The United States and Croatia update their double taxation avoidance agreement
The United States and Croatia have signed a protocol amending the income tax agreement to align it with current tax policies. The document will be submitted for ratification and will come into effect once both countries complete the necessary procedures.
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On Tuesday in Dubrovnik, during the Three Seas Initiative summit, a protocol amending the income tax agreement between the United States and Croatia was signed. The document was signed by the U.S. Ambassador to Croatia and Croatia’s Minister of Finance.
The protocol introduces changes to the agreement concluded on December 7, 2022, which was the first income tax treaty between these two countries.
According to available information, the protocol will allow the amended tax agreement to be submitted to the U.S. Senate for review, recommendations, and consent for ratification.
According to the Ministry of Finance, the protocol brings the provisions of the 2022 tax treaty in line with current U.S. tax policy regarding international agreements.
The main changes introduced by the protocol include:
- Introducing a definition of “active conduct of a trade or business” for Article 22 of the 2022 tax treaty.
- Revising the rules in Article 23 concerning the U.S. obligations to provide relief from double taxation.
- Amending Article 24 to align with the standards established by the “One Big Beautiful Bill” of 2025.
The protocol, together with the 2022 tax agreement, will be submitted to the U.S. Senate. The document will enter into force once both parties notify each other of the completion of the necessary internal procedures.