Opportunity for Croatian Entrepreneurs as EU Web Store Change Coming

Lauren Simmonds

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As Suzana Varosanec/Poslovni Dnevnik writes, the flourishing of the online world and e-commerce under the influence of the ongoing coronavirus pandemic is continuing to alter the habits of consumers, and thus regulates regulators to simplify procedures, which is exactly the case in the European Union (EU) where the web shop business system is set to be significantly simplified beginning on on the 1st of July.

According to auditor Dubravka Kopun, the forthcoming EU web store changes will probably contribute to greater exchange within the bloc, but they raise the question of whether the amendment of the EU VAT Directive is a real opportunity for Croatian entrepreneurs and whether they can increase their exports as a result. Namely, Croatian taxpayers will be positively affected by these upcoming EU web store changes when they deliver goods at a distance to customers or other non-taxpayers (from Croatia to the EU), who are obliged to determine whether they must calculate any VAT placed on the item from the destination EU member state in which the delivery arrives.

“Starting from July the 1st, this process will be significantly simplified through the One Stop Shop system, which means that deliveries must be subject to the VAT of the EU member state where the goods are delivered to either citizens or to other non-taxable persons, but this doesn’t require registration in every EU country. An exception has been made for small entrepreneurs, who don’t have deliveries exceeding 77,000 kuna (excluding VAT) on an annual basis, and in that case such entrepreneurs charge Croatian VAT regardless of where their end customers are from,” explained Kopun.

All other entrepreneurs, he says, will be obliged to calculate the VAT of the EU member state to which they’re delivering their goods, and for this it will be enough just to register with the Tax Administration in Croatia. The indebtedness and payment of VAT for each individual EU country will be “at the expense of the Croatian Tax Administration, which further redirects these funds (after mutual compensations) to the tax administrations of other EU member states.”

“Some EU member states have announced separate applications from companies before the start of sales in individual countries, which is why it is necessary to first check whether there are special provisions related to prior notification, and provisions relating to the appearance of the output invoice issued in each member state,” warned Kopun, pointing out that regulations are still being prepared, but Croatian entrepreneurs, as well as those from other member states will certainly have to register in these jurisdictions before they start selling items online.

Online shopping is a form of distance selling where goods and services are offered to potential buyers through means of remote communication, and the goods are delivered to the buyer directly by the seller or through an intermediary. Since the beginning of the restriction of business activities due to the COVID-19 pandemic, interest in e-commerce has grown significantly. Figures on this topic around the world have and continue to confirm this.

“Current projections of American consumer habits for example suggest that by 2023, as many as 91 percent of the total population will be shopping online. Therefore, the opening of e-commerce during this pandemic period is certainly crucial for both the short-term and long-term strategic achievement of business goals,” said Kopun.

For more on Croatian entrepreneurs, follow our business section.


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