The amendments made to the VAT Law, which came into force on 1 January 2010, were published in a National Gazette in December 2009. The most important issues are:
Deliveries at no charge. The VAT Regulations specifically stipulate that promotional items, such as catalogues, leaflets, bags, etc. are to be considered deliveries at no charge and VAT does not need to be assessed on such articles. VAT will not have to be charged on small gifts, up to the value of HRK 80 (without VAT), if these are given occasionally and in reasonable quantities, i.e. to one person per quarter.
Company cars. Input VAT on incoming invoices for own consumption, i.e. for entertainment or personal cars, will not be fully deductible but input VAT will from the start be divided into recoverable and irrecoverable VAT. Accordingly, it is not necessary to keep a VAT book of own consumption. A similar procedure is prescribed for remuneration provided through benefits in kind.
Place of supply of services In all cases where a Croatian VAT-registered entity or individual provides a service to a non Croatian recipient that is not an entrepreneur, e.g. to a non resident individual, that service will be subject to VAT in Croatia. Currently, the VAT the type of the service provided is relevant for VAT treatment rather than the status of the service recipient.
VAT in construction. The VAT liability for construction companies arises in the VAT period in which a temporary certificate issued by a construction company is approved by a supervisory body. If the supervisory body does not approve the temporary certificate, the VAT liability arises at the latest by the end of the VAT period following the period in which the temporary certificate was issued. However, the service recipient only has the right to recover input VAT in the VAT period in which the temporary certificate is approved by the supervisory body.
Foreign entrepreneurs. Foreign entrepreneurs, who do not have a seat, residence, management board, subsidiary or other permanent establishment in Croatia can, under certain conditions, recover VAT charged by Croatian suppliers. Croatian representative offices of foreign entrepreneurs will also be entitled to claim VAT recovery.