Croatia Extends Reduced 5% VAT Rate on Energy Products Until March 2027

Croatia has officially extended the application of the reduced 5% VAT rate on key energy products, including natural gas, district heating, and wood-based fuels, until March 31, 2027. The amendment to the Value Added Tax Act was published in the Official Gazette on March 27, 2026, ensuring the continuation of a relief measure initially introduced in 2022.

The reduced VAT rate was originally set to expire on March 31, 2026, but the newly adopted amendment prevents its discontinuation and prolongs its application for an additional year. The measure covers a range of commonly used energy sources such as firewood, pellets, briquettes, and wood chips, alongside gas and district heating.

This extension reflects the government’s ongoing efforts to mitigate the impact of rising energy costs on households and businesses. By maintaining the lower VAT rate, Croatia aims to preserve purchasing power, support living standards, and contribute to broader economic stability.

The decision follows earlier government proposals from February 2026, signalling a continued policy direction focused on energy affordability and targeted tax relief in response to market pressures