Mazars Tax News - April 2022

News from the Republic of Croatia

The Tax Authority recently issued a notice on obligation for submission of notification on Country-by-country reporting (CbC). Namely, the Tax Authority clarified that as of 2020 notification on CbC reporting is submitted through the ePorezna platform via so called MNP notification form, which contains the information on identity and tax residency of the reporting entity.

Moreover, Tax Authority explained that once a notification has been submitted, it is not necessary to submit the same notification again, except in the case of an error in the previously submitted notification or a change in the status of reporting entity. Changes are also submitted via the ePorezna platform by entering new data into the MNP notification form.

In addition, the Tax Authority has announced that this year the deadline for submitting MNP notification form is May 2, 2022.

Mazars comment:

We would like to note that Council Directive (EU) 2016/881 of 25 May 2016 amending Directive 2011/16 / EU with regards to mandatory automatic exchange of information in the field of taxation introduced an extension of automatic exchange of information between EU Member States on country-by-country reporting-CbC.

Automatic exchange of reports by country is one of the measures within the project on reduction of the tax base and profit shifting (Base erosion and profit shifting - BEPS) initiated by the Organization for Economic Co-operation and Development (OECD).

The CbC report contains aggregated information on the whole group of multinationals, which generally relate to the global distribution of profits, taxes paid and certain indicators of the place of business performance of the group of multinationals.

In accordance with the Act on Administrative Cooperation in the Field of Taxes and the Rulebook on Automatic Exchange of Information in the Field of Taxes, CbC reporting obligation relates to companies which are part of group of multinational companies with a total consolidated revenue exceeding EUR 750 million and are ultimate parent companies or other constituent entity of a group of multinational companies (MNC) and are residents of the Republic of Croatia for tax purposes.

If the constituent entity of MNCs, that is a resident of the Republic of Croatia for tax purposes, is not the ultimate parent company, substitute parent company or other constituent entity submitting the report, it is obliged to inform the Tax Authority about the identity and tax residency of the reporting entity by countries through MNP notification form via ePorezna platform.

Tax Authorities’ opinions  

Regarding the recent adoptions of amendments to the VAT Act and Rulebook which prescribe provisions concerning the extension of the application of reduced VAT rates of 5% and 13% to baby food, edible oils and fats, butter and margarine, meat, fish, energy, the Tax Authority recently issued several official opinions in which it briefly explained the application of the new rates.

In the first opinion, the Tax Authority commented on the application of the reduced rate for margarine and butter and concluded that VAT is calculated and paid at a reduced rate of 5% on edible oils and fats, vegetable and animal origin, in accordance with the special regulation on edible oils and fats and olive oil as defined by Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organization of the market in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) no. 234/79, (EC) no. 1037/2001 and (EC) no. 1234/2007, butter CN code  0405 10 and margarine CN code 1517 10.

In the second opinion, the Tax Authority referred to the application of a reduced rate on baby food, the packaging of snacks such as almonds and peanuts, and charcoal from CN code 4402.

The Tax Authority stated that there was no change in the scope of the reduced rate for baby food and snacks, but that the rate was reduced to 5% only for those goods that were previously taxed at a reduced VAT rate of 13%. In the case of charcoal from CN code 4402, the Tax Authority concludes that a standard rate of 25% is applied.