Croatian entrepreneurs aren’t quite thrilled when fiskalizacija is mentioned, to say the least. It more often results in a grumble and an eye roll. Fiskalizacija (or “fiscalization” in English) is how the Croatia government monitors the taxation process of business owners and their companies to prevent tax evasion.
If you own a business and it meets certain factors, you are required to submit to fiscalization. If you want to go cross-eyed, here is the law on fiskalizacija. If you want to understand what it is in plain English, keep on reading.
What does fiscalization mean?
Fiscalization is a procedure used by Porezna uprava (tax administration) to monitor cash transactions and the value added tax (PDV) calculation of a business. This procedure is done over the internet at the time the transaction occurs.
Fiscalization can also give business owners sales insight in real-time. They can monitor their daily traffic using the fiscalization software and quickly check business reports.
We’ll start with the technical description of the fiscalization process, then we’ll simplify it with a real world example.
When a company issues an invoice to its customer, the invoice is sent electronically to CIS of Porezna uprava. CIS (centralni informacijski server) is the central information server which generates and assigns a unique code to each received invoice. This code is called a JIR code (jedinstveni identifikator računa) and it is uniquely identifies an invoice.
Once the invoice has been assigned a JIR, this code is sent back to the company. Then, the business can print the official customer invoice along with the JIR.
If something goes wrong with the company’s internet connection, they can issue the invoice without JIR. Every invoice has a unique serial number, so it can be tracked post-transaction. However, all invoices issued without a JIR number must be delivered to Porezna uprava within 2 days.
Fiscalization, in real life
You walk into Calzedonia to buy some leggings. You pick out a real sparkly pair in shimmery silver. You take them up to the cash register to pay for them.
The cashier rings up your purchase. When she creates your purchase (the invoice), the details of your purchase (cost plus tax) travel through the internet ether to the government. The government registers the purchase and assigns the JIR code. The government sends back the code to Calzedonia’s cash register.
The cashier gives you the total amount you must pay to make those glittery leggings your very own. You pay, in cash or by credit card, to complete the transaction. In return you receive a final receipt that includes the JIR code and details of your transaction. You go home with your leggings.
What information is sent to the government?
Each invoice that is generated and sent to the tax authority must include:
- OIB (ID number of the business)
- Naziv (business name)
- Datum i vrijeme (date and time)
- Redni broj računa (unique invoice number)
- Stavke kupnje (purchased items)
- Način plaćanja (payment method)
- Obračun poreza – PDV (value added tax calculation)
- Oznaku operatera (designation of the employee who issued the invoice)
- Zaštitni kod (security code)
- Oznaku osobe koja je izvršila naplatu (designation of the person who made the payment)
- Potvrdu Porezne uprave (confirmation from Porezna uprava):
- About the online transaction – JIR
- About the offline transaction – Warning message
Which transactions need to be “fiscalized”?
Business owners must report every issued invoice for delivered good and services which are paid by:
- Credit cards
- Debit cards
- Other similar means of payment
Luckily, there are exceptions. Payments made by bank transfer (transakcijski račun or virman) are exempt from fiscalization.
This means that invoices paid by PayPal are also excluded from the fiscalization process because they are also considered bank transfers. This PayPal exclusion is great for those with web shops as implementing fiscalization for eCommerce sites is a serious nightmare.
Which businesses must use fiscalization?
Businesses that must fiscalize their transactions are:
- Persons who are taxpayers of porez na dohodak od samostalne djelatnosti (income tax for self-employment business)
- Businesses that are taxpayers of porez na dobit (profit tax)
Which businesses are exempt?
Businesses that don’t have to fiscalize their transactions are:
- Business owners who deal with:
- Selling tickets or tokens for passenger transport
- Payment of tolls
- Aviation services that refuel airplanes with oil products
- Selling private agricultural products at markets (pazar) and open spaces
- Selling products and services in postal traffic
- Lottery and fun games
- Selling goods through vending machines
- Offering bank and insurance services
- Managing loan stocks and central register of financial instruments
- Paid bills for electricity, gas, water, communal services, etc.
- Health insurance services
- Veterinary services
- Selling goods on Croatia Airlines flights
- Taxpayers who don’t have the obligation to issue bills for sold goods and services according to the Zakon o PDV-u (Law on VAT)
- Taxpayers who don’t have the obligation to issue bills for sold goods and services according to the Opći porezni zakon (General tax law)
- Taxpayers of porez na dohodak od imovine (property income tax)
- Taxpayers of porez na dohodak od drugog dohotka (income tax on other income)
What do you need?
To meet the requirements of fiscalization, you will need:
- PC computer, integrated POS (point-of-sale) system or compatible mobile device
- Internet connection
- Fiskalna blagajna (fiscal cash desk program)
- Fiscal cash desk certification
Next, we’ll go into each requirement in a bit more detail.
You will need a computer running MS Windows XP SP3 or newer, an integrated point-of-sale system or a compatible mobile device (iOS, Android).
#2 Internet connection
Your PC, POS or mobile device must be connected to the reliable internet. As noted earlier in this post, you can issue invoices if your internet goes down but you”ll need to report those invoices made during the outage to the tax authority within 2 days. They are pretty strict about this.
#3 Fiskalna blagajna
This is the fiscalization software that the government requires of each qualifying business. Only certain companies offer this tool, which we’ll cover later in this post.
#4 Fiscal cash desk certification
The fiscal cash desk certificate is a digital certificate is issued by FINA that serves as proof of your company’s identity. You can read more about digital certificates on FINA’s fiscalization website.
The price of fiscal cash deck certification is 375kuna per 5 years (60 kuna per year). Payment must be made all at once for the 5-year term. Once you buy a digital certificate, you can use it for multiple cash desks within the same business.
Where can you purchase the tools for fiscalization?
There are many companies that offer the hardware and software you will need to meet the government’s requirements. We’ve listed a few down below, but please note that we are in no way endorsing these companies. You should make sure that you thoroughly evaluate multiple options before settling on one.
For both the hardware and software, make sure that the company offers a solid warranty and maintenance service. Best to get referrals from other business owners so you can find a reliable company. The tax authority will not give a shit about your technical difficulties resulting from buying shoddy equipment.
The hardware like a POS (point of sale) system or fiscal cash desk can be purchased from a variety of vendors. Here are a few:
Business owners can install the fiscalization software on their existing cash desks, or on a newly purchased POS system.
The software can be purchased from:
- Desktop – Windows
The price of fiskalna blagajna depends on many factors. When researching pricing, keep in mind:
- Fiskalna blagajna can be rented or purchased.
- Prices can vary widely from seller to seller
- Investigate if the price includes PDV or not.
- Rentals are usually for a period of 12 or 24 months with a signed contract.
- If you purchase, you will have to pay for monthly maintenance of the system.
“Hidden” costs may include:
- Installation of fiskalna blagajna
- Backup device
- Maintenance and service
- Data backup
- Costs of making a contract
If you want to dig into this topic more, the tax authority has published a very detailed fiscalization brochure that contains all the information about the requirements.