Sanja Broz Tominac

Financial Services in the VAT System in the European Union and Croatia

This paper presents differences in the VAT treatment of financial services. We investigated the treatment of financial services in the VAT system in EU countries as well as in Croatia, in order to reveal differences and improvement possibilities. The results show that there is a need for significant improvement in the VAT system, especially in Croatia. Furthermore, European Union countries have applied tax regulations since 1977. The research on the VAT treatment of financial services indicates that there is unequal application of tax exemptions and adverse tax competition in EU countries. Nevertheless, Croatia is still adjusting its legislation (the tax treatment of financial services) with EU provisions. Our paper thus provides a comparative analysis of the treatment of financial services in the VAT system in EU and Croatia that could be useful for the new consideration of the financial services position in the VAT system in Croatia.

The Impact of Internal Rating System Application on Credit Risk Management in Banks

Credit risk is the most important risk for banks which means that it is one of the most important factors for banks’ stability. The source of credit risk is the weakness of credit ability of a client which leads to bank’s losses. Losses are daily reality of every bank and according to that should be recognized, measured and implemented in credit risk managing models. The aim of this paper is to investigate how banks in Croatia are using internal rating system in their business on a daily basis, i.e. is the application of rating included in all phases of credit process. Data that will be presented in the paper will be collected through a questionnaire. The application of ratings in daily business of a bank is one of the most important minimal requirements for internal rating based approach application. Internal rating based approach is a significant in the process of validation and measurement of credit risk after Basel I approach.

Regulations for the Preparation of Financial Statements by Banks in Croatia and Poland

This paper examines the similarities and differences in the financial reporting of banks in Croatia and Poland. It analyses the legal regulations governing bank financial reporting in the two countries. While both countries belong to the European Union, thanks to certain freedoms in national legislation, some differences in the banks’ financial reporting have occurred. The same IFRS and elements of financial statements resulting from these standards apply to both countries. Banks in Poland apply national rules in cases not regulated by IFRS, while banks in Croatia are required to apply IFRS according to accounting law. In Poland, banks produce a report on activities that accompanies annual financial statements, while those in Croatia do not. There are also some differences regarding the types of banks that operate in the two countries, i.e. Croatia has no cooperative banks.