Pdv (Value Added Tax) in Croatia

When moving from abroad to Croatia can be a difficult task if you do not know the VAT charges; thus, you may end up spending more than you had budgeted. Because of that reason, you need to understand the different VAT rates you will find. Other countries have different rates. This article will help you understand the VAT rate policies that govern Croatia.

During various stages of the supply chain, there is an indirect type of consumption tax placed on the total amount of goods or services known as Value added tax (VAT) or locally termed as Perez na dodanu vrijednost (PDV). Distribution, production, supply, wholesale and other phases that goods or services pass through to increase the product’s Value are some of the separate legal entities in the supply chain.

Businesses with a registered VAT ID and are involved in the supply chain generally reclaim the VAT. It is locally known as Porez na dodanu vrijednost identifikacijski broj (PDV-ID). The consumption tax is paid by the end consumer of the supply chain.

VAT is used as a significant source of revenue by governments worldwide. Heavy penalties may be charged due to failure to pay and report VAT.

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‍PDV rates in Croatia‍

The different payment rates and VAT categories that are valid as from 2022 are discussed below. You will find the complete PDV law here.

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Zero rate (0%)‍

There is no specific 0% VAT rate on products and services due to some of the laid down “exemptions” in the VAT directives, including aircraft and sea vessels and related goods or services, intra-Community and export supplies of services and products, goods under customs control and services to products, domestic provisions of services and products relating to global trade, provisions of monetary gold to central banks and domestic provisions to international organizations.

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Reduced rate (5%)

1. A reduction from 13% takes place on commodities such as vegetables, eggs, fish and meat, fruits, baby food, palatable fats and oils, pesticides, fertilizers, and seedlings, as well as a reduction from 25% on margarine and butter
2. Except for yogurt, all substitutes for mothers’ milk like baby food receive a reduced rate, as well as all types of milk and bread
3. Books with artistic, educational, professional, scholarly, scientific, and cultural content get a reduced rate except for those with music and video content or used for advertising tenacities.
4. Mobility equipment, medical products, orthopedic and implant devices, as well as authorized medicines
5. Journals and scientific magazines
6. Daily magazines and Newspapers expect those comprising of music or video content as well as those that are used for advertising purposes
7. Tickets for cultural, sports, and other events

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13% VAT

1. Tampons and sanitary napkins
2. Heat source
3. Wood chips, briquettes, firewood, and pellets
4. Serving and preparation of foods in restaurants receive a reduced rate from the standard 25% rate since January 1, 2020
5. Commercial hospitalities such as accommodation, accommodation with breakfast, half or full board
6. Periodic and daily magazines and newspapers of publishers that have a regulation of magazines, newspapers and media where there is no duty of approval of the regulation of broadcasting conferring to a particular law (except those that comprise wholly of ads or are used primarily for marketing drives)
7. Baby diapers for small children and infants as well as child car seats
8. Public drainage system, public water supply, water delivery excluding bottle water and other packaging
9. Fees related to electric supplies and provisions of electrical energy to another provider of the final consumer
10. Collection of biodegradable municipal waste, mixed municipal waste, and separation of waste collected according to a distinct law done by the public service

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25 % PDV

Unless an exemption applies, all transactions carried out in Croatia are governed to this rate. Such exemptions include the zero rate, reduced rate, or explanation to treat the transaction outside the VAT scope.

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Recent VAT Changes

As of April 1, 2022:

1. Permanently reduction of heat supply VAT from the current 25% to 13%
2. A reduction of gas VAT from 25% to 5% effectively from April 1, 2022, to March 31, 2023, which will then retain 13% VAT
3. Wood chips, briquettes, firewood, and pellets VAT, reduced from the standard 25% to 13%
4. Reduction of food VAT to 5% from 25% for eggs, fish and meat, vegetables, fruit, baby food,  edible fats and oils, seedlings, pesticides, fertilizers as well as butter and margarine VAT reduced to 13% from 25%)
5. Tampons and sanitary napkins
6. Tickets for cultural, sports and other events VAT reduced from 25% and 13% to 5%
   
   

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How is VAT Charged?

A tax must be included by the company on each invoice or receipt provided. When purchasing any goods or services, you need to pay keen attention to this detail.

Any business with revenue below 300,000kn per year can voluntarily join the PDV system. They do not have to pay VAT if they do not want to. The VAT such businesses pay for their goods cannot be reimbursed, and they cannot collect any PDV.

You are obligated to stay for at least 3 years if your business voluntarily joins the VAT system. When your yearly revenue drops below 300,000kn per year, you can request to leave if your business has joined the system due to the revenue exceeding the threshold.

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VAT for Imports

You should not fear paying taxes if you carry a lot of items when moving from other countries such as Germany to Croatia. In accordance with customs regulations, you are entitled to exemption tax when relocating from abroad.

Properties not considered household items and vehicles may sometimes be entitled to a VAT. Some properties not considered household items include tobacco and tobacco products, alcohol and alcoholic beverages, machines, commercial means of transport, professional performing instruments, and tools, among others.

A rule of final destination is placed on the PDV system; thus, you do not have to pay VAT if you pass your goods through Croatia.

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Exceptions to Charging VAT In Croatia

You need to request a customer’s VAT ID if you are making any sales to clients in Croatia. End consumers may not have the PDV-ID, while most individuals or businesses carrying out economic activities will have one.

You need to ensure that the VAT ID provided is valid because some individuals may give a dummy VAT ID pretending to be a business to avoid the charges. Cross-border (international) supplies and intra-community (EU) VAT charges are exempted if your client has a valid VAT ID. The reverse charge mechanism covers the transaction. VAT filling on the transaction in case the reverse charge mechanism is obligated to the buyer.