Page 16 - CEE Tax Guide 2025

Croatia

Forvis Mazars Consulting d.o.o.
Strojarska cesta 20, XVI. Floor,
10 000 – Zagreb, Croatia
Phone: (00385) 1 4864 420
www.forvismazars.com/hr

Corporate taxes and other direct taxes to a foreign company. As of October 12, 2023,
there is no longer an obligation to withhold tax
In Croatia, Corporate Income Tax (CIT) rates depend on payments for market research services, tax and
on annual revenues: 18% applies to revenues business consulting, and auditing services—except
exceeding EUR 1,000,000 while 10% applies when paid to entities in EU non-cooperative
to revenues below EUR 1,000,000. Enterprises jurisdictions. The WHT rate on dividends, profit
with annual revenues below this threshold have shares, and payments to foreign performers is set
the option to determine their CIT base using the at 10%. Croatia currently has 70 active double
cash flow principle. Tax losses can be carried tax treaties. A 25% withholding tax applies to all
forward for up to five years. Croatia applies a thin payments made to offshore companies for services
capitalization rule (4:1); however, this does not not explicitly exempted under Croatian tax law.
apply if shareholders are financial institutions Additionally, EU Directives on withholding tax are
or CIT/PIT payers in Croatia. Additionally, various applicable. The exemption from withholding tax
tax incentives are available, including allowances on interest and royalty payments between affiliated
for new investments, R&D activities, and companies extends beyond EU-based entities
employee education. to include companies from EEA countries (Norway,
A 15% withholding tax (WHT) is applied to interest Iceland, and Liechtenstein) and Switzerland.
and royalty payments made by a Croatian company
A 3% Real Estate Transfer Tax (RETT) applies to the
Transfer pricing in Croatia transfer of immovable property. The taxable base
is the market value of the property at the time
Arm’s length principle Since 2004
the tax liability arises, and the taxable person
Documentation liability Since 2004 is the buyer.

APA APA is available
as of January 1, 2017. VAT and other indirect taxes
Country-by-Country Since FY 2017. In Croatia, the standard VAT rate is 25%. A reduced
liability rate of 13% applies to services involving the

Master file-local file No Master file-local file preparation and serving of meals, tourist
(OECD BEPS 13) represents informal accommodation services, newspapers, the supply
applicable legislative framework.
of electrical energy, etc., while a reduced rate of 5%
Penalty applies to milk, books, etc. The VAT rate of 5% will
lack of documentation Not specifically stated, be applicable to supplies of gas and heating from
general rules apply thermal units, firewood, pellets, briquettes, and
(up to EUR 26,545). wood chips until March 31, 2025.
tax shortage Additional tax charged
and 100% of that tax The most important VAT-exempt services are
is non-deductible. banking services, insurance, educational services
(under certain conditions), gambling, certain
Related parties 50% Direct/indirect control
(25%) < (25% commonly used) services provided by medical professionals and
or control functions. dentists, and certain other activities. The zero VAT
Safe harbors Interest rates on loans / rate (0%) also applies to the supply and installation
low-value adding services. of solar panels on private residential buildings and
public buildings. Activities of public interest are
Level of attention paid 9/10
by Tax Authority exempt from VAT regardless of their institutional

Central and Eastern European tax guide 2025 Forvis Mazars 16