In line with the EU directive 2011/16/EU and appendix I and II to the EU directive 2014/107/EU, the Croatian Ministry of Finance has enacted a Bylaw on Automatic Exchange of Information in Tax Matters which was published in the Official Gazette no. 69/2016.
The said Bylaw clarifies in detail the provision of Article 177 of the Croatian General Tax Act wherein automatic exchange of information is prescribed to other EU member states on any resident of the particular EU member state who resides in Croatia without any prior requests or periods determined in advance.
Automatic exchange of information applies to (i) Income from employment, (ii) board and council member’s fees, (iii) life insurance products which are not included in other legal exchange instruments and other savings measures of EU, (iv) pensions, (v) property ownership and (vi) income made from property and property rights.
The tax authority exchanges relevant information with other EU member states starting retroactively from January 1st, 2014 and the exchange process is done at least once per year, 6 months prior to the deadline of the tax period for which the information has become available.
Automatic exchange of information also affects earnings from interests from personal savings; however, in this case, banks and other financial institutions are obliged to report such earnings to the Tax Authority who the forwards such information to the relevant EU member state. The same obligation for bank reporting also applies to any bank accounts newly opened in a bank in Croatia by a citizen of an EU member state. For existing accounts, bank reporting is obligatory if the threshold of USD 250,000 per account is surpassed in a given tax year.
Tax and legal advisor