PDV (Value Added Tax) in Croatia

PDV (Value Added Tax) in Croatia
PDV (Value Added Tax) in Croatia

UPDATED: 7.2.2023.

Value Added Tax, known in Croatia as “PDV”, is a modern form of taxation. This is the tax that is charged to everyone, including businesses, on most transactions. The purpose of PDV is to tax consumption. It is essentially a sales tax.

PDV is calculated and charged according to a 25% rate. Some products and services are taxed at reduced PDV rates of 5% and 13%, and other product categories are completely exempt from PDV.

In this article, we cover:

The facts are these…

What are the PDV rates in Croatia?

Below are all the PDV categories and the latest payment rates. The complete law on PDV can be found here.

0% PDV

Some activities are exempt from paying the PDV, and they are divided into ten categories.

#1 Certain activities of public interest

  • Universal postal service
  • Hospital and medical care
  • Performing medical care
  • Human organs, blood, and breast milk delivery
  • Dental fees
  • Services of associations and non-profit organizations
  • Social care services
  • Child and youth protection services
  • Education of children and youth
  • Private teaching
  • Services of religious and philosophical institutions related to spiritual care
  • Services that non-governmental organizations deliver to their members
  • Sports services
  • Cultural services
  • Events related to fundraising
  • Transport of patients
  • Public television and radio

#2 Certain financial activities

  • Insurance and reinsurance transactions
  • Granting loans
  • Credit guarantees contracting
  • Giro and current account transactions
  • Currency, banknote, and coin transactions
  • Stocks, bonds, and other loan stock transactions
  • Investment fund management services
  • Postage stamps delivery
  • Lottery, casino, sports book, slot machines
  • Buildings and land delivery
  • Apartment rental

#3 Transactions within the European Union:

  • Delivery of goods
  • Acquisition of goods
  • Certain transportation services

#4 Import of certain goods

#5 Export of certain goods

#6 Services executed on movable property

#7 Certain international transport services

#8 Certain exports equal to the import

#9 Certain mediation services

# 10 Transactions related to international trade

In addition, 0% PDV is calculated and paid on the delivery and installation of solar panels on private residential buildings, residential premises, and public and other buildings used for activities of public interest, and the delivery and installation of solar panels near such buildings, spaces, and buildings.

5% PDV

The PDV rate of 5% is applied to:

  • All types of bread and rolls
  • All types of milk in a liquid state (cow’s, goat’s, sheep’s milk) and food that serve as a substitute for breast milk
  • Animal food (but not pet food)
  • Baby food
  • Edible oils and fats
  • Butter and margarine
  • Meat delivery
  • Fish delivery
  • Fresh egg delivery
  • Fresh fruits and vegetables
  • Fertilizers, pesticides, and agrochemical products
  • Seedlings and seeds
  • Professional books
  • Medicines
  • Medical equipment for disabled people
  • Daily newspapers, except for ones that publish advertisements, videos, and music
  • Tickets for sports, cultural and other events
  • Science magazines

It should be noted that many of these items in the 5% bracket used to be exempt from PDV.

13% PDV

The tax rate of 13% is applied to:

  • Accommodation services and accommodation with breakfast
  • Commercial magazines and newspapers
  • Baby car seats
  • Baby diapers
  • Sanitary pads and tampons
  • Water and electricity delivery
  • Urns and coffins
  • Communal services
  • Animal food (but not pet food)
  • Live animal delivery
  • Sausages and meat product delivery
  • Frozen fish and seafood delivery
  • Frozen vegetable delivery
  • Dried fruits and nuts
  • Copyright services for writers and artists who are members of certain societies
  • Food services outside restaurants
  • Gas and thermal energy

25% PDV

The standard PDV rate of 25% is applied to all other products and services.

How PDV is charged in Croatia

On each receipt or invoice issued, the company must include the amount of tax. Be sure to pay attention to this detail when purchasing.

Small taxpayers are exempt from paying PDV on supplies of goods or services. That also means they cannot collect PDV, and they cannot get reimbursed for the PDV that they pay for their goods. A small taxpayer is a legal person with a registered office, a permanent business unit, or a natural person with a residence or habitual residence in Croatia whose value of delivered goods or performed services in the previous or current calendar year did not exceed 39.816,84 euros.

However, they can request to be entered in the register of PDV payers and pay PDV. If your business voluntarily enters into the PDV system, you’re obliged to stay in for at least 3 years. However, if your business entered the system because its revenue exceeded 39.816,84 euros in one year, you can request to leave whenever the yearly revenue drops below that threshold.

VAT for imports to Croatia

Let’s say you’re moving from Austria to Croatia and are carrying a lot of things over the border. You don’t have to fear paying taxes. When relocating from abroad, you are entitled to tax exemption on personal items in accordance with customs regulations.

VAT is sometimes charged on the import of a vehicle and items that are not considered household items. Alcohol and alcoholic beverages, tobacco and tobacco products, commercial means of transportation, machines, tools, and instruments for performing a particular professional activity are not considered household items. You can view the process of importing a car and personal belongings here.

If you only pass goods through Croatia, you do not have to pay VAT as the rules of the final destination apply.

VAT in other countries

VAT is a system used by many of the world’s nations and has a different name in each country. In Albania, it’s TVSH (Tatimi mbi Vleren e Shtuar), in Turkey, it’s KDV (Katma deger vergisi), in Singapore, it’s GST (Goods and Services Tax), and in neighboring BIH and Montenegro, it’s also called VAT (Value Added Tax). In the United States, it is Sales Tax and varies by state and city.

The only country with a higher rate than Croatia is Hungary, with a rate of 27%. Sweden and Denmark also carry a VAT rate of 25%, while Canada has only 5% and Japan has 10%. The European Union also prescribes VAT. The highest rate is 25%, meaning we are the most taxed country in the EU.

Short-term visitors to the European Union

If you are only visiting Croatia (or another EU/EEA country) as a tourist, you may be entitled to a refund of the VAT (PDV) you paid during your trip. View our guide regarding refunds of value-added tax here.

View our other tax articles


Source:
Zakon o porezu na dodanu vrijednost

Please note: Information provided by Expat in Croatia is only for the purposes of guidance. It does not constitute legal or financial advice in any form. Croatian laws and bureaucratic rules often change, and each personal case is individual, so different rules may apply. For legal advice, contact us to consult with a licensed Croatian lawyer. For financial advice, contact us to consult with a licensed Croatian tax advisor or accountant.

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