Croatia is moving toward mandatory e-Invoicing for all major transaction types (B2B, B2G, and B2C). The Ministry of Finance recently released a draft law on fiscalization, expanding its current rules that primarily cover cash transactions to include all invoices—whether for final consumption, inter-business trade, or business with public authorities.
A public consultation on this draft law, which is open until March 28, 2025, seeks feedback on obligations, timelines, and technical specifications. These changes aim to enhance real-time invoice reporting, bolster digital security, and solidify tax compliance within Croatia’s VAT system.
1. Key Implementation Timelines
One of the most important aspects of the proposed law is its phased rollout of e-invoicing obligations:
- From September 1, 2025
- Voluntary Testing Phase begins. Taxpayers can integrate and test their e-invoice issuance, transmission, and reporting systems.
- From January 1, 2026
- VAT-Registered Taxpayers must exclusively issue e-invoices and follow fiscalization procedures for B2C transactions.
- B2C invoices for final consumption must be digitally recorded regardless of payment method.
- From January 1, 2027
- All Other Taxpayers (outside the VAT system) must issue e-invoices.
- Full adoption of e-invoicing applies across the board.
By phasing in requirements, Croatia aims to give businesses time to test, adapt, and resolve technical issues before mandatory compliance.
2. From Cash Transactions to Full Fiscalization
Previously, Croatia’s fiscalization rules primarily addressed cash payments. The draft law significantly broadens the scope to ensure all invoices are fiscally recorded:
- B2C (Final Consumption): Invoices for goods or services provided to citizens, regardless of payment method.
- B2B: Between VAT-registered taxpayers, including mandatory real-time e-invoice data submission.
- B2G: Invoices issued to government institutions.
By extending fiscalization to cover the entire invoice lifecycle—issuance, exchange, and payment—Croatia aims to streamline and digitize its VAT system for better oversight.
3. Real-Time Reporting & Validation
3.1 Proposed Reporting Procedures
Under the draft law, issuers and recipients of invoices must send transaction data to the tax administration’s fiscalization system in near real time:
- Digital Certificate Check: Mandatory elements must be accompanied by a valid signature to confirm authenticity.
- Fiscalization Messages: Subsets of invoice data go to the Tax Administration from both the issuer and the recipient.
- Cross-Verification: The system matches data from each party, identifying any discrepancies almost immediately.
3.2 Implications for Businesses
- Fraud Reduction: Instant matching of invoice details helps detect irregularities early.
- Faster Audits: Authorities see transactions in real time, lessening the burden of manual audits.
- Cryptographic Integrity: Proper e-signature solutions are necessary to meet validation standards.
4. e-Invoicing Scope & Exemptions
The draft law references specific exemptions (Article 4) from e-invoicing or real-time reporting. While details may evolve, some smaller taxpayers or unique scenarios could remain outside the full scope. Anyone potentially eligible for exemptions should review the draft and take part in the public consultation.
In addition, the law clarifies that existing invoice exemptions under special regulations remain, unless the new rules explicitly override them.
5. Draft Law Structure and Key Provisions
- General Provisions & Glossary
- Updated definitions (e.g., “turnover in final consumption”) to include all possible payment methods.
- Fiscalization in B2C
- Extends beyond cash to any payment method, removing outdated references (like checks).
- Issuance & Fiscalization of E-Invoices in B2B and B2G
- Mandates e-invoice issuance, real-time data submission, and usage of access points (e.g., PEPPOL, EDI, or APIs).
- Establishes a new eReporting mechanism to capture invoice-related events like collection, partial payments, or rejections.
- Common Provisions
- Emphasizes data security and introduces the MIKROeRAČUN application for small taxpayers.
- Transitional and Final Provisions
- Lays out the phase-in deadlines (2025–2027), data security requirements, and conditions for information intermediaries.
6. Multiple Exchange Methods & Technology Options
6.1 E-Invoice Exchange
Croatian companies may use a range of electronic channels—Peppol, EDI, Web services, or APIs—to exchange invoices, as long as validity, security, and data integrity are maintained.
6.2 Access Points & Intermediaries
The proposed framework supports access points—either in-house or third-party—that route invoices to the Tax Administration in real time. These information intermediaries must meet strict criteria:
- ISO/IEC 27001 certification
- Compliance with cybersecurity legislation
- Approved compliance test to ensure seamless data exchange
7. eReporting & Data Consistency
7.1 Real-Time Submission
Both issuer and recipient must submit fiscalization messages to the Tax Administration. This two-way reporting:
- Verifies each issued invoice.
- Confirms receipt by the buyer (or final consumer).
- Cross-checks for mismatches, reducing errors and potential tax evasion.
7.2 Additional Reporting
- Collections or rejections of e-invoices must also be logged.
- For transactions where no valid e-invoice address is available, the system captures that scenario as well.
- Recipients must share their e-invoice address with the Tax Administration, which maintains an address book for quick lookup.
8. Data Security & Cybersecurity Measures
Since e-invoices detail a company’s transactions, the law highlights robust security protocols:
- Cyber Security Act Compliance: Key entities must implement cyber risk management measures and may undergo independent audits.
- Secure Data Handling: The draft law mandates thorough data encryption and ISO 27001 standards for providers managing invoice flows.
9. Recommended Action Steps
- Assess Internal Systems:
- Check your accounting software or ERP solutions for e-invoicing capability.
- Prepare for real-time or near real-time data transmission to the Tax Administration.
- Plan for Testing (Sep 1, 2025):
- Use the voluntary testing phase to ensure system readiness and compliance.
- Upgrade Security Measures:
- Implement valid digital certificates and ensure ISO 27001 (or equivalent) compliance if acting as an access point.
- Review Draft Law & Submit Feedback:
- The consultation period ends March 28, 2025. This is an opportunity to raise concerns or clarify exemptions.
- Align with Implementation Dates:
- January 1, 2026 for VAT-registered taxpayers.
- January 1, 2027 for all remaining taxpayers.
Croatia’s push toward full e-Invoicing and broad fiscalization signals a major step in modernizing the country’s VAT compliance framework. By expanding real-time reporting to all B2B, B2G, and B2C transactions, the government seeks to curb fraud, reduce manual audits, and enhance transparency in the country’s tax system.
With significant changes on the horizon, businesses must engage early—review the draft law, prepare for testing in 2025, and ensure technical readiness. The resulting system should streamline invoice processing, align with European best practices, and bring Croatia closer to a fully digitized tax environment.
Disclaimer: This blog post is based on publicly available information from the Croatian Ministry of Finance’s draft law on fiscalization and the summarized rival article. It should not be taken as legal or tax advice.
