On 4 October 2023, Croatia published the Amended Profit Tax Law in the Official Gazette with updated corporate tax rate threshold, withholding tax, tax return and so on.

The main changes concerning corporate tax threshold and withholding tax include:

  • The annual revenue threshold for the standard 18% corporate tax rate is increased from EUR 995,421.06 to EUR 1 million. However, the corporate tax rate will be 10% if the annual revenue is below the threshold;
  • The annual revenue threshold for utilizing the cash method of accounting for corporate tax has been raised from EUR 995,421.06 to EUR 1 million.

The amendments for the domestic withholding tax provisions include:

  • The removal of payments for business consulting, market research, tax, and audit services as subject to standard withholding tax;
  • The withholding tax rate on payments to jurisdictions included in the EU non-cooperative list will be increased from 20% to 25%. This includes payments for business consulting, market research, tax, and audit services.
  • The EU Interest and Royalty Directive rules have been amended, including a new provision allowing withholding tax exemption even if the 24-month holding period condition has not been met. This exemption is subject to the taxpayer providing an appropriate guarantee.

The amendments will go into effect from 1 January 2024.