The Croatian Parliament has axed withholding tax on company dividends as part of its preparations for entry to the European Union.
Until now, any Croatian company paying dividends from retained profits earned in a business period starting on 1 January 2001 and ending on 31 December 2004 was obliged to apply a 15% withholding tax. At the same time, dividends paid from profits earned before 1 January 2001 or after 31 December 2004 were tax-exempt.
It is not yet clear when the abolition will come into effect. “The taxation of dividend payments will be abolished completely,” says Sinisa Juric, head of custody at HVB Splitska banka in Zagreb. “The law will come into effect on the eighth day after publication in the Official Gazette of the Republic of Croatia and will be applied to any dividend payment on or after that date. The publication is still pending.”