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VAT on Digital & Electronic Services in Croatia

Country
Croatia
Last Updated
August 21, 2023
More on Croatia Indirect Tax on Digital Services
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VAT Rates & Compliance for Digital Services in Croatia

Are digital services taxable?

Yes

VAT rate

Typically 25%

Digital reporting requirements

No

Digital services in the European Union(EU) are often referred to as Electronically Supplied Services (ESS). Croatia applies the harmonized EU VAT rules for ESS.

  • For B2B supplies of such services, the general place of supply rule for services has to be taken into consideration.
  • For B2C supplies, the EU ESS rules should apply to foreign companies selling to Croatian consumers (B2C).

Under the EU’s B2C ESS rules, until the sales value reaches EUR 10,000 (including distance sales of goods), the seller can charge VAT where it is resident. Once the sales exceed the threshold, the seller should register for VAT in Croatia, or it can choose to account for the VAT under the EU’s One Stop Shop (OSS) regime.

VAT Rate: 25% VAT rate is typically applied to the sale of affected Electronically Supplied Services (ESS).

Croatia Indirect Tax on Digital Services Overview

Electronically Supplied Services (ESS) in Scope

Electronically Supplied Services include services that are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology.

The following are examples of Electronically Supplied Services:

  • Website supply, web-hosting, distance maintenance of programs and equipment
  • Supply of software and updating thereof
  • Supply of images, text, and information and making available databases
  • Supply of music, films, and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific, and entertainment broadcasts and events
  • Supply of distance teaching

Communication via email between the service provider and its customer does not qualify as ESS.

Determining the Location of the Croatian Consumer

The place of supply of the Electronically Supplied Services from a business to a customer (B2C) is where the customer has its registered office, residence, or habitual residence.

  • If telecommunications, broadcasting & electronic services (TBE) services are received at a specific location (e.g., WLAN hotspots, Internet cafés, etc.), the recipient is considered to be at that location.
  • If services are received via a landline connection, the recipient is considered to be at the landline location.
  • If services are received via mobile networks, the country code of the SIM card determines the location.
  • If reception of services requires a decoder, program, or satellite card (e.g., for broadcasting services), the recipient’s location is where the device or card is located. If this place is unknown, it is at the address to which the program or satellite card was sent.
  • In all other cases, two non-contradictory pieces of evidence determine the recipient’s location, in particular:
    • the billing address of the customer
    • the Internet Protocol (IP) address of the device used by the customer or any method of geolocation
    • bank details such as the location of the bank account used for payment or the billing address of the customer held by that bank
    • the Mobile Country Code (MCC) of the International Mobile Subscriber Identity (IMSI) stored on the Subscriber Identity Module (SIM) card used by the customer
    • the location of the customer’s fixed landline through which the service is supplied to him
    • other commercially relevant information.

VAT Registration for Foreign Companies

Foreign companies can avoid VAT registration in Croatia by using OSS after exceeding the registration threshold. The OSS simplifies the declaration of B2C sales of goods and services in the EU. It allows businesses to register electronically in one Member State and file a single VAT return for all eligible sales of goods and services across all Member States where the taxpayer has an obligation to report and remit.

  • VAT registration threshold for intra-EU distance selling of goods and B2C telecommunications, broadcasting & electronic services (TBE): EUR 10,000 (net) per calendar year
  • VAT registration threshold for non-resident, non-EU based suppliers of Electronically Supplied Services (ESS): No registration threshold
  • Fiscal representatives: Mandatory only for non-EU established businesses
  • Foreign companies can avoid VAT registration in Croatia by using OSS.

VAT Returns and payment of taxes

VAT returns for non-residents

If registered, businesses should collect and remit taxes to the Croatian Tax Authority using VAT form.

Croatia does not provide simplified returns for non-resident companies. Instead, they can use the EU OSS return to remit taxes via another EU Member State and avoid VAT registration in Croatia.

VAT Return Name OSS
Filing Frequency Quarterly
Annual Return No
Filing Deadline Q1: 30 April, Q2: 31 July, Q3: 31 October, Q4: 31 January
Payment Deadline Same as the filing deadline
Payment Currency Euro in general. However, Member States who have not adopted the euro may require payment in their national currencies.
Language Croatian or English
Fiscal Representative Non-EU established businesses may be required to appoint a fiscal representative
Input Tax Recovery Not allowed in the OSS return. VAT should be deducted via the domestic VAT returns or by way of using the special scheme for foreign VAT recovery.
Record Storage 10 years; location can be chosen by the taxpayer

Digital Reporting Requirements for Cross-Border Digital Services

There are no digital reporting requirements for cross-border digital services in Croatia.

Disclaimer on Tax Advice

Fonoa does not provide professional tax opinions or tax management advice specific to the facts and circumstances of your business and that your use of the Specification, Site, and In addition, due to rapidly changing tax rates and regulations that require interpretation by your qualified tax professionals, you bear full responsibility to determine the applicability of the output generated by the Specification and Services and to confirm its accuracy. No professional tax opinion and advice. Fonoa does not provide professional tax opinions or tax management advice specific to the facts and circumstances of your business and that your use of the Specification, Site, and In addition, due to rapidly changing tax rates and regulations that require interpretation by your qualified tax professionals, you bear full responsibility to determine the applicability of the output generated by the Specification and Services and to confirm its accuracy.

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