U.S. and Croatia sign Double Tax Treaty

Croatia
15/12/2022
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The United States of America and Croatia signed a long-awaited Convention to avoid double taxation (the “Treaty”). The Treaty covers profit and income taxes and has been signed with the aim of avoiding double taxation, but without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance, including treaty shopping.

The Treaty follows the U.S. Model Tax Treaty and includes provisions applicable to individuals, addressing the residence, permanent establishment and taxation of income from real estate, business profits, dividends, interest, royalties, capital gains, employment, directors’ fees, entertainer and sportspeople fees, student and trainee grants/bursaries, pensions etc.

Mechanisms for cooperation between the two tax administrations are foreseen in cases of ambiguities and misunderstandings that may arise through the implementation of the Treaty.

Benefits are expected for both businesses and individuals. Once in force, the Treaty should provide additional legal certainty to taxpayers, improve the conditions for bilateral trade and raise the level of overall economic activities between the two countries.

To come into force, the Treaty must be ratified by the U.S. Senate and the Croatian Parliament.

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