Italy: Croatia Joins The European Union - VAT Perspectives

Last Updated: 19 July 2013
Article by Batini Colombo Saottinis' Tax Team


Following Croatia's admittance to the European Union, starting from July 1st 2013, exchanges incurred with operators resident in that Country are now subject to the discipline of European Union exchanges and are no more considered as exportations or importations.

With this tax update we summarize procedures and fulfilments compulsory for those exchanges made in the "interim" period crossing the date of admittance.


On December 9th 2012 the EU signed the treaty to admit the Republic of Croatia to the Union; the treaty has been ratified by the Italian Government with the Law nr. 17/2012.

Starting from July 1st 2013 all exchanges regarding goods from and to Croatia are therefore no more qualified as importations nor exportation, both from a fiscal and a custom point of view. They are now EU exchanges taxed in the country of destination by the purchaser subject to VAT.

The article 60 of the Law Decree nr. 331/1993 rules the interim regimen applicable to goods exchanged with operators placed in Croatia for the period crossing the entry of Croatia in the EU.

The Italian Custom Agency, with the Circular Message nr. 11/D/2013 has clarified some important aspects of the interim period for exchanges in due course at July 1st 2013.


With the entrance of Croatia in the EU, members became 28 (here below the list of all Member States):

Austria (AT)

Latvia (LV)

Belgium (BE)

Lithuania (LT)

Bulgaria (BG)

Luxemburg (LU)

Cyprus (CY)

Malta (MT)

Croatia (HR)

Netherland (NL)

Denmark (DK)

Poland (PL)

Estonia (EE)

Portugal (PT)

Finland (FI)

Czech Republic (CZ)

France (FR)

Romania (RO)

Germany (DE)

Slovakia (SK)

Greece (EL)

Slovenia (SI)

Great Britain (GB)

Spain (ES)

Ireland (IE)

Sweden (SE)

Italia (IT)

Hungary (HU)

For VAT purposes the EU territory is the one included in the Treaty that established the EU itself made by the sum of the territories of the single Member States.

Nevertheless the definition of the EU given for VAT doesn't correspond to politic boundaries.

In fact there are some territories that although being politically part of the Italian one, or the one of another Member State, are considered as extra-EU for the application of the VAT itself. They are:


Eastern zoned under the control of Turkey


Aland Islands


Overseas Departments (Guadalupe, French Guyana, Martinique e Reunion)


Helgoland Island and Busingen Territory


Mount Athos

Great Britain

Channel Islands (Jersey, Guernsey, etc.)


Livigno, Campione d'Italia and the Italian waters of the Lake of Lugan


Ceuta, Melilla and Canary Islands

Moreover there are territories that although not politically part of the EU are in any case subject to VAT rules. They are:


Akrotiri and Dhekelia governed by the United Kingdom


Principate du Monaco

Great Britain

Isle of Man

As happened in 2007, when Romania and Bulgaria joined the EU, exchanges made with Croatia within the period crossing the entry in the EU have to be carefully analysed.

In particular, for what concerns the EU discipline, we need to refer to article 60 of the Law Decree nr. 331/1993 (changing the date of December 31st 1992 with the date June 30th 2013 and the date January 1st 1993 with the date July 1st 2013), and to clarifications issued by the Financial Administration when other countries joined the Community (Ministry Circular Message 45/E/1995, 286/E/1995 and 39/E/2004).


The article 60, paragraph 5 of the Law Decree 331/1993 states that goods introduced in Italy after June 30th 2013 have to be considered as EU purchases for VAT, even if the price has been already invoiced and/or paid, entirely or partially, before that date.

Nevertheless we'd like to underline that following modifications introduced by article 39, paragraph 1 and 2, of the Law Decree nr. 331/1993:

1. the taxable event, both for EU sales and purchases, is the one of the delivery or shipment of the goods starting from the Member Sates of origin (and no more the delivery of goods into the territory of the State);

2. the taxable event hasn't to be anticipated as a consequence of the payment or prepayments.

Therefore the interim rule of article 60, paragraph 5, is now applicable with exclusive reference to purchases that left Croatia toward Italy after June 30th 2013, for which the Croatian seller has issued the invoice before that date (very remote chances).

