Croatian Ministry of Finance Clarifies VAT Exemption Under Article 39(1)(m) of the Croatian VAT Act

The Croatian Ministry of Finance has issued clarifying guidance related to the VAT exemptions available to non-profit entities under Article 39(1)(m) of the Croatian VAT Act. Section 1(m) of Article 39 states that "services closely related to sport or physical education performed by non-profit legal persons, to persons engaged in sport or participating in physical education, are exempt from VAT". The guidance issued by the Ministry of Finance addresses the VAT treatment of these types of services, in situations when the supply is being made by a legal business entity rather than a non-profit organization. The Ministry concludes that in order to be exempt from VAT under Article 39(1)(m), the services must be supplied by an actual non-profit entity.