Croatia make changes to VAT legislation from 1 January 2019

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From 1 January 2019, a number of important changes were made to the Croatian (“HR”) VAT law.  These included:

  • A change in the Value Added Tax (VAT) treatment of vouchers. This affects retailers with promotional or loyalty programs and follows the EU Voucher Directive changes which harmonised the VAT treatment of vouchers across the EU during January 2019. Our previous article here gives further explanation of these changes.
  • The removal of the extended reverse charge for VAT registered foreign taxable persons. Previously this allowed VAT registered non-established businesses to avoid having to charge VAT on domestic supplies to their HR VAT registered customers, instead the customer would use a reverse charge mechanism to account for the VAT on the transactions in their own VAT reporting.
  • The VAT rate applicable on supplies of e-books, medicines and certain medical products will be reduced to the 5% VAT rate.
  • The VAT rate applicable on supplies of fresh meat, fish, fruits, eggs and vegetables will be reduced to the 13% VAT rate.
  • The standard VAT rate will be reduced from 25% to 24% from 1 January 2020.