Amendments to the VAT Act Adopted by Croatian Parliament

The Croatian Parliament adopted the final proposal for amendments to the Value Added Tax (VAT) Act, marking a major step toward modernising tax compliance. These amendments, primarily taking effect on 1st January 2026, focus on digital transformation, streamlining administrative burdens, and aligning with the upcoming mandatory e-invoicing regime.

Key Legislative Changes

Mandatory E-Invoicing (B2B):
Starting January 1, 2026, e-invoicing becomes compulsory for all domestic business-to-business (B2B) transactions performed by businesses with a registered office or a permanent business unit in Croatia. A critical update in this final proposal is the removal of the requirement for customer consent to receive e-invoices, ensuring universal adoption across the domestic market.

Extended Filing Deadlines:
To ease administrative pressure, the deadline for submitting VAT returns (Obrazac PDV), recapitulative statements, and EU acquisition lists has been moved from the 20th day to the last day of the month following the tax period.

Abolition of PPO declaration and U-RA form:
Elimination of the U-RA form (list of incoming invoices) and the PPO form (specification of outgoing supplies under domestic reverse charge related to services under Article 72, Paragraph 2 of the VAT Act ).

VAT Cash Accounting Scheme:
Businesses with annual supplies not exceeding €2,000,000 in 2025 may opt into the VAT cash accounting scheme for 2026, allowing them to account for VAT only upon receipt of payment.

Extension of Reduced Rates:
The 5% reduced VAT rate for natural gas, heating from thermal stations, and firewood has been extended until March 31, 2026.

These reforms are part of Croatia’s broader “Fiscalization 2.0” initiative, which aims to reduce compliance costs and improve tax collection through real-time digital reporting. While most changes apply to tax periods starting in January 2026, the Parliament also confirmed that VAT reports for December 2025 must still follow current deadlines.