Update to the previously sent Newsflash on changes to the withholding tax rates approved by Croatian Parliament

In addition to previously communicated amendments to the Income Tax Act and the Profit Tax Act, and as confirmed in the Official Gazette of the Republic of Croatia, all changes will take effect as of 1 January 2024, except for below two changes, which will become effective on 12 October 2023:

• increase of the withholding tax from 20% to 25% applicable to all remunerations payable under the Article 31 of the Profit Tax Act (including dividend and interest) to legal entities resident in countries from the EU List of non-cooperative tax jurisdictions, not having a Double Taxation Treaty with Croatia (interest payments from bonds remain to be tax exempt);
• exemption from withholding tax on interest, royalties, dividends and shares for related companies that are residents of the European Economic Area (Norway, Iceland and Lichtenstein) for tax purposes under the same conditions prescribed for related companies that are residents of a member state of the European Union for tax purposes.