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VAT refund to taxpayers with registered office in another member state
Beneficial owner and right to a refund
Taxpayers from other EU member states have the right to submit a request for the refund of VAT charged for goods and services in the Republic of Croatia through the electronic VAT refund system (VAT REFUND) of the member state in which they have their registered office, permanent establishment, residence, or habitual residence; not through the Croatian Tax Administration system.
According to the Croatian Value Added Tax Act (hereinafter: Croatian VAT Act), taxpayers have the right to a refund of Croatian VAT calculated on goods and services supplied to them by taxpayers in Croatia or when importing goods into Croatia, provided that:
- they have their registered office, permanent establishment, residence, or habitual residence in the territory of a member state other than the Republic of Croatia,
- they perform taxable transactions in the member state where they have their registered office based on which they acquire the right to deduct VAT,
- they are not registered for VAT purposes in Croatia,
- during the period to be refunded, the registered office centre of their economic activity was not in Croatia, nor did they have a permanent establishment from which business transactions were carried out, nor, in the absence of such a centre, registered office or permanent establishment, did they have residence or habitual residence in Croatia,
- during the period to be refunded (as a rule), they did not deliver goods or services that are considered to be performed in Croatia.
Therefore, to obtain a refund of the charged Croatian VAT in Croatia, a taxpayer who does not have its registered office in Croatia submits an electronic refund application through the electronic portal (VAT REFUND) of the member state in which it has its registered office no later than September 30 of the calendar year following the refund period. The applicant must submit the information in the VAT refund application, as well as any additional information, in Croatian or English.
Such an application must contain:
- name and surname (company name) and full address of the applicant,
- address for electronic communication,
- description of the applicant’s economic activity for which the goods and services are procured and the NACE Codes,
- the refund period to which the VAT refund application refers,
- the applicant’s statement that they did not, during the refund period, deliver goods or services that are considered to be delivered in Croatia,
- VAT identification number or tax number of the applicant,
- bank account details (including IBAN and BIC).
An applicant for a VAT refund from another member state can appoint a representative in the process of submitting a VAT refund application through the VAT REFUND electronic system. We recommend appointing a home country tax advisor or a Croatian tax advisor, whose information must be indicated in the application. In practice, an additional essential element is including an active e-mail address for communication with the Tax Administration!
If all the information submitted in the application is not sufficient to make a decision on a complete or partial refund, the Croatian Tax Administration will request additional information from the applicant electronically through the e-mail address provided in the application.
According to the provisions of the Croatian VAT Act, the Tax Administration will:
- inform the applicant electronically about the date of receipt of the VAT refund application,
- within four months from the receipt of the refund application, make a decision on whether the applicant’s request is approved or rejected, if all the necessary information is provided in the application, and if there is no justified doubt about its validity.
Since communication with the Croatian Tax Administration usually takes place electronically, it is important to note that the decision, invitation, or request of the Croatian Tax Administration is considered to have been delivered at the moment when the Tax Administration sends it to the applicant electronically and when its sending is recorded on the server for sending such messages.. This applies regardless of whether such an invitation, request or decision is actually delivered on the server for receiving such messages. Since there is a very high possibility that such a message (due to various restrictions or reasons) will not be delivered or will end up in the SPAM folder, it is important to note that all deadlines specified in the application, decision or invitation start running from that moment.
In case that the applicant does not respond to the invitation, request or decision, the Croatian Tax Administration issues a decision rejecting the VAT refund application – usually without further possibilities of submitting legal remedies.
If the applicant has an authorized representative in the process of submitting the VAT refund application, the Tax Administration will electronically request additional information from the representative as well, via the e-mail address indicated on the VAT refund application.
If it requires additional information, the Tax Administration issues a decision on whether the applicant’s request is approved or rejected:
- within 2 months of receiving the requested information
- if it did not receive a response to its request for the delivery of additional information within one month from the date the applicant received the request on its server, the Tax Administration issues a decision within 2 months after the deadline given for the delivery of additional information, in any case, within 6 months from the date of receipt of the refund application.
Refund period
The refund period to which the refund application refers cannot be longer than one calendar year or shorter than 3 consecutive calendar months. However, the refund application may refer to a period shorter than 3 months if that period includes the end of the calendar year.
Furthermore, if the refund application refers to the refund period:
- shorter than one calendar year, but not shorter than 3 months, the amount of VAT for which a refund is requested must not be lower than EUR 400.00
- of one calendar year or the rest of the calendar year, the amount of VAT must not be lower than EUR 50.00
Consequently, the refund period can be:
- each three-month or longer period entirely within the calendar year (the amount of VAT refund requested must not be lower than EUR 400.00)
- the entire calendar year (the amount of VAT refund requested must not be lower than EUR 50.00)
- a period shorter than 3 months starting on October 2 at the earliest and ending on December 31 (the amount of VAT refund requested must not be lower than EUR 50.00)
Refund approval and payment
If the VAT refund request is approved, the Tax Administration will:
- refund the approved amount no later than 10 working days after the end of the 4-month deadline or, if additional information is requested after the 6-month deadline (that is, further additional information after the 8-month deadline)
- pay the refund in Croatia or, upon the applicant´s request, in any other member state. In this case, the amount of any bank charges related to the transfer of funds shall be deducted from the refund amount paid to the applicant.
Additionally, if a penalty charge or unpaid interest has been determined, the Tax Administration may suspend all further refunds to a taxpayer who does not have its registered office in Croatia up to the amount of the unpaid amount.
If the refund is not paid out within the deadlines prescribed by law, the applicant is entitled to interest on the amount of the refund from the day following the last day for the payment of refund until the day the refund is paid. The interest rate to be applied is determined according to special regulations, and it is applied to VAT refunds to taxpayers who have their registered office, permanent establishment, residence or habitual residence in Croatia.
