Croatia has officially extended its reduced 5% VAT rate on key household energy products for an additional year, following the adoption of amendments to the Value Added Tax Act by the Croatian Parliament.

The amendment, published in the Official Gazette (Narodne novine No. 32/2026, Document 377) on 27 March 2026, prolongs the temporary VAT relief measures until 31 March 2027. The law was adopted by the Croatian Parliament on 27 March 2026 and promulgated by President Zoran Milanović on the same date.

Under the amendment, Article 38(4) and Article 38(5) of the VAT Act are revised by replacing the previous expiry date of 31 March 2026 with 31 March 2027.

The reduced 5% VAT rate continues to apply to:

• supplies of natural gas;

• heating delivered through thermal stations, including associated charges;

• firewood;

• wood pellets;

• briquettes; and

• wood chips.

The measure ensures continuity of VAT relief for households and businesses facing elevated energy costs and avoids the scheduled expiration of the reduced rate at the end of March 2026.

The law enters into force on 30 March 2026, providing a seamless transition before the beginning of the next VAT period on 1 April 2026.

The amendment follows a public consultation conducted earlier in 2026 and forms part of Croatia’s broader policy response to ongoing energy affordability concerns. Similar temporary VAT reductions on energy products have been implemented across several European Union Member States in recent years.

The legislation also requires the Minister of Finance to align the Croatian VAT Regulations with the amended law within 30 days of its entry into force.