VAT and Corporate Income Tax in Croatia
Value Added Tax (VAT) in Croatia is governed by the VAT Act (NN 73/13). Corporate income tax is regulated by the Corporate Income Tax Act (NN 177/04). Capital gains tax is part of the Personal Income Tax Act. These taxes are relevant both for individual consumers and for businesses.
VAT rates and exemptions in Croatia
Croatia applies three VAT rates: 25% (standard rate – most goods and services), 13% (reduced rate – food, hotels, books, medicines) and 5% (super-reduced rate – bread, milk, medicines, books, IT). The VAT registration threshold is annual revenue of €40,000. VAT on online purchases from the EU has applied since 2021 under the OSS (One Stop Shop) rules. Small businesses below the threshold may be exempt from VAT.
Corporate income tax and capital gains tax
Corporate income tax for companies (legal entities) is 18% for income above €1,000,000 and 10% for income up to €1,000,000. Capital gains tax (dividends, interest, capital gains) is 10% plus surtax. Dividends paid from profits that have already been subject to corporate income tax are further taxed at the capital gains rate – known as economic double taxation. Special rules apply to investments in funds and bonds.
VAT on digital services and special situations
Since 2021, foreign platforms (e.g. Amazon, Netflix, Google) selling digital content to EU consumers must charge VAT at the rate of the buyer's country. In Croatia, this is 25%. The Croatian Tax Administration supervises VAT compliance and may inspect business records and bank transactions. The fiscalisation obligation (JIRA) requires all cash transactions to be fiscalised through authorised devices.
Frequently Asked Questions
Do I need to register for VAT in Croatia as an individual selling services online?
If your annual revenue from economic activities exceeds €40,000, you are required to register for VAT. Below that threshold you may be a small taxpayer exempt from VAT. B2B service sales within the EU are subject to reverse-charge rules.
What is the difference between corporate income tax and personal income tax in the context of a company?
Companies (Ltd/Plc) pay corporate income tax (10% or 18%). When an owner pays themselves a dividend from the after-tax profit, the dividend is further taxed as capital income (10%). Sole traders and freelancers pay personal income tax (15-35.4%) on their individual income.
Is capital gains tax (on property, shares) the same as VAT in Croatia?
No, they are different taxes. VAT applies to the sale of goods and services. Capital gains tax falls under personal income tax on capital at 10% plus surtax. Exception: the sale of property owned for more than 2 years is generally not taxable.