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4 MINUTE READ
December 15, 2022

United States and Croatia Sign Double Taxation Avoidance Treaty in Washington

Today in Washington, D.C., U.S. Under Secretary of State for Economic Growth, Energy, and the Environment Jose W. Fernandez and Croatian Minister of Finance Marko Primorac signed a Double Taxation Avoidance Treaty between the United States and Croatia.

A long-term and shared goal for the two countries, this treaty will help both Americans and Croatians avoid double taxation.  Once ratified by the U.S. Senate and Croatian Parliament, the agreement will further allow Croatian companies doing business in the United States and U.S. companies doing business in Croatia to conduct operations more efficiently, supporting jobs in the United States and in Croatia.  Avoiding double taxation will enable Croatian firms to engage in the U.S. market more fluidly, enhancing U.S.-Croatia economic cooperation and bolstering private-sector innovation between the countries.

“Today, I joined Minister Primorac to sign a Double Taxation Avoidance Treaty that strengthens economic ties,” said Under Secretary Fernandez.  “Our U.S.-Croatia partnership is thriving, and the United States welcomes Croatia’s leadership in areas ranging from European energy security to vital support for Ukraine,” the Under Secretary said.

U.S. Chargé d’Affaires Mark Fleming, who travelled from Zagreb to Washington for the treaty signing, applauded the growing U.S.-Croatia partnership and enhanced cooperation that has made agreements like this one achievable.

“This is a complex and detailed agreement.  I commend the commitment and hard work of U.S. and Croatian officials, particularly from the Department of the Treasury and Ministry of Finance, as we successfully conclude negotiations.  Signing this treaty is a clear signal of the strength and depth of our bilateral relationship,” said Chargé Fleming.  “Last year, Croatia entered the U.S. Visa Waiver Program.  Now we’ve signed a Double Taxation Avoidance Treaty, both of which put Croatia on the same level as the United States’ closest Euro-Atlantic partners,” added Chargé Fleming.  “The Croatian Government has led together with the United States and our Allies and partners in aiding Ukraine and holding Russia accountable for Putin’s unprovoked, unjustified war against Ukraine.  Croatia’s launch last year of the Krk floating Liquefied Natural Gas terminal has been a game changer, boosting Croatia’s emergence as a strategic energy leader in the region.  U.S.-Croatia teamwork is advancing the interests of both our countries, supporting the American and Croatian people, and contributing to wider Transatlantic security,” Chargé Fleming said.

FACT SHEET:

  • Tax treaties like this one signed between the United States and Croatia set clear ground rules that govern tax matters relating to trade and investment between the two countries.
  • This income tax treaty is a long-term and shared goal for the United States and Croatia.
  • Subject to advice and consent to ratification by the U.S. Senate and ratification by the Croatian Parliament, the treaty will protect both American and Croatian taxpayers from double taxation, through the allocation of taxing rights between the two countries.
  • The treaty also prevents potential “excessive” taxation by reducing withholding taxes imposed by the source country for taxable income, which is important for both individual taxpayers and businesses. The treaty establishes an agreed minimum level of economic activity within a country by a resident of the other country before triggering any tax burden on profits.
  • This treaty will allow Croatian companies doing business in the United States and U.S. companies doing business in Croatia to conduct operations more efficiently, supporting jobs in the United States and in Croatia.
  • Avoiding double taxation will enable Croatian firms to engage in the U.S. market more fluidly, enhancing U.S.-Croatia economic cooperation and bolstering private-sector engagement.
  • The treaty allows for the exchange of foreseeably relevant information between the tax authorities and provides robust mechanisms for resolving disputes regarding the treaty’s application.
  • Importantly for pensioners and their families, this treaty sets provisions on coordinating the pension rules of the U.S. and Croatian tax systems.

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