Article 60, paragraph 5, states that for those purchases of goods, qualified as EU exchanges, parties have to follow the regularization procedure stated by article 45, paragraph 5 of the Law Decree 331/1993.

Therefore, in case the purchaser doesn't receive the invoice from the seller within the second month following the exchange (or better, following the delivery or the shipment of goods from the Croatian territory), the Italian purchaser his obliged to issue, within the 15th day of the 3rd month following the exchange, a self-invoice to pay VAT.

If the invoiced received include an amount lower than the actual one, the seller has to issue an integrative invoice within the 15th day following the processing of the original invoice (or self-invoice).

Finally, article 60, paragraph 5, obliges the purchaser (and the seller) to include the exchange in the EC Lists (INTRASTAT Forms).


If the Croatian operator still hasn't an identification code, but give the proof of being a VAT subject and having applied for the same, the Italian operator can consider the exchange as a EU purchase, provide that the invoice received is later integrated with the VAT number of purchaser.

Once the VAT number is obtained, the national seller has to file the form INTRA 2-ter.

The electronic system to check EU VAT numbers, made available by the Italian Tax Agency, has already been integrated with details of Croatian operators:


Purchases made starting from July 1st 2013 follow the ordinary procedure set by the discipline. Is therefore mandatory to apply to VIES System and communicate your VAT number (preceded by the suffix "IT") to the Croatian supplier.

Within the 15th day following the month when invoice is received, and with reference to the previous month, the invoice of the Croatian supplier has to be integrated with the amount of VAT or with the article of exclusion or exemption, and processed within both the VAT registers of sales and purchases (in order to recover this VAT).

In case the invoice of the Croatian supplier is not received within the second month following the exchange, the domestic purchaser has to issue a self-invoice within the 15th day following the 3rd month of the exchange. If the invoiced received include an amount lower than the actual one, the seller has to issue an integrative invoice within the 15th day following the processing of the original invoice (or self-invoice).

EU purchases have to be included in the EC Lists (INTRASTAT Forms).


Sales of goods delivered or shipped toward Croatia after June 30th 2013, for which the invoice has been issued before July 1st 2013, article 60, paragraph 6, foresees that the exchanges is considered as an exportation (under article 8, paragraph 1, letter a) of the Republic Presidential Decree nr. 633/1972), given that those exchanges are not taxable for VAT under article 41 of the Law Decree 331/1993.

Filing the EC lists, the operator will have to include also exchanges invoiced in advance under the non taxability regimen stated by article 8 of the RPD 633/1972.

Therefore, if the exchange invoiced as "direct" exportation is not included in those disciplined by article 41 of the Law Decree 331/1993 (because, in example, the Croatian operator is exempted or is not able to provide a VAT identification number), the domestic seller is obliged to amend the invoice already issued as exempted and apply VAT as if the exchange was made within the domestic country.

In any case with the new article 39 of the Law Decree nr. 331/1993, prepayments does not count within EU exchanges. The relevant moment of the exchanges is, in fact, identified in the delivery of the goods from the EU State of origin.


In case the Croatian purchaser is still not identified for VAT, but gives the proof of being a VAT subject and to have applied for an identification number, the Italian seller can issue its invoice without charging VAT, given that the same invoice is later integrated with the VAT number of the purchaser.

When the Croatian purchaser obtains an identification code, the domestic seller has to file the ECL (INTRA 1-ter form).

The electronic system to check EU VAT numbers, made available by the Italian Tax Agency, has already been integrated with details of Croatian operators:


EU sales of goods made starting from July 1st 2013 follow ordinary procedures foreseen by the Law Decree 331/1993.

Before selling the goods the Italian seller needs to be provided with the identification number of the Croatian customer and needs to verify its inclusion in the VIES System.

Within the 15th day of the month following the one of delivery if goods from Italy, the seller has to issue an invoice nit taxable for VAT under article 41 of the Law Decree nr. 331/1993, including in the same invoice the ID number of the Croatian customer. Within the same term the invoice has to be processed within the VAT Register of Sales.

