Global Daily Tax News, Croatia Releases Draft Pillar Two Minimum Tax Law, (Nov 16, 2023)

The Croatian Government has released for consultation draft legislation for the implementation of the EU's minimum tax directive.

The legislation, released only in Croatian, would transpose into domestic law EU Directive (2022/2523), the EU minimum tax directive.

The Directive provides that large multinational groups' profits should be liable to a corporate tax rate of at least 15 percent. The rules apply to any group, both domestic and international, with a parent company or a subsidiary situated in an EU member state, if the group's combined annual turnover is at least EUR750m.

If the minimum effective rate is not imposed by the country where the subsidiary company is based, there are provisions for the member state of the parent company to apply a "top-up" tax. Croatia will introduce a domestic top-up tax to secure the country with taxing rights over under-taxed domestic income that would otherwise be liable to a top-up tax in the location of the parent company.