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.