Croatia’s Tax Administration has recently launched “Fiscalization 2.0,” a new system aimed at revolutionizing e-invoicing, e-archiving, and online bookkeeping. The Tax Authority has outlined a two-phase plan to implement a countrywide CTC (Continuous Transaction Control) obligation. The first phase will introduce a countrywide e-invoicing mandate, followed by a countrywide DRR (Digital Reporting and Recording) mandate. Under this new system, businesses will be required to report data on sales and purchase invoices to a central infrastructure within 48 hours of issuance or reception of the document.
The current platform for B2G (Business-to-Government) e-invoicing is expected to be merged or associated with the anticipated mandate. Additionally, the Peppol Network is likely to serve as an acceptable alternative distribution channel for B2B (Business-to-Business) e-invoices once the mandate is enforced. However, it is important to note that the EN 16931 specifications, which govern the standardization of e-invoices in Europe, do not fully meet the local VAT requirements in Croatia. Therefore, either a revised EN should be implemented or an extension provided for taxpayers conducting business in Croatia.
The introduction of “Fiscalization 2.0” marks a significant step towards modernizing Croatia’s tax administration system. By implementing a comprehensive e-invoicing and online bookkeeping system, the Tax Authority aims to streamline processes, enhance transparency, and combat tax evasion. This move aligns with global trends in digitalization and reflects Croatia’s commitment to embracing technological advancements in the tax sector.
The countrywide e-invoicing mandate is expected to bring several benefits to businesses operating in Croatia. Firstly, it will simplify the invoicing process, eliminating the need for paper-based invoices and manual data entry. This will save time and reduce the risk of errors, ensuring greater accuracy in financial reporting. Additionally, e-invoicing will facilitate faster payment cycles, improving cash flow for businesses. The central infrastructure for reporting invoices will also enable real-time monitoring by the Tax Administration, enhancing compliance and reducing the likelihood of tax fraud.
The second phase of the plan, the countrywide DRR mandate, will further enhance digitalization efforts. This mandate will require businesses to maintain digital records of their transactions, ensuring easy access and retrieval for auditing purposes. By transitioning from traditional paper-based bookkeeping to online systems, businesses will not only reduce administrative burdens but also contribute to environmental sustainability by minimizing paper usage.
The Tax Administration’s decision to adopt the Peppol Network as an alternative distribution channel for B2B e-invoices demonstrates their commitment to interoperability and international standards. The Peppol Network, an international e-invoicing network, enables seamless exchange of electronic documents between businesses across different countries. By embracing this network, Croatia aims to facilitate cross-border trade and promote a more connected global economy.
However, it is crucial for businesses to ensure compliance with the new e-invoicing and online bookkeeping requirements. Adhering to the 48-hour reporting deadline is essential to avoid penalties and maintain a good standing with the Tax Administration. Companies should also stay updated on any revisions or extensions to the EN specifications to ensure their e-invoices meet the local VAT requirements in Croatia.
In conclusion, Croatia’s Tax Administration’s launch of “Fiscalization 2.0” represents a significant milestone in the country’s efforts to modernize its tax administration system. The introduction of a countrywide e-invoicing mandate, followed by a DRR mandate, will revolutionize the way businesses handle their invoices and maintain records. By embracing digitalization, Croatia aims to enhance transparency, combat tax evasion, and promote efficiency in financial reporting. It is now crucial for businesses to adapt to these changes and ensure compliance with the new requirements to reap the benefits of this digital transformation.
