Croatia’s parliament passed the amendments related to the Corporate Income Tax Law which is expected to come into effect from March 1, 2012.
FOR IMMEDIATE RELEASE / PRURGENT
(Sunnyvale, CA) – Croatia’s parliament passed the amendments related to the Corporate Income Tax Law which is expected to come into effect from March 1, 2012.
The amendments bring the tax laws in line with the Parent-Subsidiary Directive (90/435).
Withholding Tax on Dividends and Profit Participation
A withholding tax of 12% will be levied on dividends and participation in profits paid by Croatia based companies to non-resident companies.
The new amendments are applicable to dividends and participation in profits paid after March 1, 2012, with the exception of distributions of profits earned before December 31, 2000.
After Croatia becomes a member of the European Union from July 1, 2013, dividends and participation in profits paid to non-resident companies (who fall under the common regime applicable to parent companies and subsidiaries of different EU Member States) will be exempted if:
* the recipient has a shareholding of 10% or more in the company paying the dividends or participation in profits;
* the recipient has owned the aforesaid minimum of share capital of 10% or more for 24 months continuously.
Croatia Income Tax Base
Starting January 1, 2013, the tax base could be reduced by the realized profits used to increase the nominal capital. Tax payers need to prove to tax regulators the actual increase of the nominal capital, within 6 months from the date the corporate income tax return needs to be filed. From 2012, the provision will be applicable for corporate profit tax returns.
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