Do you work as a freelancer and have clients in Croatia? Then you need to be aware of the VAT rates and guidelines applicable in Croatia. The standard VAT rate in Croatia is 25%, with reduced VAT rates levied on some goods and services. In this guide, we'll go through the A-Z of Croatian VAT, starting with the various VAT rates applied to different services, and ending with your financial obligations as a sole proprietor in Croatia.
VAT is known as porez na dodanu vrijednost, or PDV, in Croatia. There are four different VAT rates, and freelancers must charge the amount that applies to their products and services.
Type |
Rate |
Goods or services |
Standard |
25% |
Applicable to all goods and services that do not fall under the reduced, zero, or exempt category. |
Reduced |
13% |
Applicable to some fresh food products, commercial magazines and newspapers, accommodation services, communal services, concert tickets, copyright services for writers and artists, etc. |
Reduced |
5% |
Applicable to all types of bread and rolls, all kinds of milk, medicines, cinema tickets, science magazines, medical products that are surgically embedded in the human body, professional books, daily newspapers except for ones that publish advertisements, etc |
Zero |
0% |
Applicable to intra-community and international transport (excluding road and rail) |
Although there are no charges on zero rated products, you should record sales of goods and services and create a report based on your returns.
Here is an expansive list of goods and services that fall under each VAT rate and supplies exempt from VAT in Croatia.
For resident freelancers in Croatia, the threshold is around HRK 230,000 (€30,000). You must register for VAT once your annual sales turnover reaches or exceeds this amount to avoid penalties.
The VAT registration threshold for EU-based non-resident freelancers selling their products to Croatian clients over the internet was HRK 270,000 (EUR 36,000) per year. However, the EU updated their laws on July 1, 2021: Instead of country-specific VAT thresholds, an EU-wide distance selling threshold of €10,000 has been established. You must be registered for VAT using the Mini One Stop Shop (VAT MOSS) to be subject to the global EU VAT threshold.
However, these figures are subject to change, so you should frequently check the current VAT thresholds.
Expat freelancers must register as non-resident traders for Croatian VAT in the following situations:
Taxable individuals from the EU Member States who provide products and services within Croatia must apply for a VAT ID number from the Tax Administration website. To obtain a VAT ID number, you must submit forms:
The forms are available in English and German on the Tax Administration website.
Expat freelancers can follow this guide from the official Croatian Tax Administration website to check their eligibility, required documents and process for VAT registration.
Alternatively, you can also register using the aforementioned Mini One-Stop Shop, an EU-wide tax system that allows you to consolidate all of your EU VAT in one single tax return. This scheme is optional but convenient and beneficial if you have customers in multiple countries within the EU, including Croatia. MOSS allows you to avoid registering in each Member State of consumption. To learn more, click here.
Lastly, you can hire an accountant (or agency) to handle your VAT returns and dealings with the Croatian Tax Administration. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.
After receiving your VAT number, you can begin trading and charging Croatian VAT. You must adhere to Croatian VAT regulations and file timely returns. You must also comply with the rest of the local rules, including:
Your invoices in Croatia must include:
Croatian VAT invoices must be issued at the time as the supply of the taxable service and should be stored for at least ten years. These records can be maintained electronically, on paper, or using a software program. Moreover, your records must be precise, legible, complete, and easy to understand.
Does that sound overwhelming? Xolo can help! We automatically calculate VAT and generate, send, and store all your invoices digitally, so you won’t have to worry about missing any steps or misplacing your documents over the next decade.
The tax registration process can be tricky at times, but we hope this guide has helped clear your doubts! If you’re still confused about the different schemes and numbers and paperwork, Xolo offers a range of solutions that handle all the hassle while you focus on your core competencies.
With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC.
Simply put, we do the hefty work for you so that you can enjoy the freedom of freelancing. So connect with us immediately, and we’ll help you get your one-person business up and running in Croatia in no time!