Double Taxation Treaty (DTT) concluded between Croatia and Japan enters into force on 5 September 2019 and will become effective as of 1 January 2020.
The applicable rates according to the DTT are as follows:
Dividends:
- 5%
- 0% if the beneficial owner of the dividends is a resident of the other contracting state and is a company which has owned directly or indirectly at least 25% of the voting rights of the company (paying the dividends) throughout a 365 day period, including the date on which the entitlement to the dividends was determined
- 10% if the dividends are deductible in computing the taxable income of the company paying the dividends and the beneficial owner of the dividends is a resident of the other contracting state
Interest:
- 5%
- 0% in following cases:
if the interest is beneficially owned by the other contracting state, a political subdivision or local authority thereof, the central bank of the other contracting state or any institution fully owned by the other contracting state or its political subdivision or local authority;
if the interest is beneficially owned by a resident of the other contracting state with respect to debt-claims guaranteed, insured or indirectly financed by the other contracting state, a political subdivision or local authority thereof, the central bank of the other contracting state or any institution fully owned by the other contracting state or its political subdivision or local authority.
Impact on investors: Eligible tax residents of Croatia and Japan will be able to enjoy preferential DTT rates as of 1 January 2020.