As already announced by Croatian Tax Administration, withholding tax is calculated, withheld and remitted at the rate of 20% on all remunerations payable under the Article 31 of The Profit Tax Act (including dividend and interest) to residents (legal entities) of the countries listed on the EU list of non-cooperative tax jurisdictions, if there is no tax treaty between such countries and Croatia.
Although the EU list of non-cooperative tax jurisdictions has been changed, changes will become effective only after the publication in the EU Official Journal. Once the changes become effective, the list will include total of 15 jurisdictions, namely: American Virgin Islands, American Samoa, Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, Guam, Marshal Islands, Oman, Samoa, Trinidad and Tobago, United Arab Emirates and Vanuatu.
The obligation to withhold the tax related to payment of remuneration under the Article 31 of The Profit Tax Act (including dividend and interest) is subject to be determined by checking the EU list of non-cooperative tax jurisdictions on remuneration payment date. Consequently, tax payers which execute the remuneration payment are obliged to calculate, withhold and remit from the gross amount of remuneration the withholding tax at the rate of 20%.
Exceptionally, if residents (legal entities) of Oman and United Arab Emirates, countries with which Croatia has Double Taxation Treaty (DTT), do not apply for favourable withholding tax rate as granted by the applicable DTT, remunerations paid in their favour would be taxed at the rate of 20% as well.
Applicable withholding tax rate to remunerations paid to individuals based in one of the countries from the EU list of non-cooperative tax jurisdictions remains at 12%.
Impact on investors: Remunerations paid to residents (legal entities) of additional countries added to EU list of non-cooperative tax jurisdictions will be taxed at the rate of 20%.