The Croatian government passed amendments to the VAT law, including the introduction of the EU’s ‘Quick Fixes’. In Croatia, the four VAT ‘Quick Fixes’ and other amendments will take effect as of 1 January 2021.
EU’s ‘Quick Fixes’
The main proposed amendment relates to the implementation of the EU temporary cross-border transaction simplifications known as the ‘Quick Fixes’. The ‘Quick Fixes’ aim to provide clarity, guidance and simplifications to VAT treatments that should apply when intra-community supplies of goods take place. These include:
- Simplification and harmonisation of rules regarding call-off stock;
- The customer’s VAT identification number becoming a substantive condition for exempting the intra-Community supply of goods;
- Simplification of chain transactions to enhance legal certainty by establishing uniform criteria; in addition to
- Harmonisation and simplification relating to documentary evidence as proof of an intra-Community transport of goods. This is for the purposes of applying the VAT exemption.
The enactment of this bill follows many other EU Member States in implementing the ‘Quick Fixes’. All Member States should have enacted this Directive into law by 1 January 2020.
Your business can prepare for the four VAT ‘Quick Fixes’ by joining our training session, sign up here.
Other Proposed Amendments
In addition, other changes to the VAT law proposed by the Croatian government include:
- A reduced VAT rate of 13% will apply to the preparing and serving of meals (including desserts) inside and outside a catering facility.
- The VAT cash accounting threshold will increase to HRK 7,5 million (currently, HRK 3 million).
- Implementation of an EC Directive to include the Italian municipality of Campione d’Italia and the Italian waters of Lake Lugano in the customs territory of the Union and in the territorial application of the Excise Directive; in addition to
- Other minor changes, such as the correction of the VAT liability in the case of a tax base change when the taxpayer to whom the goods or services have been supplied does not have his registered office, place of residence or habitual abode and is not registered for VAT purposes in Croatia.
Change in the Standard Rate of VAT
Businesses should also be aware that the planned change in the standard rate of VAT in Croatia, as first reported in our story back in January, has now been abolished. Therefore, the VAT rate will remain at 25%.
In Croatia, the four VAT ‘Quick Fixes’ will be implemented shortly. If any of the above changes affect your business, then please contact our VAT experts.