Invoicing and Tax regulation in Croatia

Croatia initiated the modernization of its transaction processes in 2019 by implementing mandatory B2G e-invoicing. Digitalization has been successful and is scheduled to extend to mandatory B2B e-invoicing by 2026. Despite this phased approach, many businesses have opted to transition earlier, realizing significant benefits in terms of cost savings, time efficiency, and reduced manual errors, which are particularly prevalent in tax reporting. Given the standard VAT rate in Croatia at 25% and corporate tax rate at 18%, minimizing errors is crucial to avoid increased liabilities and penalties.

 

To ensure you're meeting the requirements while optimizing your financial strategy, explore our comprehensive guide on (e-)invoicing, tax regulations, and digital reporting in Croatia.

 

Invoicing Regulations in Croatia

Invoicing regulations in Croatia are managed by the Tax Administration of the Republic of Croatia (Porezna uprava Republike Hrvatske) under the guidance of the Croatian Value Added Tax Act (Zakon o porezu na dodanu vrijednost). Invoices are required for all transactions involving the sale of goods or services, applicable to both B2B and B2C dealings. Customers must receive invoices upon the delivery of goods or completion of services. For transactions where the customer is another business, invoices must be issued by the 15th day of the month following the delivery or service. Moreover, VAT-registered businesses must issue VAT invoices for all taxable sales, complying with Croatian tax laws and regulations.

At a minimum, the invoice needs to include kako:

Date of Issue;

Unique Invoice Number;

Supplier Information: Name, address and tax identification number;

Customer Information: Name, address and VAT, if the buyers is VAT-registered;

Description of Goods or Services,

Quantities and Unit Prices: The quantity and price per unit,

Date of Supply: The date when the goods were delivered or the services were completed,

Total amount and Tax Details: VAT applied, VAT amount payable, total amount excluding VAT, total amount including VAT;

Any other legally required or agreed details

 

B2G Invoice Specifications

For B2G transactions you have to issue e-invoices.

 

B2C Invoicing

For most B2C transactions you can issue simplified invoices, which require less information compared to full invoices.

 

Simplified Invoice

In Croatia, you can issue simplified invoices for transactions where the total invoice amount does not exceed €100.

Simplified invoices include:

Date of issuance,

Unique invoice number,

VAT number of the seller,

Full name and address of the seller,

Nature of the goods or services,

Total amount payable including VAT,

VAT amount payable (if applicable)

 

Invoice Archiving

In Croatia, you must archive invoices for a minimum period of 11 years. The archiving period starts from the end of the year in which the invoice was issued. Archiving abroad is allowed under specific conditions.

 

 

E-invoicing Regulations

Electronic invoicing, or e-invoicing, is the digital exchange of invoice information between a supplier and a buyer. The creation of electronic invoices in Croatia involves a streamlined process that includes the use of specialized software for generating invoices, selecting appropriate electronic invoice formats, and choosing transmission methods such as the Peppol web service or email. This process not only facilitates the efficient submission and validation of invoices but also ensures that recipients are promptly notified, significantly enhancing the invoicing workflow for businesses.

As of 2019, Croatia has mandated B2G e-invoicing, and there are considerations that B2B e-invoicing might become mandatory in January 2026. Currently, B2C and B2B e-invoicing remain optional, yet many Croatian companies have already adopted e-invoicing proactively. The advantages of e-invoicing include improved operational efficiency, quicker payment processes, and enhanced compliance with tax regulations, making it a preferable alternative to traditional paper-based invoicing. By adopting e-invoicing, businesses can achieve cost savings up to specific thresholds for agreements on simple procurement, goods, services, and works in compliance with the Act on Electronic Invoicing in Public Procurement.

Croatian e-invoicing regulations align with Directive 2014/55/EU, which mandates public entities to be equipped to receive and process e-invoices that adhere to the European standard EN-16931. Furthermore, Croatia participates in the PEPPOL network, enhancing standardized cross-border e-invoicing within the EU through the use of electronic invoices. To support these requirements, the Croatian government utilizes e-RAČUN, an adapted standard for the electronic exchange of invoices, including a structured format that complies with EU norms, facilitating the receipt and processing of e-invoices in dealings with public sector entities.

 

E-invoicing Process in Croatia

Taxpayers in Croatia must register on the Croatian Tax Administration's online portal. The platform allows them to manage tax-related activities, including the submission of electronic documents. The process follows:

Completing a transaction: Croatian taxpayers are required to submit details electronically within 48 hours.

