How to Invoice EU Clients from Croatia

Overview

Invoicing clients in other EU countries from Croatia follows one of three paths depending on two factors: what you are selling (goods or services) and who you are selling to (a business or a consumer). Getting this right matters because applying the wrong VAT treatment can result in penalties, and the rules differ significantly between B2B and B2C transactions.

The three paths:

• Reverse charge (Path 1): For B2B services. You do not charge VAT. The client self-assesses VAT in their own country.
• OSS (Path 2): For B2C sales of goods or electronic services above 10,000 EUR per year. You charge VAT at the rate of the buyer's country.
• IOSS (Path 3): For importing goods valued under 150 EUR from outside the EU directly to EU consumers. Rarely relevant for Croatian-based businesses.

Decision table: which regime applies?

The key question is always: B2B or B2C? For B2B transactions, the VAT obligation shifts to the buyer. For B2C transactions, you as the seller are responsible for charging and paying the correct VAT.

Path 1: Reverse charge for B2B services

Reverse charge (known in Croatian as "prijenos porezne obveze") applies when you provide services to a business in another EU country that holds a valid VAT identification number. The legal basis is Article 17, Paragraph 1 of the Croatian VAT Law and Article 196 of the EU VAT Directive 2006/112/EC.

When it applies

All three conditions must be met:

• Both parties are VAT-registered businesses (a B2B transaction)
• The buyer has a valid VAT ID (verify on the VIES portal at ec.europa.eu)
• The subject of the invoice is a service, not goods (goods have separate intra-community supply rules)

Common services covered: IT development and programming, consulting and advisory services, design and creative services, translation, legal and accounting services, software licensing.

What must appear on the invoice

Every reverse charge invoice must include:

• Your OIB (Croatian tax identification number), prefixed with "HR" for VAT purposes
• The buyer's VAT ID (e.g., DE987654321 for a German company)
• The invoice amount without VAT
• A legal reference note in Croatian: "Prijenos porezne obveze prema cl. 17. st. 1. Zakona o PDV-u"
• Optionally (and recommended) the English equivalent: "Reverse charge, VAT to be accounted for by the recipient as per Article 196 of Directive 2006/112/EC"

Practical example

An IT consultant in Zagreb invoices a company in Berlin for web application development in February 2026.

ABC Consulting d.o.o.
Ilica 10, 10000 Zagreb, Croatia
OIB: HR12345678901

Buyer: TechFirma GmbH
Berliner Str. 15, 10115 Berlin, Germany
VAT ID: DE987654321

Invoice No. 2026-042
Date: March 15, 2026

Web development, February 2026:    5,000.00 EUR

Subtotal:                          5,000.00 EUR
VAT:                               0.00 EUR
TOTAL DUE:                         5,000.00 EUR

Note: Reverse charge, VAT to be accounted for
by the recipient as per Article 196 of
Directive 2006/112/EC.

Reporting in your VAT return

B2B services provided to EU businesses are reported in field II.3 of the Croatian PDV (VAT) form. You must also submit the ZP (Zbirna prijava), which is the EC Sales List, by the 20th of the following month. Note: ZP is for services you provided. Do not confuse this with PDV-S, which is for EU services you received.

Path 2: OSS for B2C sales above 10,000 EUR

The One Stop Shop (OSS) is an EU-wide system that allows you to report and pay VAT for B2C sales across all EU countries through a single quarterly return filed in Croatia via the e-Porezna portal. Without OSS, you would need to register for VAT separately in each EU country where you sell to consumers.

The 10,000 EUR threshold

The threshold applies to your total annual B2C sales to all EU private individuals combined, not per country. It includes electronic services (SaaS, online courses, streaming, hosting) and physical goods shipped from Croatia to EU consumers.

• Below 10,000 EUR per year: You can charge Croatian VAT at 25%
• Above 10,000 EUR per year: You must either register for OSS or register for VAT individually in each buyer's country

VAT rates by country

Under OSS, you charge the VAT rate of the buyer's country, not the Croatian rate of 25%.

