- Alignment with EU Directives: The Draft Bill proposes several amendments to the existing VAT Act to align national legislation with EU directives and improve VAT administration efficiency. These changes aim to enhance the functioning of the VAT system and reduce administrative burdens for small enterprises and international businesses.
- Public Consultation: The proposed amendments are available for public consultation through e-Građani until 24 October 2024. Stakeholders, including businesses and tax professionals, are encouraged to provide feedback on the draft bill.
- Special Scheme for Small Enterprises: The amendments will transpose the EU Directive 2020/285 into national law, introducing a special VAT scheme for small enterprises. This scheme simplifies VAT registration and reporting, reducing administrative burdens and aligning eligibility criteria, including the annual turnover threshold, with EU provisions.
- Place of Supply for Internet Services: The amendments clarify the place of supply for services transmitted over the internet and provided to non-taxable persons (end consumers). This change ensures VAT is applied in the consumer’s jurisdiction, improving compliance for businesses offering digital services.
- Additional Key Changes:
- Increase of VAT Registration Threshold: The mandatory VAT registration threshold will rise from EUR 40,000 to EUR 50,000 in annual turnover, reducing the administrative burden on smaller businesses.
- Abolition of Reciprocity Requirement: The requirement for VAT refunds to non-EU businesses will be abolished, allowing them to claim refunds on the same terms as EU businesses, facilitating cross-border trade.
- Input VAT Deduction: Businesses will be allowed to deduct input VAT based on decisions by the Croatian Tax Administration, streamlining VAT recovery procedures and improving cash flow.
- The final version of the bill will incorporate feedback from the public consultation and will be submitted for parliamentary approval.
Source Taxbackinternational
