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.