How to register

1. Log in to the e-Porezna portal (eporezna.porezna-uprava.hr)
2. Complete the ePDV-OSS registration form
3. Registration becomes active from the first day of the next quarter (or immediately if you have already exceeded the threshold)
4. Begin tracking revenue by EU country and applicable VAT rate

Quarterly reporting

OSS returns are filed quarterly through e-Porezna. Deadlines:

• Q1 (January to March): April 30
• Q2 (April to June): July 31
• Q3 (July to September): October 31
• Q4 (October to December): January 31

You pay the total VAT to one account, and the Croatian Tax Administration distributes the funds to the respective EU countries.

Path 3: IOSS for low-value imports

The Import One Stop Shop (IOSS) is a specialized system for selling physical goods of low value (up to 150 EUR per shipment) from countries outside the EU directly to EU consumers.

When IOSS applies

All conditions must be met:

• The goods are shipped from a country outside the EU (not from Croatia or any other EU country)
• The shipment value is up to 150 EUR per package
• The buyer is a private individual in the EU (B2C)

Most Croatian businesses do not need IOSS. If you store and ship goods from Croatia or any EU country, you use OSS, not IOSS. IOSS is relevant only for businesses that sell goods from warehouses outside the EU (e.g., dropshipping from China or the US) directly to EU consumers.

Benefits for the buyer

Without IOSS, the EU customs service collects VAT from the recipient upon import, causing delivery delays and surprise charges. With IOSS, VAT is charged at the point of purchase, packages clear customs without delay, and the buyer pays no additional fees on delivery.

Registration and reporting

IOSS registration is available through e-Porezna. Unlike OSS (quarterly), IOSS returns are filed monthly. You report revenue by EU country and pay VAT at each country's rate.

Required invoice elements by regime

Common mistakes to avoid

Mistake 1: Applying reverse charge to B2C transactions. Reverse charge applies only to B2B transactions. If your client is a private individual without a VAT ID, you cannot use reverse charge. You must charge VAT (Croatian 25% for general services, or the buyer's country rate via OSS for electronic services above the threshold).

Mistake 2: Skipping VIES verification. Before issuing a VAT-free invoice for an EU B2B transaction, verify the buyer's VAT ID on the VIES portal (ec.europa.eu/taxation_customs/vies). If the number is invalid and you issued an invoice without VAT, you bear responsibility for the uncollected VAT. Save the verification confirmation as proof of due diligence.

Mistake 3: Forgetting PDV-S and ZP forms. Even when the net VAT effect is zero, the PDV-S form (for EU services you received) and ZP form (for EU B2B services you provided) must be submitted by the 20th of each month. Failure to file results in penalties of 130 to 2,650 EUR for legal entities, regardless of whether any tax is owed.

Mistake 4: Using the wrong VAT rate in OSS returns. In your OSS return, apply the VAT rate of each individual EU country, not the Croatian rate of 25%. Each EU country has its own standard rate and potentially reduced rates for certain categories. Check current rates on the European Commission's TEDB portal.

FAQ

Do I have to charge VAT to EU clients? It depends on three factors: (1) Are you selling goods or services? (2) Is the buyer a business (B2B) or a consumer (B2C)? (3) If B2C, do your total EU sales exceed 10,000 EUR per year? For B2B services, reverse charge usually applies (no VAT). For B2C sales above the threshold, use OSS and charge the buyer's country VAT rate.

What is OSS (One Stop Shop)? OSS is an EU system that lets you report and pay VAT for all EU countries through a single quarterly return filed in Croatia via e-Porezna. Instead of registering for VAT in each EU country, you use OSS to declare and pay VAT at each country's rate.

When do I use IOSS instead of OSS? IOSS is for selling goods valued up to 150 EUR that are shipped from outside the EU directly to EU consumers. If you are a Croatian company selling goods from your own inventory within the EU, use OSS, not IOSS.

How does a freelancer invoice an EU company? For B2B services (IT consulting, design, translation), apply reverse charge. Include your OIB and the buyer's VAT ID on the invoice, note "Reverse charge" with the legal reference, and do not charge VAT. The buyer self-assesses VAT in their country.

Can a lump-sum sole trader ("pausalni obrtnik") invoice EU clients? Yes. Lump-sum sole traders who are not VAT-registered can invoice EU B2B clients without VAT using reverse charge. However, if they sell goods to EU consumers above 10,000 EUR per year, they must register for OSS or local VAT in the buyer's country.

This guide is for informational purposes only and does not constitute legal or tax advice. Tax rules change frequently. Consult a qualified Croatian accountant or tax advisor for your specific situation. Last verified against official sources on the date shown above.