Mazars Tax Newsletter, October 2019

Here are the latest tax news from Croatia and the European Union.

Tax Authorities have issued a new Manual on Transfer Pricing Audit, which can serve taxpayers in assessing their own potential risks and help them to timely fulfil their obligations as members of multinational groups (related entities) towards the Tax Authorities.

The Ministry of Foreign and European Affairs announced the entry into force, on 1 November 2019, of the Agreement between the Republic of Croatia and the Republic of Korea on Social Security. It is of importance to workers who have spent part of their working life in South Korea, since such foreign retirement service is included when assessing the right to a Croatian pension.

Furthermore, another international treaty has entered into force to coordinate the application of tax legislation between the two countries: the Agreement between the Government of the Republic of Croatia and the Government of Japan on the elimination of double taxation on income taxes and the prevention of tax evasion and tax avoidance.

New European Court of Justice judgment addresses the issue of the application of VAT exemption for export transactions. According to the judgment, taxpayers performing export transactions should take all reasonable steps to verify the status of their customers and to ensure that they do not participate in any VAT fraud, which could result in disputing the application of the VAT exemption on exportation.

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