Double Tax Treaties in Croatia

Updated on Friday 05th May 2023

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The business environment in Croatia welcomes foreign investments in numerous well-developed industries. Varied companies have establishments in Croatia and benefit from several incentives and protection from a taxation point of view. In this direction, the double taxation treaties were signed by Croatia in order to preserve the foreign company’s incomes and attract more investments. The provisions of such agreements can be explained by our lawyers in Croatia. Our team of advisors is at your disposal with legal support when registering your business in this country.

What are the states that signed DTTs with Croatia?

The states that have signed double tax treaties with Croatia are: Albania, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, Chile, China, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iran, India, Ireland, Indonesia, Iceland, Israel, Italy, Jordan, Korea, Kuwait, Kosovo, Latvia, Luxembourg, Lithuania, Macedonia, Malaysia, Malta, Mauritius, Morocco, Moldova, Montenegro, the Netherlands, Norway, Oman, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Syria, Turkey, Turkmenistan, Ukraine and United Kingdom.

Many agreements with other countries are in the process of ratification and along with these, many protocols for information exchange were signed or are about to be signed. We remind that foreign investors can talk to one of our Croatian attorneys for information about the double taxation agreements signed by Croatia with other states.

What do the DTTs in Croatia mention?

The double taxation treaties signed by Croatia contain information about the taxation of incomes for companies and natural persons in this country. Also, these conventions comprise several methods through which the double taxation is avoided. There is also information about reduced taxes for particular profits registered in Croatia.

How can companies benefit from double tax treaties in Croatia?

In order to have an idea about the advantages of the double taxation agreements, the following requirements should be sufficient for companies in Croatia:

a legal entity needs to prepare a set of documents and deposit it to the Croatian Tax Administration;
these documents must prove that the candidate is already paying taxes in the country of origin;
the forms of the double taxation which can be received from the Official Gazette must be completed in four copies: one for the claimant, one for the income payer, one for the Croatian tax administration and one for the foreign tax authority;
all forms must be sent to the foreign country for authorization and two of them are returned after being checked.

We remind that the main purpose of the double tax treaties is to avoid the double taxation in Croatia and also in the country where the company has its head office.

What types of incomes are mentioned by DTTs in Croatia?

The 5% withholding tax rate is imposed for interests, dividends, and royalties in the foreign country from which the business is. Also, if the dividends are paid out of profits, a 15% rate will be applied, particularly if the revenues derive from immovable properties in Croatia.

Taxation in Croatia

The Croatian system of taxes includes a corporate income tax of 20% and a corporate tax income by the withholding of 15%. A tax of 20 % is received for the services paid by the companies with headquarters in another state, while a tax of 12.5% is paid by the members of EU. Other exemptions are offered to certain types of companies which don’t pay an income tax:

companies with less than 15 employees, total income in the last fiscal year bellow EUR 530,000;
companies with the value of assets below EUR 265,000
companies with the total revenue in the last fiscal year below EUR 265,000.

It is good to know that non-residents are taxed for the revenues from self-employment, employment, from property and property rights, insurance, and capital. The tax rates start at 12% and may reach progressively 40%.

For more information about avoiding double taxation in this country, you may contact our law firm in Croatia