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.
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).
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:
Communication via email between the service provider and its customer does not qualify as ESS.
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.
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.
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.
There are no digital reporting requirements for cross-border digital services in Croatia.
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.