Croatia

In terms of the CIT Act, residents are legal or natural persons whose seat is recorded in the Register of Companies or another register in Croatia, or whose place of effective management and control of business is in Croatia. Residents are also entrepreneurs/natural persons with domicile or habitual residence in Croatia whose business activity is recorded in a register or other records.

A non-resident is any person who does not meet one of the requirements referred to above.

Permanent establishment (PE)

The definition of a business unit of a non-resident is based on the OECD guidelines, which provides that a non-resident’s business unit is a place of management, a branch, an office, a factory, a workshop, a mine, an oil or gas well, a quarry, or any other place of extraction of natural resources. It also encompasses construction sites or projects that last longer than six months and agents acting on behalf of a non-resident that have the authority to conclude contracts or hold stock of products distributed in the Croatian market in the name of a foreign entrepreneur. The business unit of a non-resident also includes the performance of services (i.e. advisory and business consulting services) for the same or a related project, which lasts for more than three months within a 12-month period.

The PE definition is expanded in line with base erosion and profit shifting (BEPS) developments, mainly by introducing anti-fragmentation rules, expanding the definition of a dependant agent, and limiting the exemption scope for preparatory and auxiliary activities.