English for Tax Administration 2 Lecturer: Miljen Matijašević G10, room 6/I, Wed 11:00-12:00 e-mail: miljen.matijasevic@gmail.com Session 7

Today’s Session Revision Taxes in Croatia Indirect Taxation – Value Added Tax

Taxes in Croatia Unit 3

Taxes in Croatia What are the foundations of the Croatian economy? What is the position of foreign enterpreneurs in relation to domestic? What different types of taxes does the Croatian system include?

Taxes in Croatia values of the Croatian economy free market entrepreneurial freedom equal rights guaranteed to both domestic and foreign investors a system of direct an indirect taxes agreements to avoid double taxation

Taxes in Croatia Read and analyze the chart on p. 24 in your books. Do the exercises on p. 25.

Indirect Taxation Value Added Tax Unit 4

Value Added Tax What do you know about VAT? What is it paid on and who by? Why is it called a ‘value added’ tax? Do you know what it means to be ‘in the VAT system’?

Value Added Tax Levied at each stage of the production and distribution process Input tax deductible from the output tax INPUT TAX – pretporez OUTPUT TAX – izlazni porez

Taxable persons Individuals Legal persons engaged in taxable activities Taxpayers whose supplies equalled more than HRK 230,000 must enter the VAT system

Taxable persons E.g. Importers and exporters of goods Entrepreneurs receiving services from a non-resident Anyone performing business activities if non-taxation of such activities would lead to unfair competition

Taxable transactions Taxable transactions include Supply of goods and services for consideration within Croatia Self-supply of goods and services Importation of goods

Taxable transactions Self-supply: use of own business services for private needs business entertainment expenses use of personal vehicles (if not deductible from personal income tax or profits for tax purposes)

Taxable transactions Taxable transactions also include: Supply of goods and services by legal entities for the benefit of the shareholders and members of immediate family for no consideration or with a personal discount Any supply free of charge or at a personal discount, irrespective of who the recipient is

Taxable Amount (base) The sales price of goods and services supplied, including costs of transportation, insurance and packaging For imports – customs value + customs duties and other charges and special taxes payable in the course of customs clearance For reimported goods (exported and processed abroad) – the consideration for the processing or increase in value of the goods

VAT Rates The standard rate: 25 % Reduced rates: 13 % and 5 %

Non-residents Non-resident entrepreneurs engaged in taxable transactions in Croatia - subject to the same taxation rules as residents Other non-residents (non-EU citizens) can claim a refund of VAT on goods purchased in excess of HRK 740 Deadline for the refund: 6 months from the date of invoice

Key vocabulary input tax output tax deductible legal entity taxable activity non-resident taxable person to be exempt from taxable transaction supply of goods or services consideration free of charge customs duty customs clearance processing (of goods)

Thank you for your attention!