News from the package of tax changes for 2025 – Value Added Tax (VAT)
News from the package of tax changes for 2025 – Value Added Tax (VAT)
The new threshold for entering the VAT system has been increased from €40,000.00 to €60,000.00 and is in effect as early as December 2024 (entry from 01.01.2025). Likewise, a request to exit the VAT system from 01.01.2025 can be submitted by those taxpayers who by the end of December 2024 did not have supplies (which enter the threshold) exceeding €60,000.00.
New rule – supplies that do NOT fall into the threshold of €60,000.00 for the obligation to register in the VAT system:
- Services taxable according to the fundamental principle (Art. 17th paragraph 1 of the VAT Act) (reverse charge).
- Exception services (Art. 19. – 26. of the VAT Act):
Services for which the place of taxation is not in the Republic of Croatia (according to special rules), e.g.:
real estate, cultural, artistic, educational and sports services, transport, telecommunications and electronic communications services.
- Supplies of tangible and intangible economic goods, e.g. supplies of fixed assets (e.g. machinery, vehicles) or sale of rights and intellectual property, etc.
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Amendment to Article 21 of the VAT Act – new rules related to services that include access to events, including virtual presence:
Virtual events – access services to cultural, artistic, sports, scientific, educational, entertainment and similar events, such as exhibitions, fairs and ancillary services to these events.
Thus, if the presence is virtual, such services are no longer taxed according to the place where the actual event takes place, but:
- If the service is provided to a B2B taxpayer – Article 17, paragraph 1 of the Act shall apply. of the VAT Act (reverse charge),
- for services provided to non-taxable persons (B2C)
The place of performance of the service is the place where a person who is not a taxpayer has his registered office, domicile or habitual residence
When a provider exceeds the threshold laid down in the Member State of the recipient of the service, it must:
- Register in that Member State for VAT or
- Use the special OSS (One Stop Shop) procedure to calculate and report VAT for that member.
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Amendment to Article 38 of the VAT Act
VAT at a reduced rate of 13% is paid on the public service of municipal waste collection provided by the public service provider in accordance with a special regulation governing waste management.
Therefore, the reduced rate applies only if such services are provided by the public service provider.
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New provisions for “small taxpayers”
A “small taxpayer” from the Republic of Croatia can be a small taxpayers both in the Republic of Croatia and in any other EU member state and vice versa, a small taxpayers from the EU can be a small taxpayers in the Republic of Croatia if certain conditions are met:
- annual turnover in the Union does not exceed €100,000.00
- the value of deliveries of goods and services in the country did not exceed €60,000.00
Also, from January 1, 2025, new rules for EU taxpayers are in force in the Republic of Croatia.
Therefore, a taxpayer with a registered office, permanent residence or habitual residence in another EU Member State may exercise the right to VAT exemption in the Republic of Croatia if the following conditions are met:
- The annual turnover in the Union was not more than €100,000.00.
- The value of supplies of goods and services performed in the country (Croatia) did not exceed € 60,000.00.
Key news
- This right allows foreign taxpayers to be treated as “small taxpayers” in the Republic of Croatia.
- Previously, this option did not exist for taxpayers from other EU member states.
Additional notes
This provision is a possibility, not an obligation. Thus, EU taxpayers can still to:
- Register for VAT purposes in the Republic of Croatia even before reaching the threshold or
- Apply the special OSS (One Stop Shop) procedure.
Conditions for the application of the exemption
- Prior notification – “Small taxpayer” must submit a prior notification to the tax administration of the Member State of its registered office, residence or habitual residence.
- Individual Identification Number – upon notification, the taxpayer will receive an Individual Exemption Identification Number. The number will be assigned in the home Member State (country of establishment).
- In the Republic of Croatia – foreign “small taxpayers” will receive an individual identification number that includes OIB (Personal Identification Number) with the suffix EX (e.g., 12345678901EX).
- Invoicing – such foreign “small taxpayers” can issue simplified invoices for invoice amounts up to €100.00.
Furthermore, a foreign taxpayer, who is qualified as a “small taxpayer” in the Republic of Croatia, must meet the following obligations for each calendar quarter according to the home Member State (registered office, permanent residence or habitual residence):
Quarterly reporting – mandatory information in the quarterly report
- Total value of deliveries in the Member State of establishment
- The report must contain the total value of supplies of goods and services made within the home Member State during the quarter.
- If there were no deliveries, the amount of “0” shall be indicated.
- Total value of deliveries in other EU Member States
- The total value of supplies of goods and services performed in every other Member State during the quarter, including the Republic of Croatia, is indicated.
- If there were no deliveries, the amount of “0” shall be indicated.
Deadline for submission of reports
- Deadline for submission: One month after the end of the quarter.
- Example: For deliveries made in the period from January 1 to March 31, the deadline for submitting the report is April 30.
Remark
- There is no obligation to submit a report in the Republic of Croatia, but all information is submitted to the Member State of headquarters.
- These obligations are in line with EU rules on monitoring and reporting of small taxpayers operating in other member states.
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