Croatia: Flea Market Exchanges Exempt from VAT
On December 28, 2015, the Croatian tax authority (Porezna Uprava) published a circular discussing the application of VAT on the exchanges of personal belongings at a flea market. The tax authority reiterated that VAT is levied on the supply of goods and provision of services in Croatia for a fee by a taxable person acting as such, as well as the acquisition and import of goods within the European Union. A taxable person is defined as any person who independently carries our economic activity whatever the purpose or result of the activity. Economic activity is considered to be the exploitation of tangible or intangible property for the purpose of permanent realization of revenues.
Special rules, however, apply to small taxpayers. A “small taxpayer” is defined as a legal entity based or permanently established in Croatia and whose supply of goods is less than 230,000.00 HRK in a given year. A “small taxpayer” is exempt from VAT on supplies of goods or services, but cannot deduct input VAT.
After considering the purpose and application of VAT, the tax authority concluded that the exchange of used personal belongings in a public flea market is not the type of commercial activity intended to fall under the purview of the national VAT Act, and is therefore exempt.
