Croatia has raised its VAT registration threshold from €40,000 to €60,000 and introduced new cross-border exemptions for small businesses, with the amendments taking effect January 1, 2025.

Under the new rules, businesses with annual turnover not exceeding €60,000 in Croatia and €100,000 across the EU will be eligible for VAT exemptions from other EU member states. Small Croatian businesses can apply for VAT exemptions in other EU states provided their annual EU turnover stays below €100,000 or the relevant threshold in the respective state.

The law also removes the VAT refund reciprocity condition for non-EU businesses, simplifying refund procedures for foreign companies. These changes align with EU Directive 2020/285, which harmonized small business VAT exemption rules across member states.

Additional technical amendments include clarifications on virtual event taxation, with VAT applying at the location where non-taxable persons are established when services are delivered online. The law also introduces emergency VAT exemptions for disaster relief imports, subject to European Commission approval.

Context

The reforms represent Croatia's implementation of the EU's unified approach to small business VAT treatment, designed to reduce compliance burdens while maintaining tax collection efficiency. The higher threshold brings Croatia closer to the EU average and supports the bloc's digital single market objectives by simplifying cross-border trading for smaller enterprises.