Croatia

Croatia adjusted its legislation to mandatory European Union (EU) Directives (ATAD I and ATAD II) within the Corporate Income Tax (CIT) Act provisions in relation to exit taxation and hybrid instrument rules. Exit taxation and hybrid mismatch rules are applicable along with the submission of the CIT return for 2020, while the provisions in relation to the reverse hybrid mismatch are applicable along with the submission of the CIT return for 2022. 

As of 1 January 2020, Croatia also implemented the Council Directive 2018/822 of 25 May 2018 amending Directive 2011/16/EU in relation to reportable cross-border arrangements (DAC6) through the Act on administrative cooperation in the field of taxation and Rulebook on the automatic exchange of information in the field of taxation.

Furthermore, as of 1 January 2023, Croatia modified its legislation in accordance with Council Directive 2021/514 regarding administrative cooperation in the field of taxation in relation to reporting of digital platforms (DAC7).  As of 1 January 2023, platforms operators have the obligation to report the sale of goods, rental of any mode of transport, provision of personal services, and rental of immovable property to the tax administration.

The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) negotiated within the Organisation for Economic Co-operation and Development (OECD)/G20, which modifies bilateral tax treaties in order to eliminate double taxation, entered into force in Croatia on 1 June 2021. The Croatian MLI covers 66 double taxation treaties (DTTs).

In December 2022, the United States and Croatia signed a DTT. The new tax treaty will enter into force after both countries have notified each other that they have completed their requisite domestic procedures. Croatia also signed DTTs with Cyprus and Egypt, and both these agreements have been ratified by Croatia (and published in the Official Gazette); however, they will come into force as soon as Cyprus and Egypt, respectively, ratify them as well. The DTT with Andora has recently been ratified by both countries.

As of 1 January 2023, the euro (EUR) replaced the kuna (HRK) as official currency in Croatia. The substitution has been carried out in line with the provisions of the Act on the introduction of the euro as the official currency in the Republic of Croatia. The fixed HRK conversion rate, determined by the Council of the European Union, is EUR 1 = HRK 7.53450.

Croatia has introduced Pillar Two rules into Croatian legislation. According to the Act on minimum Global Corporate Income Tax, the Croatian Pillar Two rules are in line with the Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union. The Act has been published in the Official Gazette, comes into force as of 31 December 2023, and applies to the fiscal years commencing after 31 December 2023.