Like most countries, the Republic of Croatia has introduced special conditions under which tourists and travelers can enter and stay on its territory as one of the measures to prevent COVID-19 pandemic. As of July 1st the official COVID-19 digital certificates have been announced as a confirmation of either received vaccine, approved by the EU, or negative test result.
According to the Value Added Tax Act, article 39, hospital and other medical care services performed by public health care institutions or other similar institutions that have the public authority to do so, are considered nontaxable. COVID-19 testing services are therefore considered as medical services, which was confirmed by Ministry of Finance in 2020 stating that the aim of such services is to protect public health, no matter if they took place in a public or private institution and no matter the reason behind such services - as directed by a doctor or as a personal request. Therefore, COVID-19 testing services are considered nontaxable and an entrepreneur who wants to ensure that employees have been tested would then treat the full amount of invoice as a regular expense. Such invoice would not need to be reported in the VAT report.
However, if an entrepreneur performs a business activity in tourism and wishes to provide a service of testing for its guests that would later be invoiced to them, then it is considered as a taxable fee. In that case, a taxpayer is obliged to use 25% value added tax rate when invoicing the service to end client, while the institution that performs the service issues an invoice without the tax category. Entrepreneurs would, in that case, report such invoice in VAT report.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
