Croatia moves forward with ratification of double taxation agreement with Australia, featuring reduced withholding tax rates of 5-10% on dividends, interest and royalties, plus anti-abuse provisions to prevent tax evasion. The treaty, signed in November 2025, awaits parliamentary approval before taking effect in 2027.Â
Croatia’s Ministry of Finance has submitted a draft law to ratify a new tax treaty with Australia during a meeting on 16 April 2026.
The agreement between Croatia and Australia on the elimination of double taxation with respect to taxes on income and the prevention of tax evasion and avoidance was signed in Canberra on 24 November 2025.
The treaty establishes reduced withholding tax rates on cross-border income. Dividends will be taxed at 5% when the beneficial owner is a company holding at least 10% of voting rights for 365 days, and 10% in other cases. Interest and royalties will both be subject to a 10% withholding tax rate.
The treaty incorporates modern anti-abuse measures designed to prevent treaty shopping and other arrangements aimed at achieving tax-free or reduced-tax income through evasion or avoidance.
Once implemented, the treaty will take effect from 1 January following ratification for Croatian withholding taxes and other income taxes, while Australia will apply it from 1 January for withholding taxes, 1 April for payroll taxes, and 1 July for other taxes.
