Croatia Tax Agency Clarifies VAT Treatment of Subsidies for Public Passenger Transport Service Providers

The Croatian Tax Administration March 6 clarified the VAT treatment of public subsidies for passenger transport service providers. A taxpayer sought clarification of the VAT treatment of subsidies that a county would grant to contracted carriers for providing discounted or preferential rail or road tickets as part of the county’s public passenger transport service. The Tax Administration clarified that: 1) under the VAT Ordinance, the VAT base includes subsidies and other incentives from the budget if directly related to the price of the goods or services supplied; and 2) the subsidies would, therefore, be included in the VAT-taxable fee for ...