• Service: Tax, Global Indirect Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 5/24/2013

Croatia - Customs implications of EU membership 

May 24:  Croatia is scheduled to become a member of the European Union (EU) on 1 July 2013. With ratification of the accession treaty of the remaining two countries (Germany and Denmark) in May 2013, Croatia will become the 28th Member State of the EU.

Businesses conducting trade with, or are developing activities in Croatia, will encounter customs implications of Croatia’s accession to the EU, including:

  • As of 1 July 2013, Croatia will be part of the EU Customs territory. This means that all goods in free circulation in Croatia before that date will also be in free circulation in the EU after that date. As such, after the accession date, these goods can be dispatched to other EU Member States without customs duties being owed. This also applies to goods that are currently in free circulation in the EU and that will be dispatched to Croatia after 1 July 2013.
  • The basis assumption applying as of 1 July 2013 is that EU customs tariffs will also apply in Croatia with regard to goods imported from third countries.
  • Goods that fell under a customs arrangement at the moment of accession (such as a temporary import, transit or customs warehouse arrangement) will be exempt from customs duties if it can be demonstrated that they are of Croatian or EU origin.
  • Specific transitional rules apply to a number of customs arrangements.
  • Customs licenses that were issued by the Croatian authorities before the accession date (for example, licenses for inward processing, processing under customs control, and outward processing, as well as AEO certificates) will be valid up to one year after Croatia’s accession to the EU (if an earlier date is stated in the license, that date will apply).
  • Binding tariff information (BTI) and binding origin information (BOI) issued by the Croatian authorities before the accession date will no longer be valid after the accession date. On the other hand, any BTIs and BOIs issued in the EU before 1 July 2013 will also apply in Croatia.
  • As of 1 July 2013, goods supplied to Croatia will no longer qualify as exports, but as an intra-Community supply. Traders must therefore record and verify customers’ value added tax (VAT) registration numbers.
  • As of 1 July 2013, goods and services supplied to Croatia must be “listed” for VAT purposes.
  • Special attention needs to be paid to yachts and pleasure craft that fell under the temporary import arrangement in Croatia before 1 July 2013, and that will be released for free circulation in the EU after Croatia’s accession to the EU. In such instances, VAT is, in principle, owed on import unless it can be demonstrated that these boats had already been subject to VAT in the EU. With regard to pleasure craft of an age of eight years or older that have not already been subject to VAT in the EU, a VAT exemption on import to the EU can nevertheless apply, subject to conditions.

Read a May 2013 report [PDF 174 KB] prepared by the KPMG member firm in the Netherlands: Tax Alert - Croatia’s EU membership: Customs implications

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