EU sales of goods have to included in the EC List (INTRASTAT form) to be file and submitted to the Italian Customs Agency.


Here below we analyse fiscal consequences of the admission of Croatian in the EU for what concerns the exchange of services.


The Italian seller who is intended to sell "generic" services to a VAT subject in Croatia, has, first of all, to apply for the VIES System.

VIES application is also mandatory for domestic VAT subject who purchase services from a Croatian services supplier (the Croatian seller is, in fact, called to verify the existence of a VAT number for the Italian customer within the VIES System, before performing its services).


Starting from January 1st 2013 the obligation to pay VAT through the "reverse-charge" mechanism, with relation to EU services relevant in Italy, being them "generic" or "specific" services, has to be observed according to the rules enforced by articles 46 and 47 of the Law Decree nr. 331/1993 (therefore with the same rules foreseen for EU purchases of goods).

Therefore, invoices received from Croatian suppliers, if relevant in Italy for VAT, will no more need to be self-invoiced as per article 17, paragraph 2 of the RPD 633/1972 (with an invoice issued within the 15th day of the month following the one of performance and processing of the same invoice within VAT register of sales within the issuing date), but will need to be integrated on the same document.

In particular, the invoiced received without VAT charge has to be numerated and integrated with the amount of the exchange in euro and with all the other elements that concur to determine the taxable amount, with the amount of VAT (or with the title for exemption or the non taxability), within the 15th day of the month following the one of its receiving.

For the calculation of the taxable amount, article 13, paragraph 4 of the RPD 633/1972, foresees that amounts due, expenses and charges suffered in a foreign exchange rate, have to be converted according to the exchange rate of the day of the performance, or in case of missed in formation in the invoice, of the same date of its issuing; in case the exchange rate for the date is missing, it has to be considered to nearest day available.

The document has to be processed in the VAT register of sales within the same term (15th day of the month following the one of receiving) with reference to the previous month.

The invoice can be processed in the VAT register of purchases within 2 years (term for VAT recovery as per article 19, paragraph 1 of the RPD 633/1972).

The integration of the invoice under article 46 and 47 of the Law Decree 331/1993, implies the respect of the term foreseen by article 46, paragraph 5 for the issuing of the self-invoice in case of missed delivery of the foreign invoice. In addition in case the invoice received shows an amount lower than the actual one, the domestic purchaser is obliged to issue an integrative invoice within the 15th day of the month following the processing of the original invoice, always with reference to the previous month.


"Generic" services under article 7-ter of the RPD 633/1972 sold or purchased from VAT subject resident in Croatia have now to be included in EC Lists (INTRASTAT forms).

In particular the article 50, paragraph 6 of the Law Decree 331/1993, states the obligation to declare generic services performed by Italian resident VAT subjects to other VAT subjects resident in other Member States and received by Italian VAT subject form other VAT subjects resident in other Member States.

The obligation to file EC Lists doesn't include exchanges of "specific" services as per articles 7-quarter and 7-quiniquies of the RPD 633/1972.

As clarified by the Circular Message of the Italian Tax Agency nr. 36/E/2010, domestic VAT subjects are not obliged to declare services sold for which VAT is not due in the Member State where the purchaser is placed, nor the ones received by a EU seller for which VAT is not due in Italy.

As also clarified by the Circular Message nr. 43/E/2010, to ascertain that a certain service is considered not taxable or exempted in the Country of business of the purchaser, the Italian provider is obliged to require a written confirmation to the purchaser stating that the service is not taxable or exempted in his Country of business.

The same statement can be released just one time by the EU purchaser with regard to all services of the same nature received and it is valid until characteristics of the performed services or the tax treatment of the same remain unmodified in the Country of the purchaser.

In case this declaration is missing, the Italian tax payer is legitimated to not include these service in the EC Lists only if he has objective elements to prove that those services are not taxable for VAT purposes in the Member State of the purchaser.


Saved "generic" services under article 7-ter of the RPD 633/1972, that are relevant in the place of business of the purchaser VAT subject, the entry of Croatia in the EU produces relevant effects for the so called "specific" services.

