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Croatia – Taxation

Candidate countries conduct negotiations with the European Union (EU) in order to prepare themselves for accession. The accession negotiations cover the adoption and implementation of European legislation (acquis) and, more specifically, the priorities identified jointly by the Commission and the candidate countries in the analytical assessment (or ‘screening’) of the EU’s political and legislative acquis. Each year, the Commission reviews the progress made by candidates and evaluates the efforts required before their accession. This monitoring is the subject of annual reports presented to the Council and the European Parliament.


Commission Report [COM(2010) 660 final – SEC(2010) 1326 - Not published in the Official Journal].


The 2010 Report presents the progress made in implementing taxation rules. However, gaps remain in the area of fiscal control and the fight against fraud.

EUROPEAN UNION ACQUIS (according to the Commission’s words)

The acquis on taxation covers extensively the area of indirect taxation, namely value-added tax (VAT) and excise duties. It lays down the scope, definitions and principles of VAT. Excise duties on tobacco products, alcoholic beverages and energy products are also subject to EU legislation. As concerns direct taxation, the acquis covers some aspects of taxing income from savings of individuals and of corporate taxes. Furthermore, Member States are committed to complying with the principles of the Code of Conduct for Business Taxation, aimed at the elimination of harmful tax measures. Administrative co-operation and mutual assistance between Member States is aimed at ensuring a smooth functioning of the internal market as concerns taxation and provides tools to prevent intra-Community tax evasion and tax avoidance. Member States must ensure that the necessary implementing and enforcement capacities, including links to the relevant EU computerised taxation systems, are in place.

EVALUATION (according to the Commission’s words)

No progress was made in harmonising direct and indirect taxation legislation with the acquis. Progress can be reported in the area of operational capacity for the tax administration (taxpayers’ services and audit efficiency).


Commission Report [COM(2009) 533 final – SEC(2009) 1333 final – Not published in the Official Journal].

Commission Report [COM(2008) 674 final - SEC(2008) 2694 final - Not published in the Official Journal].
The 2008 Report noted very limited progress as regards taxation and no improvement in terms of legislative alignment. Administrative capacity was to be strengthened, as was IT interconnectivity.

Commission Report [COM(2007) 663 final - SEC(2007) 1431 - Not published in the Official Journal].
In its 2007 Report, the Commission stated that some progress had been made as regards taxation. Croatia was to continue to take steps to bring its national tax legislation into line with the Community acquis. It was also to continue to increase its administrative capacity.

Commission Report [COM(2006) 649 final – SEC(2006) 1385 – Not published in the Official Journal].
According to the 2006 Report, limited progress had been made in the field of taxation. Croatia still needed to undertake major efforts to align with the Community acquis. For instance, the tax administration needed to be reinforced and there should be greater interconnectivity between IT systems in order to implement and enforce the acquis in the field of taxation.

Commission Report [COM(2005) 561 final - SEC(2005) 1424 - Not published in the Official Journal].
The 2005 Report contained very little progress in the field of taxation as legislative activity had been extremely limited. The report indicated that major efforts were required if alignment with the acquis was to be achieved in good time. Two important priorities for Croatia were modernising the tax administration and improving IT interconnectivity.

Commission Opinion [COM(2004) 257 final - Not published in the Official Journal].
In its April 2004 Opinion, the Commission stated that Croatia had to make considerable efforts to align its legislation with the Community acquis, particularly with regard to the interconnectivity of IT systems.
In order to bring the VAT system into line with the acquis, legislation had to then be modified and sales tax removed as a matter of urgency. Further work was required regarding direct taxation and excise duties. Serious efforts were also required to recruit and train staff to strengthen the tax administration, which was not very effective at tax collection and control, and to simplify legal and prosecution procedures.

Last updated: 02.12.2010

See also

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