Croatian MPs approved the new 5 percent VAT rate on heating and firewood and wood pellets on Friday. The cut, down from the regular 25 percent VAT rate, should help people deal with the cost-of-living crisis ahead of the coming winter.

The new legislation also made the delivery and installation of solar panels VAT-free. The lower tax rate will be in force for the next six months, until the end of March 2023.

Finance Minister, Marko Filipovic, in an earlier cabinet session that this rate would apply to end-users and their energy communities, that is, apartment buildings, and to persons “carrying out activities of general interest,” state agency Hina said, without clarifying.

The lowered VAT rate is expected to cost the government 120 million kuna (€16 million) in lost revenue.

(€1 = 7.52 kuna)