Croatia has initiated proceedings to sign a protocol amending its 2022 double taxation convention with the US, which never entered into force, with the proposed changes targeting the treaty's limitation of benefits, double taxation elimination, and non-discrimination articles to address American objections to specific provisions.
Croatia’s government has initiated proceedings, on 18 March 2026, to sign an amending protocol with the US government that will modify the existing convention on avoiding double taxation and preventing tax evasion regarding income taxes.
The original Convention between Croatia and the US was signed in Washington on 7 December 2022. However, despite Croatia beginning the ratification process, the treaty never entered into force due to disagreements on specific provisions from the American side. This prompted the current proposal to amend the Convention through a new Protocol.
The US has suggested modifications to three main articles of the Convention:
- Article 22 (Limitation of Benefits) will receive technical corrections and a new subsection defining the term “active conduct of trade or business.”
- Article 23 (Elimination of Double Taxation) will undergo the most significant changes. The existing paragraphs 2, 3, and 4 will be replaced with new provisions. Most notably, a new subparagraph c) will be added to paragraph 2, allowing the United States to grant its businesses tax credits for taxes paid in Croatia when dealing with controlled foreign corporations.
- Article 24 (Non-Discrimination) will have its first paragraph replaced with new provisions requiring possession of a social security number under American domestic law to access certain benefits and relief measures.
The protocol must be finalised, signed, and ratified before entering into force.
