The 2012 worldwide VAT, GST and sales tax guide

142 C ROATIA
Continuous supply of services. If a supply of services is performed
continuously through two accounting periods, VAT liability arises
at the end of the second accounting period. However, if the supply
of services is performed continuously through more than two
accounting periods, VAT liability arises at the end of each
accounting period, regardless of whether an invoice is issued.
Prepayments. If a payment is made before the supply (prepayment),
VAT is due at the end of the accounting period in which
the prepayment is received. A regular VAT invoice must be issued
for a prepayment received. After the supply is performed, the
prepayment invoice needs to be cancelled and a new invoice for
the performed supply must be issued.
Imported goods. VAT on imports is due on the day on which the
customs debt arises. If during the import of goods, the customs
debt does not arise, VAT is due on the day on which the customs
debt would arise if it were payable. VAT on imports is calculated
and charged by the customs office at the customs clearance.
Cash accounting. Domestic entrepreneurs registered as personal
income taxpayers (income from self-employment), charge and
pay VAT on a cash basis; that is, on the basis of payments
received for their supplies of goods and services. A taxable person
who uses the cash accounting scheme may deduct input VAT
on its purchases only when the VAT is paid and other conditions
for input VAT deduction are met.
Margin taxation. For supplies of second-hand goods, works of art,
antiques and collectors’ items performed by dealers, the margin
scheme may be applied. This scheme may be applied only if
goods are supplied to dealers by non-VAT payers, VAT payers
making exempt supplies or other dealers applying the margin
scheme. The dealers’ VAT base is limited to their taxable margin,
which is equal to the difference between the selling price and
purchase price of the goods, less the amount of VAT due by the
dealer from the margin.
F. Recovery of VAT by taxable persons
A taxable person may recover input VAT, which is the VAT
charged on goods and services supplied to the taxable person for
its business purposes. A taxable person generally recovers input
VAT by deducting it from output VAT, which is VAT charged on
supplies made. Input VAT includes VAT charged on goods and
services supplied in Croatia, VAT paid on imports and VAT payable
under the self-charge mechanism.
Input VAT may be deducted if the following conditions are met:
• The invoice contains all elements prescribed by the VAT law.
• The supply is made by another VAT payer.
• The right to deduct input VAT is not excluded by specific provisions
of the VAT law.
• Supply is made to a taxable person for its business purposes.
Input VAT on imports may be deducted if VAT is paid at the time
of import and if the goods have been imported to Croatia for the
taxable person’s business purposes.
Input VAT payable under the self-charge mechanism is deductible
if the general conditions for input VAT deduction are met. In