All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Croatia: Treaty analysis: Croatia-Luxembourg DTA enters into force


David Jakovljevic

Croatia and Luxembourg signed a treaty on the avoidance of double taxation (double tax agreement, DTA) on June 20 2014, which recently entered into force on January 13 2016.

The treaty applies to persons who are residents of one or both of the contracting states in regards to corporate income tax, personal income tax and any type of surtax in line with the general OECD guidelines.

According to the agreement, the profits of a company of one state are taxable only in that state unless the company maintains a permanent establishment (PE) in the other state.

In case a company resident in one state pays dividends to a resident of the other state, the withholding tax applicable cannot exceed:

  • 5% of the gross amount of dividends if the beneficial owner holds at least 10% of the capital of the company paying the dividends; or

  • 15% of the gross amount of the dividends if no such participation criteria is fulfilled.

In regards to interest withholding tax rates, taxation cannot exceed 10% of the gross amount paid. On the other hand, the withholding tax rate for royalties and copyrights cannot exceed 5% of the gross amount.

As far as income from employment wages and similar remuneration is concerned, such income derived by a resident of one state is taxable only in that state unless employment is exercised in the other state in duration exceeding 183 days within 12 months.

The treaty stipulates that double taxation will be avoided in Croatia by allowing a tax deduction in amount of the tax paid in Luxembourg. The double taxation in Luxembourg will be eliminated by exempting income or capital from Luxembourg tax if tax was paid in Croatia. This elimination is applicable to taxes subject to the treaty with the exception of withholding tax on dividends, interest, royalties and income of artists and sportsmen for which the tax deduction method will be applied.

The agreement will be effective as of January 1 2017.

David Jakovljevic (

Eurofast Global Croatia


more across site & bottom lb ros

More from across our site

The winners of the ITR Americas Tax Awards have been announced for 2022!
US technology company Cisco Systems hopes shareholders will reject a proposal to make its CbCR public, while the UK approves an extradition case connected to the ‘cum-ex’ scandal.
Tax leaders have warned that the latest UK interest rate increases could land a further blow on MNEs, which are already struggling.
Panellists said OTP can improve corporations’ forecasting and data usage, with one describing improvements as 'night and day'.
Digital services companies are increasingly selective about the countries where they register for VAT, basing their choices on revenues and risks of penalties.
The Women in Business Law Awards is excited to present the shortlist for the first Global Awards
Like medicine, tax is an evolving science. Norah Al Khalaf explains how tax policies have changed across the member states of the Gulf Cooperation Council and what tax departments should prepare for next.
The departing OECD director said countries’ sovereignty is crucial to pillar two while speakers questioned current tax policies.
World tax leaders and departing OECD director Pascal Saint-Amans said they would work increasingly hard to implement pillar two, during the IFA Congress.
This week the European Commission is facing opposition over its windfall tax proposal, while Tesla is considering moving production to the US over tax breaks.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree