Concerning the interest rate on loans between related parties for purposes of the corporate profit tax, the arm’s length interest rate is 4.55% per annum, effective 1 January 2018. Alternatively, the arm’s length interest rate on loans between related parties can be based on an interest rate determined by applying one of the transfer pricing methods.
Accordingly, for corporate profit tax purposes, as of 1 January 2018:
These rules also apply to loans between two Croatian taxpayers if one of the taxpayers is in a corporate profit tax “favourable position.”
All taxpayers that receive loans from or provide loans to related parties therefore need to consider the conditions of their loan arrangements and, if warranted, take certain steps.
For corporate profit tax purposes in Croatia:
Read a 2018 report (Croatian and English) prepared by the KPMG member firm in Croatia
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