News from the Republic of Croatia
Tax Authority's opinion – Application of the VAT rate on the supply of solar tiles
The Tax Authority has issued an opinion regarding the application of the VAT rate on the supply of solar tiles.
Namely, the Tax Authority has received an inquiry related to the application of the VAT rate on the supply of solar tiles. It is stated that the question does not refer to the classic solar panels, but Terran Generon solar tiles. In particular, subject solar cells are integrated into a concrete tile, which will be launched on the Croatian market for the first time.
In its response, the Tax Authority states that, according to the provisions of Article 38, Paragraph 6 of the VAT Act (Official Gazette, No. 73/13, 99/13, 148/13, 153/13, 143/14, 115/16, 106/18, 121/19, 138/20, 39/22 and 113/22) from October 1 2022, VAT is calculated and paid at a rate of 0% on the supply and installation of solar panels on private residential buildings, living spaces and public and other buildings used for activities of public interest and supply and installation of solar panels near such objects, buildings and spaces.
Thereby, the term supply and installation of solar panels includes realization of projects related to performance of simple buildings in the sense of the law regulating construction, which includes both the project and implementation part by one or more contractors. In addition to all before mentioned, all necessary equipment and works are also taxed at VAT rate of 0% (including the equipment group photovoltaic panels, inverter, battery (optional), building structure and cable distribution, solar collectors, hot water tank, circulation pump and works and services such as execution of assembly works, designing and obtaining permits and connection to the electric power distributing network).
Finally, the Tax Authority states that the provision of the VAT Act which prescribes VAT taxation at a rate of 0% is not applicable to the supply of solar tiles, i.e. it is taxed at a standard VAT rate of 25%.
Rulebook on amendments to the Rulebook on Personal Income Tax
Recently, Rulebook on amendments to the Rulebook on Personal Income Tax came into force. The amendments refer to the harmonization of the Rulebook with the provisions of the Personal Income Tax Act regarding the payment of compensation on the account and also prescribes a new non-taxable receipt which enables an employer to pay non-taxable flat-rate compensation to an employee who works at a separate workplace, i.e. work from home, in accordance with the provisions of the Labour Act. This new non-taxable receipt will amount up to 3.98 euros per day of work from home, and a up to 66.37 euros per month.
Rulebook on amendments to the Rulebook on Corporate Income Tax
In Official Gazette No. 156/2022 from December 30, 2022 the Rulebook on amendments to the Rulebook on Corporate Income Tax was published, which came into force on January 1, 2023. Except the fact that the amounts in Kunas were replaced by amounts in Euros and the provisions related to the Investment Incentive Act were changed, below we have highlighted some additional changes.
Costs related to vehicles for personal transportation
An additional provision was introduced regarding the costs related to vehicles for personal transportation for which it is not necessary to increase the Corporate Income Tax base. Namely, costs related to vehicles for personal transportation defined in Article 25 Paragraph 1 do not include costs related to vehicles for personal transportation that, in addition to the driver's seat, have at least 7 or at most 8 seats that are used exclusively for the transport of workers in the case of work in the work field if the employer organizes the transport of workers to the place of work field and returning from the place of work field.
The right to carry forward tax losses
In accordance with the new Rulebook, the provisions related to the right to carry forward tax losses within statutory changes have also changed. Specifically, the legal successor has right to use tax losses carried forward and reduce Corporate Income Tax base within the period of five years, starting from the year when tax losses occurred at legal predecessor, as if the statutory change had not occurred.
Just to remind, according to the provisions that were in force until December 31, 2022, during statutory changes, there was a loss of one tax period when it comes to the right to carry forward the tax losses.