Croatia prepares flexible VAT cuts as fuel prices rise amid global energy pressures

Zagreb, 11 April 2026 – The Croatian government is preparing potential changes to VAT regulations as part of a broader effort to mitigate rising fuel prices, Prime Minister Andrej Plenković said on Friday.

Plenković stressed that the proposed amendments to the VAT Act would not automatically lead to tax reductions, but would instead provide the government with an additional mechanism to respond if needed.

Any decision to adjust VAT rates will depend on future developments, particularly global energy prices.

The move comes amid a sharp increase in oil prices on international markets, which has placed renewed pressure on fuel costs.

The government has already introduced a range of measures aimed at softening the impact on consumers, including reducing excise duties and limiting distributor margins.

However, Plenković noted that margins cannot be reduced indefinitely without risking the viability of fuel distributors. He added that the current approach represents a balanced and sustainable solution, similar to measures taken during previous energy market disruptions.

Croatia is also exploring the possibility of lowering the European component of excise duties. The Customs Administration has formally requested approval from the European Commission’s Directorate-General for Taxation and Customs Union to proceed with such a measure.

Any reduction in this segment requires individual approval from the Commission. A decision is expected in the coming days, following a delay caused by the Easter holiday period.

Plenković noted that similar exemptions have been granted in the past, although typically on a temporary basis. He added that such a measure could be beneficial across the European Union, as many member states are facing comparable challenges.

VAT changes as a contingency tool

Describing VAT as the “last lever” available, Plenković confirmed that the government has launched a public consultation on proposed legislative amendments.

The consultation will last around ten days, after which the changes are expected to be adopted by the government and sent to Parliament under urgent procedure.

The Prime Minister expressed confidence that the amendments could be approved by the end of April.

If adopted, the changes would allow the government to temporarily adjust VAT rates on a biweekly basis in line with regulated energy prices. This would provide additional flexibility to reduce fuel costs during periods of exceptional volatility.

Plenković emphasised that such measures would only be used if absolutely necessary, underlining that the legislative changes are primarily intended to ensure readiness rather than signal immediate action.

Ultimately, any VAT adjustments will depend on how global energy markets evolve and the average price levels in the coming weeks.