Croatia Requests Derogation for Small Business Exemption Threshold

On June 8th, the Republic of Croatia submitted a final proposal to the European Commission, requesting a derogation from the EU VAT Directive regarding threshold amounts for tax application on small enterprises. This derogation would allow Croatia to exempt from VAT taxable persons whose annual turnover is EUR 45 000, effective January 1, 2018.  Under Article 287 of the EU VAT Directive, the current threshold for exemption is EUR 35 000. Croatia’s request is not without precedent, as the EU Commission has granted similar variances from the threshold for Luxembourg, Belgium, Poland, Lithuania, Latvia, Slovenia, Italy, and Romania. The EU Commission has yet to issue a decision on Croatia’s proposal; a full copy of the submitted document is available here

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