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Hrvoje Sgombić
Episode · #710

RITAM POSLA Hrvoje Zgombić

Guest Hrvoje SgombićHosted by Lidija KiseljakMay 3, 2026
About this episode
What you'll hear in this conversation

The state's role in collecting taxes is clear: businesses act as agents, collecting VAT on its behalf. But what happens when those businesses never get paid themselves? In Croatia, a legal right to reclaim VAT on unpaid invoices in insolvency cases has long existed, yet in practice, it's been "practically impossible" to achieve. Now, with a looming deadline for claims related to the massive Agrokor case, this systemic issue is coming to a head. Hrvoje Zgombić, a seasoned tax advisor and the force behind "Project VAT," has spent years dissecting these complexities. He uncovered that while the law permits these refunds, the administrative hurdles make them inaccessible. His work reveals not just a legal loophole but a deeper tension between a state's declared laws and its operational realities. Listeners will consider how a system can be designed to deny its own stated rights, and the persistence required to navigate intricate legal and administrative pathways to claim what is genuinely owed.

Insights from the conversation
What to take from this episode
01
The impending statute of limitations for VAT refund claims in the Agrokor case has made the issue urgent, highlighting a long-standing problem that affects all insolvency proceedings. A critical deadline on a high-profile case can force long-ignored systemic issues into focus, revealing the practical gap between legal rights and their execution.
02
Hrvoje Zgombić describes the process of reclaiming VAT in insolvency as "legally allowed, but practically difficult to achieve, and in insolvency proceedings, almost impossible." The state can formally grant a right while simultaneously creating such administrative barriers that the right becomes virtually non-existent for its citizens.
03
Businesses act as "agents of the state" when collecting VAT, but Zgombić argues they shouldn't bear the financial risk if the original invoice goes unpaid. When a business collects tax on behalf of the state, but then cannot collect its own payment, the state should bear the risk of non-payment, not the business that acted as its proxy.
04
Zgombić reassures clients facing tax audits by reminding them, "Don't be afraid, that's your private money." The fear of state scrutiny often deters individuals from claiming what is rightfully theirs; reframing a refund as "your private money" can change the calculus of risk.
05
Zgombić advises clients to expect initial denial, stating, "It seems too optimistic and unbelievable that they would acknowledge this right to a refund in the first instance. So, you should expect this process to take four to five years." When dealing with a state that routinely denies a legal right, a business must anticipate a multi-year legal battle and structure its offering to remove financial risk for the client.
06
From the moment a refund request is submitted, default interest accrues at "ten to twelve percent" annually. A state's reluctance to settle can inadvertently create a significant financial incentive for persistence, as statutory default interest rates can far exceed market returns over several years.
07
Zgombić notes that the state often avoids settlements, choosing to "go to arbitration and lose ten times more money" rather than admitting fault. For state actors, the perceived political cost of appearing to concede a claim can often outweigh the financial cost of prolonged legal battles, even when those battles result in significantly larger losses.
08
To counter potential accusations of favoritism when making sensitive decisions, Zgombić suggests getting opinions from "four or five top law firms." When navigating politically sensitive decisions within a state bureaucracy, seeking consensus from multiple external experts can be a defense against accusations of impropriety, even if it adds to complexity.
09
Zgombić estimates "a total of about 400 million euros in VAT" is tied up in all Croatian insolvency proceedings. The accumulated value of legally owed but practically unobtainable funds can reach hundreds of millions of euros, highlighting the systemic impact of administrative barriers.
10
Despite activating "Project VAT" in March, Zgombić rapidly engaged "both domestic tax advisors and lawyers... and some foreign tax advisors who are specialists in VAT" to analyze the problem. For complex, high-stakes legal challenges, a rapid, multi-faceted consultation with diverse experts—both local and international—can quickly validate a strategy and build confidence, even if the project starts late.
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