Upon submission: Croatian Tax Administration reviews the electronic document. This check includes validating the transaction details and assigning a unique identification code known as the JIR (Jedinstveni Identifikator Računa).

After validation: the taxpayer issues a receipt that includes the JIR and potentially other security features like a QR code. This receipt serves as proof of the submitted and validated transaction.

The customer receives this receipt: which includes the JIR and any additional security features.

Customers or other interested parties can verify the transaction: through a web application provided by the Croatian Tax Administration.

 

Governmental Body Responsible for E-invoicing

Responsibility for e-invoicing regulations in Croatia lies with the the Ministry of Economy and Sustainable Development.

 

E-invoicing Formats

Croatia e-invoicing formats align with the European standard EN 16931. They system for e-invoicing is managed through eRačun za državu.

E-invoicing formats commonly used in Croatia:

UBL (Universal Business Language)	Internationally recognized standard that includes a suite of XML-based business documents specifications.
PEPPOL BIS Billing 3.0a	Internationally recognized standard, providing a unified XML-based specification for electronic billing.
HR e-Invoice	Globally accepted framework that encompasses a set of XML-based specifications for electronic invoicing processes in human resources.

 

E-invoice Validating

Ensure that your e-invoices adhere to both European standard EN 16931 and specific Croatain requirements. Further validation of e-invoices is not mandatory, but you can use a qualified digital certificate. If you use it, then it must be verified to confirm that the invoice remains unaltered and originates from a trusted source.

 

E-invoice Archiving

You must archive E-invoices for a minimum period of 10 years. The archiving period starts from the end of the year in which the invoice was issued. Archiving abroad is allowed under certain conditions.

 

 

Tax Regulations

In Croatia, the standard VAT rate is 25% and applies to most goods and services. A reduced VAT rate of 13% is applicable to various items including restaurant and catering services. Medical products and cinema tickets, among others, benefit from an even lower VAT rate of 5%.

 

Corporate Tax

The standard corporate tax rate in Croatia is 18%. A reduced tax rate of 10% applies to companies with an annual income of €1 million (HRK 7.5 million) or less.

 

Double Taxation

Croatia has established double taxation agreements with numerous countries to prevent the double taxation of income earned in one jurisdiction by a resident of another.

 

VAT on Digital Products

For digital products such as downloadable software or online services, the VAT is generally charged at the standard rate of 25%. However, e-books and electronic newspapers are exceptions, subject to a reduced VAT rate of 5%.

 

VAT Payments and Returns

In Croatia, businesses must submit a VAT Return to the Tax Administration (Porezna uprava) to detail the VAT accrued from sales and the VAT deductible for business purchases. The VAT Return should include:

VAT collected on sales,

VAT credits for VAT paid on business expenses.

The net VAT amount, which is the difference between the VAT collected on sales and the VAT credits from expenses, is indicated on the VAT Return and must be paid to the Tax Administration. If the VAT credits are greater than the VAT collected, the business may request a refund.

The reporting frequencies are:

Monthly: Reports must be submitted by the 20th day of the month following the reporting period. This is mandatory for businesses with a turnover exceeding HRK 800,000 (approximately €106,000) in the previous year.

Quarterly: Reports must be submitted by the 20th day of the month following the reporting period. This option is available for businesses with a turnover of less than HRK 800,000.

The Tax Administration of Croatia strongly encourages the use of its electronic system (ePorezna) for the filing of VAT Returns and for making payments.

 

VAT Registration Threshold

VAT registration threshold for domestically established businesses is HRK 300,000 (approximately €40,000).

For EU-based businesses engaged in distance selling of goods or services to the German consumers, the threshold is €10,000.

Non-EU businesses selling into Germany have no VAT registration threshold; they are required to register for VAT immediately upon beginning sales of goods or services to German consumers.

 

 

E-invoice Requirements

In Croatia, e-invoice requirements adhere to EU standards, demanding components such as:

Unique Identification Number;

Date of issuance;

Identification of the Seller and the Buyer: full name, address and VAT identification number;

Information about Goods or Services Provided: description, quantity, unit price;

VAT Information: total amount excluding VAT, applicable VAT rate, total VAT amount;

Total amount Including VAT;

Currency;

Payment terms: details of the payment terms, including due date and payment method;

Tax Point Date: If different from the invoice date, the date on which the taxable supply was made or completed;

Reference number for tracking;

Electronic signature or other means of ensuring authenticity and integrity.

