearance. For performance of customs clearance procedures, each person has to be identified by an Economic Operator Registration and Identification (EORI) number, which is issued by the Customs office upon request.
There are a number of excise duties and special taxes levied on specific products. They are levied at a fixed amount and are payable by the producer or importer. VAT is applied first, after which the fixed amounts are added.
|Product||Excise tax rate|
|Oil derivatives||From HRK 423 to HRK 4,500 per 1,000 l/kg|
|Natural gas||HRK 4.05 per MWh for business purpose heating|
|HRK 8.10 per MWh for non-business purpose heating|
|Cole and coke||HRK 2.30 per Gj|
|Electricity||HRK 3.75 per MWh for business use|
|HRK 7.5 per MWh for non-business use|
|Cigarettes||Specific excise duty: HRK 335 per 1,000 pieces|
|Proportional excise duty: 34% of the retail price|
|But not less than HRK 755 per 1,000 pieces|
|Fine-cut tobacco||HRK 600 per kg|
|Other tobacco for smoking||HRK 600 per kg|
|Beer||HRK 40 per 1 volume percentage alcohol in 1 hl (special excise duties are paid by small independent breweries based on yearly production)|
|At 15% alcohol or higher||HRK 800 per hl|
|Less than 15% alcohol||HRK 500 per hl|
|Ethyl alcohol||HRK 5,300 per hl (HRK 2,650 per hl for small distilleries)|
|Coffee and soft drinks:|
|Roasted coffee||HRK 6 per kg|
|Coffee extracts, essence, and concentrates||HRK 20 per kg|
|Roasted coffee contained in finished products||HRK 6 per kg of coffee net mass|
|Coffee extracts, essence, and concentrates in finished products||HRK 20 per kg of coffee net mass|
|Sugar or sweetener added water, aromatised water (mineral water and fruit juices exempt)||HRK 40 per hl|
|Other drinks with max 1.2% alcohol (mixture of beer and soft drinks with more than 0.5% alcohol exempt)||HRK 40 per hl|
|Syrups and concentrates for soft drinks preparation||HRK 240 per hl|
|Powders and granules for soft drinks preparation||HRK 400 per 100 kg|
|Motor vehicles on which special tax was not already paid for the use on public roads:|
|Motor vehicles on diesel fuel||Determined on the basis of an average carbon dioxide (CO2) emissions depending on the type of fuel used by the vehicle for propulsion and the sale price of the motor vehicle|
|Motor vehicles on petrol, liquefied petroleum gas, natural gas, and other fuels except diesel fuel|
|Motorcycles, mopeds, bicycles and 'ATV' vehicles||Determined on the basis of calculation of the volume of the engine in cm3 multiplied by the engine volume ratio increased by 5, 10, or 15 depending on the level of emission of exhaust gases (EURO III, EURO II, EURO I)|
|Fully electric vehicles, motor vehicles with 0 g/km CO2, and motor vehicles produced 30 years ago and older ('olditimers')||Not subject to taxation|
|Producers, dealers, and dealers of used motor vehicles||Obligated to register in the registry of motor vehicle producers and dealers eight days before the beginning of the activities. Also, they are obligated to deposit a security instrument for the payment of special taxes.|
|Acquisition of used motor vehicles on which special tax on motor vehicles was paid, which applies if supply was not subject to VAT, gift, or inheritance tax||Administrative fee payable in HRK/kW, depending on the age of the used motor vehicle according to the special legislation|
|Liability and comprehensive road vehicle insurance premiums||15% of the contractual amount for obligatory motor vehicle insurance premium|
|10% of the contractual amount for comprehensive motor vehicle insurance premium|
There are no property taxes in Croatia.
Real estate transfer tax (RETT)
The acquisition of real estate is subject to taxation. ‘Real estate’ generally includes agricultural, construction, and other land, as well as residential, commercial, and other buildings. Transactions include the sale, exchange, and any other means of acquiring real estate for consideration. The acquisition of real estate on which the VAT is paid is not subject to the RETT.
As of 1 January 2019, tax is charged at 3% (previously 4%) of the market value of the real estate on the contract date and is paid by the acquirer.
There are no stamp taxation provisions in Croatia.
Employers are required to withhold a percentage of their employees’ salaries and benefits as a payment on account of their PIT. The rate of withholding is a progressive rate between 24% and 36%, depending on the employee’s personal circumstances and income.
Social security contributions
The Croatian social security system covers pension, health, and unemployment insurance. In case of dependently employed individuals, social security charges are borne by the employee and employer.
Employers make social contributions at the rate of 16.5% for health insurance.
The basis for payment of employer’s social security contributions is gross salary, which is not capped.
Employers have certain obligations with respect to disabled individuals.
Apart from some exceptions, employers employing 20 or more employees are obligated to employ a prescribed number of disabled individuals. The number depends on the total number of employees and it cannot be lower than 3% of the total number of employees.
Employers who do not comply with prescribed requirements are obligated to pay a monthly fee amounting to 30% of minimal salary (minimal salary for 2020 amounts to HRK 4,062.51) for each disabled individual that employer was obligated to employ.
Chamber of Commerce contribution
Employers pay a mandatory contribution to the Croatian Chamber of Commerce. The amount varies between HRK 42 and HRK 3,973, depending on company size.