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| Maria Anastasiou |
Afrodita Taci |
Transfer pricing legislation was introduced in Croatia by
way of the Corporate Income Tax Act (CIT) on January 1 2005.
However, the Croatian tax authorities have only recently
recognised its importance, with advance pricing agreements
(APAs) recently being implemented in Croatian tax
legislation.
The implementation of APAs in national legislation (Official
Gazette No. 47/15), published on May 3 2017, reveals a
significant progress towards harmonising the Croatian
legislation with OECD transfer pricing guidelines.
An APA can be concluded as:
- A unilateral APA between a taxpayer and the Tax
Administration (TA); or
- Bilateral or multilateral APA between the taxpayer, TA,
associated entities and the TA of other countries in which
those associated entities are residents.
The procedure for concluding an APA consists of five
stages:
- Submission of the initiative for the conclusion of the
APA;
- Preliminary interview of the taxpayer by the TA, in order
to exchange views and gain additional information about the
APA;
- Submission of the statement of intention to conclude the
APA by the taxpayer. This statement includes general and
specific information regarding the transactions intended to
be covered by the APA;
- The conclusion of the APA. The conclusion must include
information about the related parties included in the APA, a
description of the transactions and the agreed documentation
methodology; and
- Monitoring the implementation of the APA by the TA.
The duration of an APA can be defined to be up to five
years, depending on the characteristics and type of
transactions subject to the agreement. The TA has the right to
terminate the APA in case of a violation of any term by the
taxpayer.
The cost of the APA conclusion procedure is:
- HRK15,000 ($2,405) for a taxpayer whose
profit, according to the latest tax return, is a maximum of
HRK 3 million ($481,000);
- HRK 30,000 for a taxpayer whose profit is
between HRK 3 million and HRK 20 million; and
- HRK 50,000 for a taxpayer whose profit
exceeds HRK 20 million.
In the case of concluding a bilateral APA, there is a cost
increase of HRK 50,000, and in case of a multilateral APA the
relative cost increase is HRK 100,000.
The addition of the APAs to Croatian TP legislation
indicates that intragroup transactions are becoming of high
importance to the tax administration. MNEs in Croatia should
reassess their significant and complicated intragroup
transactions and examine the possibility of concluding an APA
in order to minimise their tax risk. Your contact for further
queries is:
Maria Anastasiou (maria.anastasiou@eurofast.eu)
and Afrodita Taci (afrodita.taci@eurofast.eu)
Eurofast Croatia
Tel: +30 210 8257720 22 and +385 98 525 758
Website: www.eurofast.eu