The Croatian government has made the following clarifications and amendments to its VAT legislation in order to harmonise with current EU law:
- VAT exemption for sales of exports by a Croatian supplier to an EU-based buyer when the goods are dispatched directly from the Croatian supplier to a third country final buyer.
The Croatian Tax Administration has clarified that in the above scenario, provided the first buyer is listed on the export customs declaration as the “exporter”, the Croatian supplier has the right to apply a VAT exemption on the exported goods. For the first buyer to be eligible for “exporter” status, he is required to register for Croatian VAT before the transaction is performed. Businesses based outside the EU will have to appoint a tax representative for this purpose.
This clarification has been made in light of the recent change to the EU customs definition of “exporter”, effective from July 2018. What this means for VAT is that the exporter can be a different person from the supplier of the goods which are eligible for the zero-rating.
Consequently, care must be taken to provide individual Member States with their required documentation to ensure the correct VAT treatment is applied.
- Changes to procedure for submitting binding opinion requests from 5th May 2019
Before 5th May 2019, only a person with the requisite recognised legal powers was permitted to submit a request for a binding opinion. Now, this criterion has been relaxed to allow both resident and non-resident businesses as well as their tax advisers to file a claim.
Additionally, the time limit for deciding on a binding opinion has been increased to 90 days from 60 days, with an option for further extension increased to 45 days from 30 days.
- Introduction of mandatory e-invoicing to public bodies from 1st July 2019
As of 1stJuly 2019, Croatia’s legislation introducing mandatory electronic invoicing for all taxpayers performing business-to-government (B2G) transactions, came into effect. From this date, affected taxpayers, have to create and transmit electronic invoices automatically through the tax administration’s e-invoicing in public procurement platform e-Račun.
These changes were implemented to comply with the e-invoicing in public procurement Directive 2014/55/EU. The directive requires that as of 18th April 2019, central public authorities must be able to receive and process EU-standardised electronic invoices. All Member States had to transpose the rules into their national legislation by this date. The deadline can be extended for regional and local authorities, until 18th April 2020.
The European Commission considers these rules as a useful simplification measure since public authorities can receive and process standardised e-invoices from anywhere in the EU. This will make compliance simpler for businesses and foster cross-border trade.
Contact our VAT experts now and find out how these changes could affect your business.