Incentives and disincentives created by tax systems, together with legal considerations connected thereto, affect the behavior of both individuals and companies, whether acting nationally or across borders. Taxation traditionally appears as an important, sometimes crucial, determinant for businesses in their decision on whether, where, and how to invest, and how to structure and conduct their business operations, or specific transactions.
The Croatian tax system is facing an extremely dynamic period in its development, being affected by two recent events – accession to the European Union, and an ongoing national tax reform.
Meanwhile, in the international tax arena, the OECD developed a BEPS action plan set out to equip governments with domestic and international instruments to address tax avoidance, ensuring that profits are taxed where those economic activities generating the profits are performed and where value is created.
On the EU level, the Council adopted on 20 June 2016 the Directive (EU) 2016/1164 laying down rules against tax avoidance practices that directly affect the functioning of the internal market – so called EC Tax Avoidance Directive. The EC Tax Avoidance Directive has announced additional amendments to be expected in the national tax systems, primarily dealing with interest limitation rules, exit taxation, general anti-abuse rules, CFC rules and hybrid mismatches.
This creates a demanding environment for both tax authorities and entities doing business in Croatia.
Our experience covers a wide range of disciplines – from VAT, corporate and personal income tax, transfer pricing, and international tax law, to tax controversy – with a main goal to achieve risk reduction, avoidance of disputes, and resolving issues that entities encounter when doing business in Croatia.