In example, leasing and short term renting services for vehicles under article 7-quarter, paragraph 1, letter e) of the RPD 633/1972, from July 1st 2013 become entirely taxable for VAT in Italy if the vehicle is made available in Croatia and used in Italy.

Again, the transportation of goods sold to individuals (private consumers) under article 7-sexies, paragraph 1, letter c) of the RPD 633/1972, are now relevant in Italy for VAT if the transport begins in Italy and not subject to VAT in Italy if the transport begins in Croatia.

Therefore it is extremely important to be very careful to territoriality principles foreseen by articles 7-quater, 7-quinquies, 7-sexies and 7-septies of the RPD 633/1972 when the counterpart, VAT subject or not, is placed in Croatia.


International services, or connected with international services, ruled by article 9 of the RPD 633/1972, benefit from non VAT taxability because are considered as linked to operations with a foreign country.

Following the entry of Croatia in the EU, the most part of these exchanges can no more benefit from VAT exemption (just consider transport to and from Croatia, to services on shipments on goods to and from Croatia, to services of loading, downloading, transfer and similar connected to goods leaving Croatia or coming from Croatia, to brokerage services on goods shipped to Croatia or coming from Croatia, that up to June 30th could be considered services connected to exportations or importations).


The so called "passive completion" consists in shipping goods abroad, outside the EU, to be manufactured, transformed or repaired, with a following re-importation of the same as the result of the work done.

For these exchanges until December 31st 2009 VAT on manufacturing services was paid at the Custom at the moment of their re-importation and was calculated on the difference between the custom value and the one declared at the moment of their temporary exportation; starting from 2010, instead, following modifications introduced on the territoriality of services, the VAT on the said value became due by the national purchaser through the issuing of a self-invoice or integration of the foreign invoice.

In order to avoid negative effects, with the Circular Message nr. 37/E/2011, the Italian Tax Agency has clarified that the purchaser who, before the re-importation, has already charged VAT on the manufacturing service with a self-invoice or with the integration of the foreign invoice, can demonstrate with appropriate documentation to have already paid VAT; in this case, VAT already paid with the reverse-charge mechanism, will be subtracted from the VAT due at Custom.

Where this is not possible, the Italian Tax Agency deems that the previous procedure can be still used with the calculation and the payment of VAT at Custom when goods are re-imported; in this case the invoice already issued has to include the following statement: "VAT already paid at Custom with custom document nr. ....".


The article 38-bis 1 of the RPD 633/1972 states that Italian VAT subjects can apply for the refund of VAT paid in another EU Member State.

Therefore also VAT paid in Croatia starting from July 1st 2013 on goods and services purchased or imported can be refunded according the above mentioned article.


The new paragraph 6-bis of the article 21 of the RPD 633/1092 has extended the obligation to issue an invoice to the most part of exchanges not subject to VAT for the lack of territoriality requisite.

In particular all VAT subject established in the Italian territory are obliged to issue an invoice also for the below mentioned exchanges when they are not subject to VAT under articles from 7 to 7-septies of the said Decree:

1. sales of goods and services, different from the ones included in article 10, from number 1) to number 4) and 9 of the RPD 633/1972, to a VAT subject obliged to pay VAT in another member state (with the indication of the "reverse- charge");

2. sales of goods and services the are considered as made outside the EU (with the indication "exchange not subject to VAT", given that VAT is not due neither in Italy, nor in another EU Member States);

Therefore the extraterritorial exchanges that until June 30th 2013 were invoiced to Croatian VAT subjects with the indication "exchange not subject to VAT", starting from July 1st 2013 have to be invoiced with the indication "reverse-charge" if territorially relevant in Croatia (being excluded just naturally exempted exchanges, such as financial and insurance services related to mandate and brokerage services).

Those exchanges concur to determine the general VAT amount of the year of the tax payer ("Volume d'Affari").


Starting from July 1st 2013, VAT subjects established in Croatia can directly identify themselves for VAT in Italy following the procedure enforced by article 35-ter of the RPD 633/1972. If they already have appointed a Fiscal Representative in Italy, they can switch to the direct identification, but they have first to deregister their VAT in Italy obtained through the Fiscal Representative itself.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Batini Colombo Saottinis' Tax Team
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