Higher Withholding Tax Rate for Investors from non-cooperative Tax Jurisdictions

Zagrebacka Banka d.d.
Amendments to the Croatian Profit Tax Act introduce higher withholding tax rate on dividends and interest, excluding interest from bonds, for investors based in non-cooperative tax jurisdictions
Tue, 11/12/2018


Adopted by the Croatian Parliament and published in the Official Gazette, amendments to the Profit Tax Act have entered into force on 8 December 2018. 

With that, a withholding tax at the rate of 20% has become applicable to all types of remuneration payable under Article 31 of the Profit Tax Act (including dividend and interest), if the following conditions are met:

  • the remuneration, including dividend or interest, is paid to investors based in one of the countries from the EU list of non-cooperative tax jurisdictions

  • there is no tax treaty in place between such countries and Republic of Croatia

The increased withholding tax rate of 20% will be applied to all taxable dividend and interest payments executed on the Croatian market after 1 January 2019. However, interest payments arising from bonds will remain exempt. 

Impact on investors: Dividend and interest payments, excluding interest from bonds, will be taxed at a rate of 20% in respect of investors based in non-cooperative tax jurisdictions (as defined by EU) from 1 January 2019.