Croatia’s Ministry of Finance has initiated a consultation on several draft tax bills that would, among other things, bring domestic legislation in line with the EU anti-tax-avoidance directive (ATAD), effective 1 January 2019.
Proposed new rules for interest expenses incurred on loans granted by both related and unrelated parties would apply in tandem with the existing thin capitalisation rules for interest expenses incurred on loans granted by related parties.
The draft measures would also introduce controlled foreign corporation rules covering passive income (including dividends, interest or other income from financial assets, fees for licences or any other intellectual property income, and income from finance leasing) that is taxable in a foreign low-tax jurisdiction.
Moreover, another draft bill would extend the 20 percent withholding tax rate levied on remuneration paid for services rendered by non-resident suppliers in non-cooperative jurisdictions (based on the EU list) to interest, dividends, and other similar payments to those persons, provided that there is no tax treaty in force between Croatia and the non-cooperative jurisdiction.
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