Croatia

Croatia – Fiscalisation 2.0 Despite 2022 being relatively muted with respect to e-invoicing developments in the country, Croatia has been significantly more vocal in its support for introducing Continuous Transaction Controls (CTCs) in 2023. CTCs serve as potent government measures which help to reduce VAT gaps, with the corollary of developing and automating wider fiscal procedures.  Kofax has been monitoring developments in respect of the Croatian government’s ‘Fiscalisation 2.0’ project. Our recent post confirms the main goals associated with the project.   To this effect, the government has recently issued an announcement regarding the initiative which can be accessed here (in Croatian only). Currently, the plan is very much in its infancy, but with significant developments expected over the coming months.  With a tentative time period of 2024 confirmed for the roll-out, Kofax will keenly follow project developments and consider Kofax’s role within the wider project. 

B2B e-invoicing -public consultation Last month, we announced Croatia’s intention to mandate B2B e-invoicing in the country. You can read more about their initial plans here.  Unsurprisingly, the Croatian government will be keen to collate public sentiment in respect of e-invoicing, where noise has previously not been as vociferous when compared to other neighbouring countries. To this effect, Croatia has launched a public consultation in respect of B2B e-invoicing in the country.   Croatia is a compliant territory for Tungsten Network and we are following progress in respect of the proposed B2B mandate in the country. 

Potential VAT reduction for heating-related supplies As Croatia steps up its support for a B2B e-invoicing mandate in 2025, it similarly looks to combat with other fiscal-related measures considering rising inflation that continues to grapple Europe.   As part of these fiscal reforms, the Croatian Parliament has accepted to consider a bill which serves as an emergency measure to extend the reduced VAT on heating-related supplies.  The reduced VAT rate of 5% was due to expire on 31 March 2023 but is now being touted for extension until 31 March 2024.   Croatia is a compliant territory for Tungsten and our portal supports all valid tax rates in the country.  

Croatia- B2B e-invoicing Building on the introduction of project ‘Fiscalisation 2.0’ last month, Croatia’s e-invoicing drive has just been sparked to life as the government announces plans for a nationwide B2B e-invoicing mandate. By means of some background, Croatia introduced B2G e-invoicing obligations in 2019.   The timing of the announcement is not coincidental. The VAT in the Digital Age (ViDA) proposal looks likely to have triggered countries to review their own e-invoicing practices as reporting obligations loom in January 2028, according to the current proposal.  Specific details of Croatia’s proposed e-invoicing are yet to be announced, but in all likelihood, this will be modelled largely on the Croatian government’s e-invoicing national platform, the e-Racun.   The mandate is expected to take effect from 1st January 2025, according to current timeframes. Currently, it appears that Croatia’s Ministry of Finance will include full transactional-level live submission of e-invoices, although specific details in respect of the e-invoicing solution have not yet been confirmed.  Tungsten is also probing mandates in France, Poland, Belgium and Spain, amongst others EU countries, which are expected to commence prior to January 2025. Croatia is, however, a compliant market for Tungsten and we are closely observing developments in respect of the Croatian mandate with a view as to how we can serve our Croatian market. Mindful of the ViDA backdrop, we expect Croatia’s e-invoicing model to be ViDA compliant and will keep you informed of the same.  

Fiscalization 2.0 – new system for cashless payments Croatia’s e-invoicing drive has, to some extent, been overshadowed by its neighbouring countries, where plans for mandate implementations are developing with some speed. However, this month has marked a significant step in the digitisation of Croatia’s fiscal procedures, specifically with respect to e-reporting.    The Croatian Tax Administration launched a new project referred to as Fiscalization 2.0, which will focus on the implementation of an e-reporting system for cashless transactions with an integrated e-Archive and advanced online bookkeeping system. This project will potentially impact the current e-invoicing, e-archiving and e-bookkeeping obligations in the country.   For more information on the Fiscalization 2.0 project, you can refer to the publication available on the website of the Minister of Finance:    https://www.porezna-uprava.hr/HR_projekti/Stranice/Fiskalizacija_2.0.aspx   

Local currency change Croatia’s local currency is transitioning from the Croatian Kuna to the Euro, effective 1 January 2023.   Tungsten’s Product and Development teams have facilitated the option to utilise the Euro currency from 1 January 2023, while also retaining the ability to select the Kuna currency when required (for example, for ‘late’ invoices, or debit and credit notes where the original invoice dated is dated prior to 1 January 2023).   Tungsten is communicating with our Croatian suppliers and buyers regarding the change.  

VAT reduction on specific supplies Croatia is following the overwhelming trend both in Europe and beyond to reduce VAT rates on specific supplies. These aim to lower the tax burden on Croat citizens – which is unsurprising given the current inflation, culminating in rising living costs. The Act on amendment of the Act on the Value Added Tax was published in the official Gazette, No. 39/2022 on 30 March 2022. The amendments provide a detailed oversight of the main changes outlined by the Croatian government; these can be summarised as follows:

• Reduced rate of 5% applicable to cinema tickets, certain foodstuffs, fertilisers and pesticides
• Extension of the 13% VAT rate for natural gas from CN 2711 11 00 and CN 2711 21 00 and heating from heat stations, including fees related to these deliveries, regardless of who the delivery is made to.

Tungsten Network supports all valid VAT tax rates in Croatia.