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Croatia is entering a significant period of change in its VAT framework as the Ministry of Finance moves ahead with a package of reforms that will reshape how businesses issue invoices, report transactions and determine their VAT obligations. A draft bill amending the VAT Act was released for consultation in September 2025, with the consultation window running until mid-October. This marks the latest step in Croatia’s plan to modernise its VAT system as part of a broader shift toward digital reporting.
One of the most notable developments is the evolution of the fiscalisation system, which has been central to Croatian tax control for more than a decade. A new structure under the updated Fiscalisation Act takes effect from September 2025 and requires additional invoice data fields, including the method of payment and enhanced identity and security information for the issuer.
These changes lay the groundwork for Croatia’s transition to mandatory e-invoicingElectronic invoicing - widely referred to as e-invoicing - is the exchange of a digital document between a supplier and a buyer. E-invoices are issued, transmitted and received in a structured data format that enabled automatic and electronic processing. They contain data in a machine-readable format so that an AP system can read an invoice without manual data entry, leading to faster and more efficient invoicing., which will become a nationwide requirement from January 2026. Although electronic invoicing will be the default method, paper invoices may still be issued in limited cases where the recipient cannot be identified through the national metadata service directory. This hybrid approach is designed to keep the system functional during the early stages of the rollout, while encouraging full adoption over time.
Alongside the move to digital invoices, Croatia is revising elements of its VAT regime to ease administrative pressure on smaller taxpayers. The threshold allowing domestic businesses to remain outside the VAT system has been raised to €60,000 in annual turnover from January 2025.
The reform package also extends elements of the small-taxpayer treatment to certain non-resident EU businesses, provided they meet strict turnover criteria in both Croatia and the wider EU. This adjustment is intended to reduce compliance burdens for micro-enterprises while still protecting the integrity of the tax base.
The draft VAT Act amendments published this autumn underline Croatia’s intention to fully integrate VAT reporting into its new e-invoicing environment from 2026. Extended deadlines, streamlined reporting processes, and alignment with real-time data flows all signal an effort to bring the country in line with European trends.
For tax and finance teams, the reforms represent a shift from traditional periodic reporting to a more structured, data-driven system that will gradually reduce the space for errors, delays or inconsistencies.
Croatia’s trajectory mirrors wider EU developments, but the pace and scope of its fiscalisation and e-invoicing reforms mark an especially ambitious phase. Over the next year, the focus will turn to system readiness, interoperability and ensuring the new framework integrates smoothly with Croatia’s established tax controls.
This transition will shape how businesses manage VAT for years to come, and the legislative process set in motion in 2025 confirms that the country is firmly committed to a digital VAT future.
