Croatia: Reduced rate of interest on related-party loans, deductible interest

Croatia: Interest on related-party loans

Croatia’s National Bank announced a reduction in the bank discount rate, from 7% per annum to 3% per annum, effective 31 October 2015. This rate reduction has tax implications.

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Accordingly, for Croatian corporate profit tax law purposes: (1) the maximum amount of deductible interest on loans from a Croatian tax non-resident to a Croatian tax resident related party will also decrease from 7% per annum to 3% per annum; and (2) the minimum acceptable interest rate on loans from a Croatian tax resident made to a Croatian tax non-resident related party for corporate profit tax purposes also decreases from 7% per annum to 3% per annum.  These rules further apply to loans between two Croatian tax residents if one of them is in a “favorable” tax position.

 

Read a November 2015 report [PDF 117 KB] (Croatian and English) prepared by the KPMG member firm in Croatia: Related-party interest rate limit

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