Croatia Proposes Mandatory Electronic Invoicing as of Jan 1, 2026 – DRAFT law in English

Croatia Proposes Mandatory Electronic Invoicing as of Jan 1, 2026

Croatia proposes mandatory electronic invoicing for companies starting in 2026.
Companies within the value-added-tax system must issue electronic invoices from January 1, 2026.
Taxpayers outside the system, local and regional governments, and state-funded entities have until 2027 to issue electronic invoices.
Both issuers and recipients must report tax data to the tax administration for processing and verification.

Source: news.bloomberglaw.com

Expansion of Fiscalization Scope: The proposed law broadens the existing fiscalization framework by mandating the fiscalization of all invoices related to final consumption (B2C), as well as the issuance and fiscalization of electronic invoices (eInvoices) in business transactions between taxpayers (B2B) and between taxpayers and public bodies (B2G). This transition aims to enhance transparency and efficiency in tax monitoring.
Implementation of eInvoices: A significant feature of the proposal is the introduction of mandatory eInvoices starting January 1, 2026, for taxpayers in the VAT system, with a complete transition from paper invoices to eInvoices by January 1, 2027. The law outlines the procedures for issuing, receiving, and fiscalizing eInvoices, enhancing real-time data reporting to the Tax Administration to combat VAT fraud and streamline tax compliance.
Administrative Benefits and Cost Savings: The law is expected to reduce administrative burdens significantly by eliminating various tax returns and paperwork associated with traditional invoicing, leading to estimated savings of over EUR 120 million for businesses. Additionally, the law promotes the use of a free application for small taxpayers to facilitate the transition to digital invoicing, encouraging a more efficient and environmentally friendly approach to business operations.

Constitutional Basis

The law is based on Article 2, paragraph 4, subparagraph 1 of the Constitution of the Republic of Croatia.

Assessment of the Situation

The Act on Fiscalization in Cash Transactions has been in effect since January 1, 2013, and has undergone several amendments to improve its implementation.
Fiscalization involves measures to control cash transactions and requires certain entities to comply with these measures.
Amendments have introduced obligations for small taxpayers, exemptions for specific transactions, and requirements for software solutions used in fiscalization.

Issues to be Regulated

The new law aims to regulate fiscalization comprehensively across all business segments (B2C, B2B, B2G).
It includes provisions for issuing and fiscalizing eInvoices, establishing a unified legal framework, and ensuring compliance with EU standards.

Consequences of Adopting the Law

The law will enhance control over cash transactions and improve data collection for macroeconomic analysis.
It will introduce mandatory eInvoicing and fiscalization for various business segments, aiming to reduce VAT fraud and improve fiscal policy planning.
The implementation will involve creating a system for reporting non-cash invoices, establishing a free application for small taxpayers, and reducing administrative burdens.

Implementation Timeline

The law will come into effect on September 1, 2025, with certain provisions related to eInvoicing and fiscalization becoming mandatory from January 1, 2026, and January 1, 2027.

Key Provisions

Fiscalization of Invoices: All invoices in final consumption must be fiscalized, including those issued through self-service devices.
eInvoicing: Mandatory issuance and receipt of eInvoices for domestic transactions, with specific exemptions.
Reporting System: Introduction of an eReporting system to submit data on transactions that cannot be issued as eInvoices.
Compliance and Security: Requirements for information intermediaries to ensure data security and compliance with cybersecurity regulations.

Administrative Relief

The law aims to reduce the number of tax forms and simplify tax procedures, resulting in significant administrative savings for businesses.

By-Laws and Regulations

The Minister of Finance will issue by-laws to detail the implementation of various provisions within 90 days of the law’s entry into force.

Timeline of Key Changes and Implementation Dates

2024

January 1, 2024:
- Amendments to the Act on Fiscalization in Cash Transactions (Official Gazette, No. 114/23) come into effect, regulating the status of tips, abolishing SMS invoice checks, and harmonizing with euro introduction provisions.

2025

September 1, 2025:
- Fiscalization of Invoices in Final Consumption: Implementation of fiscalization for all taxpayers in the B2C segment, regardless of payment method.
- Submission of Business Premises Data: Abolition of data submission on premises via the Data Registration in the Fiscalization System form.
- Cheque Payment Method: Abolition of the possibility of submitting cheque information as a payment method.
- Testing Systems: eInvoice payers and information intermediaries can begin testing their systems for eInvoice exchange, fiscalization, and eReporting.
- Information Intermediaries: Begin preparatory actions for compliance testing and submission of identifiers in the AMS.
- Reporting Requirements: Amendments to the General Tax Act and VAT Act to align with the new reporting system.

2026

January 1, 2026:
- Mandatory Fiscalization: Fiscalization procedures apply to all B2C transactions and specific sales activities (e.g., retail sale of daily newspapers, tobacco, etc.).
- Mandatory eInvoicing:
  - Issuance and receipt of eInvoices required for taxpayers in the VAT system.
  - Mandatory receipt of eInvoices for companies, craftsmen, liberal professions, state budget entities, local and regional self-government units, and budgetary/extra-budgetary users.
- Tax Return Simplification: Reduction or abolition of various tax forms, including DON-H, I-RA, VAT-F, PPO, U-RA, OPZ-STAT, and others.
- eReporting System: Introduction of eReporting for transactions that cannot be issued as eInvoices, including reporting on the rejection of eInvoices and data on collections.
- FiskApplication: Launch of the FiskApplication for taxpayers to view fiscalized data, VAT returns, and invoice statuses.

2027

January 1, 2027:
- Mandatory eInvoicing Expansion:
  - Issuance of eInvoices required for all companies, craftsmen, liberal professions, state budget entities, local and regional self-government units, and budgetary/extra-budgetary users not in the VAT system.
- Full Application of eInvoicing: Complete transition from paper invoices to eInvoices.

Sources

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

E-invoicing