On March 20, 2015, the Croatian Finance Minister and the US Ambassador in Croatia signed a Foreign Account Tax Compliance Act (FATCA).
Initially planned to enter into force at the end of September 2015, the Croatian Tax Authority announced that the FATCA reporting deadline will be postponed until September 30, 2016.
Once the Act enters into force, all Croatian financial institutions are obliged to provide all relevant information to US authorities related to any US citizen or resident, either legal or natural person,, including all personal and contact data. Due diligence is made for each transaction exceeding USD 50,000 for physical persons and USD 250,000 for legal entities. The rule applies for all existing accounts as well as for new ones. All information is sent directly to the IRS and the reporting obligations also include a report of all account transfers, accrued interests and dividends.
If a financial institution (banks, investment funds, entities which hold financial assets and other investment entities) does not comply with the above obligations, all payments shall be subject to FATCA withholding tax (at a rate of 30%) made for any U.S. source to any non-participating financial institution.
On the other hand, the US commits to also provide information about Croatian residents – holders of US accounts – to the Croatian authorities.
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