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Proposal for an Agreement on Avoidance of Double Taxation Between USA and Croatia

In early September 2020, the US Ambassador to the Republic of Croatia, Mr. Robert Kohorst, met with the Minister of Finance of the Republic of Croatia, Mr. Zdravko Marić, and presented him with a proposal for an Agreement between the United States and the Republic of Croatia on avoidance of double taxation, which was confirmed in the public announcement of the Government of the Republic of Croatia. After the delivery of the draft Agreement, negotiations will follow in this calendar year.

The agreement will provide additional legal certainty to taxpayers, especially those with dual citizenship, prevent double payment of tax liabilities, and protect them from possible discriminatory practices. It will also establish mechanisms for cooperation between the Croatian and US tax services and the resolution of ambiguities and misunderstandings that may arise through the implementation of the Agreement, the statement said.

This represent a major step towards expanding trade cooperation between the two countries. The Republic of Croatia with the United States of America, one of the leading economies in the world, has an annual trade value of over 600 million US dollars, of which almost 400 million relates to the export of Croatian services to the United States. Despite the current world economic situation caused by the COVID-19 virus pandemic, a long-term positive growth trend of trade is visible, so in 2019 we witnessed an increase in the value of trade of almost 25% compared to the reference period year before. However, in order for the two countries to provide a basis for further growth in cooperation, it is crucial to reach an agreement on avoiding double taxation. According to the website of the Tax Administration, Croatia has so far signed double taxation agreements with about 65 countries, and hopefully one with USA will be next one.

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