PDV (Value Added Tax) in Croatia

PDV tax on bills - PDV racun
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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.

PDV (VAT) rates in Croatia

Below are all the PDV categories and their payment rates, which are valid from January 1, 2020. 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
  • Transport of patients
  • Public television and radio
  1. 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
  1. Transactions within the European Union:
  • Delivery of goods
  • Acquisition of goods
  • Certain transportation services
  1. Import of certain goods
  2. Export of certain goods
  3. Services executed on movable property
  4. Certain international transport services
  5. Certain exports equal to the import
  6. Certain mediation services
  7. Transactions related to international trade

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
  • Professional books
  • Medicines
  • Medical products that are surgically embedded in the human body
  • Daily newspapers except for ones that publish advertisements, videos, and music
  • Cinema tickets
  • 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
  • Edible oils and fats
  • Baby car seats
  • Baby diapers
  • Processed baby food
  • Water and electricity delivery
  • Concert tickets
  • Urns and coffins
  • Communal services
  • Seedlings and seeds
  • Fertilizers, pesticides, and agrochemical products
  • Animal food (but not pet food)
  • Live animal delivery
  • Meat delivery
  • Sausages and meat product delivery
  • Live fish delivery
  • Fresh and frozen fish and seafood delivery
  • Fresh and frozen vegetable delivery
  • Dried fruits and nuts
  • Fresh egg delivery
  • Copyright services for writers and artists who are members of certain societies
  • Food services outside restaurants

25% PDV

The standard PDV rate of 25% is applied to all other products and services starting January 1, 2020.

How PDV is charged

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

It is important to note that the PDV system is voluntary for businesses that have revenue under 300.000 kn per year. This means that if they do not want to pay PDV, they do not have to. That also means they cannot collect PDV and they cannot get reimbursed for the PDV that they pay on their goods.

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 it’s revenue exceeded 300.000 kn in one year, you can request to leave whenever the yearly revenue drops below that threshold.

VAT for imports

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, then 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 Iceland with a rate of 25.5%. Sweden, Hungary and Denmark also carry a VAT rate of 25% while Canada and Japan have only 5%. The European Union also prescribes VAT. The highest rate is set to 25%, which means that we are the most taxed country in the EU.

Short-term visitors in the European Union

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

Please note: All information provided by Expat in Croatia is only for the purposes of guidance. It does not constitute legal advice in any form. For legal advice, you must consult with a licensed Croatian lawyer. We can recommend one if you contact us.

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8 thoughts on “PDV (Value Added Tax) in Croatia

  1. Josephine peros
    October 28, 2017 @ 5:15 pm

    Renting 1 apartment in ZADAR only

    I only work with booking.com

    I paid uprava porez the fixed fee for the year

    I paid tourist agency tax fee of 1,200 kunas

    i paid tourist fee of 0.16150% of total rentals charged for the year (obrazac TZ) firm

    Now the tourist agency said I must bring that form and the booking .com commission form

    To Upravan porez

    My questions: what is the % I must pay to Upravna porez on booking commission charged to me

    Next question: I was told by Fina in Nin that I must only pay at Fina in ZADAR

    Last question: is there any other bill I must pay as I want to do the right way

    Many thanks for your help

    {reply}

    • Expat in Croatia
      November 20, 2017 @ 10:51 am

      Hi Josephine,

      I recommend speaking with an accountant, as they will have the most accurate information with regards to taxation.

      Regards,

      Sara

      {reply}

  2. Vicki
    February 21, 2019 @ 4:51 am

    Hi Sarah
    im a dual Croatian Australian citizen and just about to get married and move to Croatia to live ….. my question is this: i am aware that any household goods i ship from Australia to Croatia (that are from my home) will not incur any taxes however as a citizen coming to live in Croatia am i also expempt from Taxes when i purchase my first car in Croatia?

    cheers
    Vicki

    {reply}

    • Expat in Croatia
      March 19, 2019 @ 11:23 am

      Hi Vicki,

      You are not exempt from taxes. You are only exempt from customs fees when importing.

      Regards,

      Sara

      {reply}

  3. Kristina
    October 21, 2020 @ 3:47 am

    As a returning citizen with the customs tax exception why would I be charged VAT on my personal effects?

    {reply}

    • Expat in Croatia
      October 21, 2020 @ 7:28 am

      Hi Kristina,

      Thanks for the comment!

      Returning citizens do not have to pay VAT on personal effects. If you are returning from a non-EU country, you need to request a customs exemption. I recommend reading this post as it goes into far greater detail what is involved when importing personal belongs: https://www.expatincroatia.com/move-import-car-croatia/

      If you have further questions, please let me know. 🙂

      Regards,

      Sara

      {reply}

  4. Carolyn Zelikow
    November 15, 2020 @ 3:07 am

    Hi Sara – thank you so much for sharing your incredible expertise. I’m an American thinking about opening a combination brick and mortar / online store that sells home-made Croatian products (honey, olive oil, etc.) to affluent tourists visiting Croatia and consumers overseas. I assume that I will need to deal with the challenges of opening a Croatian business for the brick and mortar venture (though perhaps I could finagle the ‘pazar’ fiskalizacija loophole), but I am wondering if I could do the webstore as a US-registered business and thus avoid the VAT and other headaches. For context, I do have reasonably well-connected Croatian friends who are signed on to help with vendor and bureaucratic relationships.

    {reply}

    • Expat in Croatia
      November 17, 2020 @ 11:15 am

      Hi Carolyn,

      Thanks for reading! I’m glad you are finding the resources helpful.

      Any brick and mortar will have to go through the proper procedures, including fiscalization. For the online store, I see a lot of risks in registering it as a US company. Presumably you would be sourcing all of these items from Croatian businesses. They’ll need to issue your foreign company invoices for these items, which means they’ll need permission to outsource to a foreign company. That could raise some red flags. Technically anyone doing business in Croatia needs to have a Croatian business or be employed for one. I would give some thought to all the different vendors and needs you would have for the business in Croatia, because red flags could get raised at each step. It’s not to say it’s not impossible to accomplish this without getting caught but it’s a big risk especially when dealing with physical products.

      Regards,

      Sara

      {reply}

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