Value-added tax (VAT) in the digital world is becoming an increasingly important topic due to the rapid development of the digital economy and the growing presence of e-commerce. This paper will thoroughly examine the basic characteristics of VAT, including its definition, calculation methods, and role in the modern economy. Special attention will be given to the legislative and legal regulations of VAT within the European Union, with an emphasis on recent changes and adjustments made to effectively tax the digital economy. The digital economy, with a specific focus on Croatia, requires a tailored approach due to the speed and complexity of the transactions it encompasses. Therefore, the paper will analyze in detail how Croatia is adapting its VAT regulations to cover digital services and products. Additionally, the challenges of taxing cryptocurrencies, which are becoming increasingly popular as a means of payment in e-commerce, will be explored. Cryptocurrencies, as a decentralized form of digital money, present a unique challenge for tax systems due to their anonymity, volatility, and global nature. Through the analysis of practical examples, legislative initiatives, and expert opinions, the paper will provide a comprehensive overview of the current state and future trends in the taxation of the digital economy within the EU, with a particular focus on Croatia. In this way, the aim is to offer a complete insight into the dynamics and challenges of VAT in the digital age.