Guide to VAT rates for freelancer in Croatia

Do you work as a freelancer and have one client or multiple 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 VAT 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 solopreneur in Croatia. 

VAT rates 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.

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.

When do you have to register for VAT as a freelancer 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:

• Buying and selling goods locally (domestic supplies)
• Organising events with paid admission
• Distance Selling VAT registration thresholds apply to consumer e-commerce sales.
• Acquiring goods from another EU nation in Croatia (Intra-community acquisitions). 
• Holding goods at a Croatian consignment facility for more than three months
• Importing goods into Croatia from outside the European Union.
  
  

How to register for VAT in Croatia as a freelancer

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:

1. a)    Application for registration for value-added tax purposes (P-PDV Form) and
2. b)    Application for the assignment of personal identification number (OIB).

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. 

Financial Obligations of VAT Registered Freelancers in Croatia

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:

• Issuing invoices with the disclosure details outlined in the Croatian VAT Act.
• Electronic invoices with proper signature, authenticity, and agreement by the recipient.
• Maintenance of accounts and records, which must be held for at least ten years.
• Correct invoicing of customers for goods or services in accordance with the Croatian time of supply VAT rules.
• Processing of credit notes and other corrections.
• Use of approved foreign currency rates.
  
  

Your invoices as a freelancer in Croatia must include this listed information:

• Date and place of issue of the invoice
• Unique, sequential invoice number
• Full name, address, VAT number of the supplier as well as the customer
• Date of supply, completion of services, and prepayment (if any)
• Description/nature of the goods or services
• Per VAT rate price per unit (excluding VAT) 
• Per VAT rate, any discounts or rebates, if not included in the unit price 
• Per VAT rate taxable amount or exemption 
• VAT rate(s) applied and total VAT amount
• Total amount payable (excluding VAT)

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. 

How to handle VAT aspects of freelancing with ease

Now you know the registration steps and all VAT obligations when working as a freelancer in Croatia. Does that sound like a lot of work for you? No worries, we understand your pains of dealing with all these mundane and repetitive tasks when working all by yourself. With Xolo Go, you can simply invoice your clients without a registered company and leave all the VAT calculations and adding to us in the background. 

Send your first invoice within 10 minutes as a freelancer in Croatia and let us take care of boring VAT calculations!