E-Commerce & B2C Services in Croatia
In Croatia the VAT related place of supply in regard to services differentiates between services supplied to B2B (business to business) taxable entities and B2C (Business to consumer).
In general, the services are considered to be performed where the supplier of the services is established or where this supplier has a fixed establishment which provides these services.
Read more about B2C services including digital services & E-Commerce in Croatia in our comprehensive guide.
B2C Services in Croatia
There are exceptions to the above generally used rules which switch the acknowledged taxation to the place of consumption of these services:
These rules include the following:
- If it involves short-term transportation hiring, then it is the place where the service is rendered to be of use by the customer.
- If it involves telecommunications, then it is the place where the consumer of the services is established with a permanent residence / address.
- For transportation of passengers the place of supply is the place where the transportation took place.
- For entertainment and cultural or sports events the place of supply is the place where the events took place.
- Catering and restaurant services are deemed to be supplied where they are performed.
- If the place of supply of the services is connected to an immovable property then the services are considered to be supplied at the location of the immovable property.
Selling in Croatia?
Digital services in Croatia
A digital product refers to any product that is stored, transported, and utilized in electronic format. It includes items or services that are obtained by customers through means such as email, Internet downloads, or website login. To sell digital products in any EU member state, including Croatia, registration with the One-Stop Shop (OSS) is mandatory.
The VAT One Stop Shop (OSS) is an optional arrangement that allows you to account for VAT in one EU country. You may be eligible if you provide cross-border telecommunications, broadcasting, or digital services to a non-taxable person.
Among the OSS services are:
- website hosting.
- supply of software.
- access to databases.
- downloading apps or music.
- online gaming.
- distance teaching.
- accommodation services carried out by non-established persons.
- Admission to cultural, artistic, sporting, scientific, educational, entertainment events, fairs & exhibitions.
The OSS eliminates the need to register with tax authorities in each EU country where you sell. Instead, you can register for VAT, file VAT returns, and make payments in a single location under the OSS framework. You must apply the rules of the OSS scheme to all your clients in all the EU nations to which you provide services or products.
Currently, there are two schemes in operation under OSS:
- The Union Scheme – which is available to enterprises that have been formed in the EU or that have at least one branch in an EU country.
- The Non-union Scheme – which is Intended for enterprises that have not been created in the EU and do not have any branches.
Download the Croatian VAT Guide
New E-commerce rules in the EU
A transaction is only subject to VAT in Croatia if the place of supply is in Croatia. According to Article 12 of the VAT Act, if goods are transported within the country, the place of supply is where the goods are located at the time of supply. For cross-border transactions, Article 13 of the VAT Act sets the place of supply as the location of the goods at the time of dispatch.
The EU VAT reform, effective from July 1, 2021, affects e-commerce businesses that engage in cross-border transactions within the EU or import goods from outside the EU. The new VAT scheme, called the One-Stop-Shop (OSS), allows businesses to register for VAT and file quarterly VAT returns in a single EU country. Another concept, the Import One-Stop-Shop (IOSS), has been created for imported goods.
For VAT on some digital products in the EU, the One-Stop-Shop (OSS) model extends the previous Mini One-Stop Shop (MOSS) scheme. Both schemes aim to simplify tax compliance and reduce the administrative load on businesses while increasing tax collection. The OSS scheme allows you to register for VAT and file your VAT returns within a single nation. If you have consumers in many countries, you no longer need to keep track of varied distance selling thresholds in each country. The annual EU distance selling threshold was EUR 35,000 for Croatia. Instead, an EU-wide EUR 10.000 threshold will apply.
Last Updated: 29/12/2023
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
