WASHINGTON – In a ceremony held at the US Department of State today, a comprehensive income tax agreement was signed between the United States and Croatia’s Minister of Finance Jose W. Fernandez and Minister of Finance of Croatia Dr. Marko Primorac Croatia. The new tax treaty is the first of its kind between the United States and Croatia.
“I am honored to sign the United States-Croatia Income Tax Agreement today, Finance Minister Primorac,” said Deputy Secretary Fernandez. “We look forward to taking this important step in further strengthening the trade and business relationship between the United States and Croatia.”
“The Department of the Treasury is pleased to finalize this new tax treaty with Croatia. It is the first comprehensive tax treaty signed by the United States in more than a decade and represents current tax treaty policy and is an important step in the Treasury’s efforts to to expand the US tax treaty network. We appreciate the cooperation shown by Croatia during the negotiations”, said Lily Batchelder, Assistant Secretary (Tax Policy).
The new tax treaty closely follows the US Model Tax Treaty. Key aspects of the new agreement include:
- Abolition of withholding tax on cross-border payments of dividends paid out of pension funds and interest payments;
- Deducting the tax on the payment of dividends in addition to the amount paid to the pension fund, as well as compensation;
- Modern anti-abuse measures designed to prevent income tax evasion as well as contract sales;
- A robust dispute resolution mechanism including mandatory arbitration; SY
- Standard rules for the exchange of information to assist the revenue authorities of the two countries in the performance of their duties as tax administrators.
The new tax treaty will go into effect when the United States and Croatia notify each other that they have completed the required domestic procedures, which in the case of the United States refers to the advice and consent of the Senate of the United States. obedience.
The text of the treaty document is available at: https://home.treasury.gov/system/files/131/Treaty-Croatia-12-7-2022.pdf