Croatia

Corporate - Significant developments

Last reviewed - 14 July 2022

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 will apply at the time of 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, Croatia plans to modify its legislation in accordance with Council Directive 2021/514 regarding administrative cooperation in the field of taxation in relation to reporting of digital platforms (DAC 7).  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).

As of 1 January 2023 the euro will replace the kuna ("HRK") as official currency in Croatia. The substitution would be 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. From 5 September 2022 until 31 December 2022 there will be a mandatory period of dual display of prices, both in HRK and EUR which will relate exclusively to direct relations with consumers and employees.