For businesses with repeating customers, setting up recurring invoices can streamline the billing process by automating regular, automatic payments.

 

Utilizing invoicing software can significantly benefit businesses in creating, sending, and managing e-invoices in compliance with Croatian regulations. These tools not only help in generating professional invoices but also in streamlining the invoicing process, improving cash flow, and ensuring that payments are received on time.

See how Space Invoices can help.

 

B2C E-invoice Specifications

For most B2C transactions you can issue simplified e-invoices, which require less information compared to full invoices.

 

Simplified E-invoice Requirements

In Croatia, you can issue simplified e-invoices for transactions where the total invoice amount does not exceed €100.

Simplified invoices include:

Date of issue;

Unique invoice number;

Supplier identification: The name, address and the VAT number is required if the total amount of the invoice, including VAT, is above €100;

Type of goods or services;

Total amount and VAT: The total amount payable and the VAT amount.

 

 

Digital Reporting R

In Croatia, fiscalization is mandatory for all B2B, B2C, and B2G transactions. This requirement applies to all self-employed individuals liable for income tax, as well as legal entities and individuals subject to profit tax. It encompasses all cash transactions, including payments made through physical cash, credit/debit cards, and other payment methods, with the exception of direct bank transfers.

Businesses must utilize fiscal devices that are approved and certified by the Croatian Tax Administration. At the point of sale, transactions must be recorded in real time using these fiscal devices. The device then transmits the receipt data to the Tax Administration, providing detailed information about the sale.

 

SAF-T

SAF-T is not yet mandatory in Croatia.

 

Data Breaches

If a data breach occurs in Croatia, you must notify the Croatian Personal Data Protection Agency within 72 hours of becoming aware of the incident. If the breach poses a significant risk to individuals' rights and freedoms, affected individuals must also be notified without undue delay. This requirement aligns with the General Data Protection Regulation (GDPR) standards enforced across the European Union.

 

 

Penalties

If a taxpayer fails to issue an invoice or issues it outside the specified timeframe, they may face penalties ranging from €260 to €66,360. Additionally, failing to inform the Croatian tax administration about storing invoices and related documents outside of Croatia can lead to penalties ranging from €130 to €26,540. Responsible individuals could also face fines ranging from €60 to €5,300 for such violations. It's crucial to understand the importance of compliance with invoicing regulations to avoid penalties related to the issuance, management, and storage of invoices, ensuring all processes from issuing to accepting invoices are properly handled.

 

Tax Penalties

If your business in Croatia fails to register or is late in registering, it could incur fines ranging from €140 to €26,700. Additionally, responsible individuals within the organization can be fined from €70 to €5,300.

Incorrect VAT returns or failure to comply with invoicing and accounting obligations can result in penalties ranging from €270 to €66,700. Responsible individuals may also face fines ranging from €140 to €6,700.

For late payment of VAT, fines range from €265 to €66,400. Additionally, the interest penalty for late payment of VAT has varied, but was recently noted as being around 12% per annum, emphasizing the importance of making VAT payments promptly to avoid significant financial penalties.

 

Real-Time Reporting Penalties

If your business fails to comply with mandatory real-time reporting of transactions, it can face penalties ranging from €3,000 to €500,000, depending on the severity and nature of the non-compliance.

 

 

Streamline Global Invoicing and Digital Reporting with Space Invoices

One way to comply with (e-)invoicing, tax and reporting regulations in Croatia is to use a provider like Space Invoices.

You will be able to:

Have one API for current and future worldwide compliance, including Croatia

Support and upsell your clients worldwide, including Croatia

Become the one-stop shop for current and future clients

Save time and money streamlining the process and eliminate manual errors

Rest assured all documents are archived and successfully reported to responsible institutions

Save time and money with less than a week-long integration

 

Having questions how to achieve compliance in Croatia?

We are ready to help.

 

 

This guide is provided by Space Invoices and does not constitute professional tax advice or opinions tailored to the specifics of any particular business or situation. Space Invoices does not accept responsibility for the accuracy or applicability of the content within this guide. Tax regulations, e-invoicing requirements, and digital reporting standards are subject to frequent changes and complex interpretations that require validation by qualified tax professionals. It is the user's responsibility to evaluate the relevance and accuracy of the information provided and to consult appropriate professionals. Space Invoices does not offer professional tax opinions or advice through this publication.

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