Donated food exempt from VAT!

The donation of food will be exempt from value-added tax (VAT) starting next week, specifically from Tuesday, December 8, when amendments to the VAT Regulation come into effect.

Food donation has been enabled by the Agriculture Act, adopted in early March, but the implementation required the adoption of subordinate legislation, i.e., regulations. The Ministry of Agriculture adopted the Regulation on the conditions, criteria, and methods of donating food and animal feed at the end of October, and in the latest Official Gazette (number 130, dated November 30), the Ministry of Finance published the Regulation on amendments and supplements to the Value Added Tax Regulation, which comes into effect eight days after publication, i.e., on December 8. With the entry into force of the amendments to the VAT Regulation of the Ministry of Finance, the conditions for the full implementation of the food donation system have been created, says Minister of Agriculture Tihomir Jakovina.

– For the first time, the Republic of Croatia has established rules for food donation to stop the devastating trend of food waste, but also to ensure that donated food reaches the plates of those who need it most, said Jakovina.

According to previously published data, approximately 400,000 tons of food are wasted annually in Croatia.

The amendments to the VAT Regulation stipulate that “taxpayers who donate food for the purpose of preventing its destruction, protecting the environment, or assisting final recipients, in accordance with the Regulation on the conditions, criteria, and methods of donating food and animal feed, will have such food donations recognized as a shortfall on which VAT will not be calculated, provided that the value of these donations does not exceed two percent of the revenue or receipts from the previous year,” explain the Tax Administration. They emphasize that “food donations to final recipients are carried out exclusively through non-profit legal entities that perform humanitarian activities in accordance with special regulations and are registered as intermediaries participating in the food donation chain, except in the case of natural disasters.”

Minister Jakovina emphasizes that there has been a long discussion about models and ways to solve this problem.

– I believe that we can all be satisfied with the joint results. We have joined the high society of countries that care for their socially vulnerable citizens in a socially responsible and transparent manner while respecting the highest environmental protection standards, said Jakovina, thanking everyone who contributed to the drafting of these regulations, as well as all citizens and businesses that will participate in this system in the coming period.

The Regulation on the conditions, criteria, and methods of donating food and animal feed also stipulates how food can be donated to the final recipient – a person in need who is a socially vulnerable person and/or affected by natural disasters or calamities. A person in need who is socially vulnerable is a user of rights in the social welfare system, a recipient of cash benefits and social services, as well as a person who makes it probable to the donor or intermediary that they are in need. Only safe food can be donated, and the Regulation also allows for the donation of food produced or prepared in public catering facilities and grocery store gastro departments, provided that such food has not already been served to the final consumer. According to the Regulation, food marked with a ‘use by’ date must be donated to the final recipient exclusively before the expiration of that date.

In the case of direct food donation, the donor must donate food marked with a minimum durability date to the final recipient exclusively before the expiration of that date, and in the case of donation through an intermediary, it must be given to the intermediary before the expiration of the minimum durability date. The intermediary may offer and give food to the final recipient even after the expiration of the minimum durability date, but under several conditions – that they have informed them of the expiration of the minimum durability date, that the final recipient accepts the donation of such food, and that the intermediary has provided them with guidelines for using the food in accordance with the good practice guides of the European Union and national guides.

The Regulation also regulates the keeping of records of donors and intermediaries, the conditions that intermediaries must meet, and stipulates that individuals or legal entities intending to perform intermediary activities must be registered in the intermediary register maintained by the Ministry of Agriculture.