Many questions arise with entrepreneurship, and one of them is the process of procuring goods from abroad. Below is the basic course of the process, and you can always contact Confida’s team of experts for specific concerns.
Given that the Republic of Croatia is one of the EU members, it is logical that the procurement process differs within the EU from those that are not. Within the EU, such procurement is called mergers, while procurement from all other countries in the world is called imports.
No matter where the entrepreneur gets the goods from, the process is the same. Whether it is direct contact with the supplier, or through the webshop. In any case, foreign goods with an invoice come to the Croatian border where it is then cleared through a freight forwarder. What customs officers need to know is who hired the freight forwarder – whether it is the seller or the buyer, and whether the freight forwarder is in the price of the purchased goods or not. This does not include smaller items that arrive by mail, they are cleared at the post office through a very simple procedure.
VAT and customs duties are paid before the goods are taken from the customs warehouse. Most often, everything is paid together to the freight forwarder, who keeps the amount for his service and pays the corresponding part to the state budget. The customs office also calculates VAT on imported goods, and all costs incurred during import make up the total purchase price of the goods.
As for the documentation, it is important to know that it is complete if it contains an invoice of a foreign supplier with all information about the buyer and supplier, goods and other conditions relevant to the business, freight forwarding documents, transport documents, and invoices for them, invoice for freight forwarding and customs declaration.
Customs duties will always be part of the purchase price, while VAT will be able to be used as input tax depending on whether the importer is in the VAT system and depending on the purpose of purchasing the goods. If the entrepreneur is in the VAT system, he will probably be able to use the paid VAT as input tax in the same month when it is imported. However, if the entrepreneur is not in the VAT system, then VAT is a cost. These rules apply if the entrepreneur, ie the buyer, procures goods for the purpose for which the pre-tax is allowed to be used.
If the entrepreneur procures goods for a purpose for which input tax is not allowed, the postings should be made in a way that this rule is respected, where VAT will also represent a cost. However, if an entrepreneur procures goods from abroad for business gifts, part of the VAT will be a tax-deductible expense.
