Prospera MundiGuides · Lump-sum sole trade
The 60,000 EUR threshold: two counters you must keep separate
The same 60,000 EUR figure appears in two Croatian tax regimes, but one counter follows supplies and the other follows cash receipts. Treating them as one number creates expensive mistakes.
The two counters
VAT counter
Tracks the value of supplies made in the calendar year, regardless of whether the customer has paid. It answers when the small-taxpayer VAT exemption ends.
Lump-sum income-tax counter
Tracks collected business receipts. It answers whether income may still be taxed under the lump-sum regime.
Because the tests are different, a sole trader can be inside the VAT system and still remain under lump-sum income taxation until the separate lump-sum condition is lost.
What happens when the VAT threshold is crossed
The exemption ends at the crossing. VAT registration applies from the first day after the threshold is exceeded, and the P-PDV form must be filed within eight days. Exactly 60,000 EUR is not “above” the threshold; the next supply is the one that changes the status.
Do not try to manage this by delaying an invoice. The VAT counter follows the time of supply under the VAT rules, not the date that is most convenient for issuing paperwork.
What happens to the lump-sum regime
Leaving lump-sum taxation means moving to business books and the ordinary income-tax regime, or choosing another legally available form. It does not automatically require opening a d.o.o. The company decision must be made separately, using liability, costs, profit use and growth plans.
Examples
Invoices ahead of collections
A sole trader has made supplies of 62,000 EUR but collected 55,000 EUR. The VAT counter has crossed its threshold, while the lump-sum receipts counter has not yet done so. The business can therefore be in VAT while still taxed on a lump-sum basis.
The invoice that crosses the line
Supplies stand at 57,500 EUR. A 1,000 EUR supply leaves the counter at 58,500 EUR. A later 2,500 EUR supply raises it to 61,000 EUR and ends the exemption at that crossing.
Discovering the crossing late
A business issues 15,000 EUR of consumer invoices without VAT after crossing. If prices cannot be corrected, VAT at 25/125 of the gross amount is an illustrative 3,000 EUR paid from the business margin. That is why the counter must be monitored before the next invoice, not after year-end.
Frequently asked questions
Is the threshold measured by money collected?
The answer depends on the regime. Lump-sum income taxation follows receipts, while the small-taxpayer VAT threshold follows supplies. The two counters must be tracked separately.
Do I lose the lump-sum regime as soon as I enter VAT?
No. VAT and lump-sum income taxation are separate systems with separate tests, even though the current thresholds use the same headline amount.
When do I start charging VAT after crossing the threshold?
The exemption ends when the threshold is crossed, and registration applies from the first following day under the prescribed procedure.
I issued invoices without VAT after crossing. What now?
Do not wait for year-end. The affected invoices, VAT base, registration date and filing consequences need to be reconstructed immediately from the actual supplies.
Verified primary legal sources
Open verified primary sources (4)
The links open the primary legal texts used in the mechanical verification of this guide.
- Croatian VAT RulebookAritem 186. para. 1.
- Croatian VAT RulebookAritem 186. para. 2.
- Croatian Income Tax Act82. para. 1.
- Croatian Lump-Sum Taxation Rulebook3. para. 1.
Status date: 30 July 2026. This guide is general information, not tax or legal advice for a specific case. Croatian rules and annual amounts can change; the date above is part of the information.
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