03/2013. Tax News - Croatia

Transcription

1 03/2013 Tax News - Croatia

2 New VAT Act As we previously informed you, a draft version of the new VAT Act has been discussed in the Croatian Parliament. It passed at the first reading on 19 April. The Croatian Government will prepare the final draft of the new VAT Act taking into consideration remarks, suggestions and opinions received during discussions. It is expected that the new VAT Act will be passed by the Parliament by the end of May. In previous newsletters we have outlined some of the key changes that will be introduced by the new VAT legislation as of 1 July Here we provide some additional points. Information on taxpayers Croatian taxpayers should check whether the information stated on their invoices (name, address, registered seat) corresponds with that stated in the court registry and in the Tax Authorities system, from where such information will be transferred to the VIES (VAT Information Exchange System) database upon obtaining the VAT number. The VIES database is a network of national VIES databases for the transmission of information relating to VAT (validity of VAT numbers, information relating to supplies between Member States etc.). The information stated on invoices should be in line with that stated in the VIES database. Onward supply relief Article 44, Paragraph 1, Item 26 of the draft of the new VAT Act prescribes that the importation of goods from third countries to Croatia should be exempt from Croatian VAT if the goods in question are intended to be transported to another Member State (this is known as Procedure 42). The goods should be dispatched to another Member State as soon as they are imported and the importer should have upfront evidence that the goods are intended to be transported or dispatched to another Member State (this evidence should be an invoice, contract of carriage, the VAT identification number of the recipient). Domestic reverse charge of VAT New special regime will be applicable as of 1 July 2013 with respect to certain supplies received by a Croatian VAT payer. According to the new rule, no VAT would be charged by the suppliers on the invoice. Instead, the recipient would be obliged to charge respective VAT. Supplies on which new rule will apply include construction work (repair, maintenance, alteration and demolition services in relation to immovable property), supply of staff engaged in construction work, supplies of waste, supplies of immovable property in a compulsory sale procedure and similar. The aim of this measure is to avoid or minimise situations of non payment of VAT to the Tax Authorities. Act on the implementation of the EU customs rules In becoming an EU member, Croatia is committed to applying the common customs regulations. The EU customs system is based on the Community Customs Code and the Regulation for implementing the Community Customs Code. As of 1 July 2013, Croatia will also apply the Act on the implementation of the EU customs rules, which will regulate the provisions that are not within the competence of the EU. The Croatian Act on the implementation of the EU customs rules, among other things, covers the following: It includes provisions relating to representation in customs procedures and defines who can be customs representatives in Croatia. It defines the jurisdiction in charge for issuing binding opinions relating to customs tariff classification and preferential and non-preferential origin. It defines border crossings and official sites, the control measures relating to these and the obligations of officials. It includes additional regulations with respect to temporary import/export procedures and the area in which the goods may be temporarily placed. It additionally defines how customs declarations should be completed It defines some of the measures of customs control in a free zone. The Croatian Act on the implementation of the EU customs rules supersedes current Croatian customs legislation (including the Croatian Customs Act and the Customs Tariff Act). New customs regulations will also be published based on the Act on the implementation of the EU customs rules (e.g. regulation on allocating tariff quotas). 2 Ernst & Young Tax News - Croatia 03/2013

3 Outbound assignees may need to notify authorities of their move, based on new Act on residence The new Act on residence (Official gazette 144/12) prescribes that Croatian citizens must notify the relevant police authority on their permanent move from Croatia, or temporary absence from Croatia longer than one year for the purpose of education, temporary work abroad (includes outbound assignees), long term medical treatments or any other reasons. Generally, the police authority should be notified before an individual moves abroad, or within 15 days of arrival to the foreign country (this can be done via the Croatian diplomatic mission). Upon return to Croatia, the person should notify the relevant authority within 15 days. Croatian citizens who were already temporarily absent from Croatia when the new Act entered into force (29 December 2012) should notify the relevant Police authority (also possible via relevant Croatian diplomatic mission) by 29 December Constitutional court temporarily suspended taxation of dividends realized before 1 March 2012 On 3 April 2013 the Croatian Constitutional court issued a resolution temporarily suspending any collection of personal income tax on dividends which were earned before March 2012, when amendments to the Personal Income Tax Act were introduced (Official Gazette 22/12). The provisions of the Act on Amendments to the Personal Income Tax Act that the Constitutional court will be reviewing (specifically: Art 7 Para 2, Art 16 Para 3, and Art 18) stipulate that any dividend paid out after 1 March 2012 is subject to personal income tax (apart from dividends earned before 2001). The Constitutional Court will review the formal and material aspects of these provisions due to (inter alia) retroactive application of personal income tax to dividends earned in the period (a period in which dividends were not subject to personal income tax). The suspension of taxation is only temporary until the Constitutional court issues its final ruling. 3 Ernst & Young Tax News - Croatia 03/2013

4 Reprogramming of the tax debt and write off of penalty interest of individuals Based on the Act on the collection of the tax debt of individuals, persons who are no longer engaged in performing registered activity and individuals in sectors of agriculture and fishery may be granted the following: reprogramming of payment of the principal debt at an interest rate of 4.5% by paying in monthly installments with a simultaneous write off of the penalty interest, or write off of the accrued penalty interest if the taxpayer pays of the principal debt in one payment. The Act will apply only to tax debt collection of individuals who submit the request until 7 August Film industry incentives in Croatia Croatia wishes to make itself an attractive destination for domestic and foreign film and television production companies. With this aim in mind the Government has introduced financial incentives for film companies, which are delivered via the Croatian Audiovisual Centre, the agency for the audiovisual sector in Croatia. The incentives are paid directly by the Agency in the form of a 20% cash refund of the qualified costs spent in Croatia. Qualified costs generally include, but are not limited to: Salaries and other compensation including related personal income tax and social security contributions for Croatian actors, technical and production crew, directors and producers. Personal income tax and social security contributions paid in Croatia relating to salaries/compensation received by foreign actors, technical and production crew, directors and producers. Purchases of goods and services made in Croatia. In order to qualify for the cash rebate, production companies will have to spend at least HRK 2 million (approximately EUR 260,000) for feature films, HRK 1 million (approximately EUR 130,000) for TV films and HRK 500,000 (approximately EUR 66,000) for animated films. The funds available for cash incentives are to be announced annually and distributed on a first-come first-served basis. The financial incentive is capped at HRK 4 million (approximately EUR 530,000) per film. 4 Ernst & Young Tax News - Croatia 03/2013

5 Contacts Ernst & Young Dénes Szabó Partner Tel: +385 (1) Katarina Dijan Tel: +385 (1) Marta Glasnović Tel: +385 (1) Sanja Stojić Tel: +385 (1) Maša Šarić Tel: +385 (1) Dunja Hitrec Tel: +385 (1) Vladimir Nol Manager Tel: +385 (1) Marko Starčević Manager Tel: +385 (1) Assurance Tax Transactions Advisory About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Ernst & Young Advisory LLC Radnička cesta 50, Zagreb, Croatia Tel: Fax: Ernst & Young Advisory LLC All Rights Reserved. This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research of the exercise of professional judgment. Neither Ernst & Young Advisory LLC nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication.on any specific matter, reference should be made to the appropriate advisor. For more information, please visit Ernst & Young Tax News - Croatia 03/2013