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India-Croatia Double Taxation Avoidance Agreement (DTAA)
The Double Taxation Avoidance Agreement (DTAA) signed between the government of the Republic of India and the government of the Republic of Croatia serves the purpose of avoiding double taxation and preventing fiscal evasion from taxes on income. This bilateral agreement was signed on February 12, 2014, and ratified on February 6, 2015, marking one of the first of its kind between both countries.
The India-Croatia DTAA covers the following taxes:
- In Croatia: Croatian income tax and profit tax
- In India: Indian income tax, including any surcharges
The DTAA also encompasses taxes on total income, elements of income, taxes on gains from the alienation of movable or immovable property, and total amounts of wages or salaries paid by enterprises.
Here are key highlights of the India-Croatia DTAA:
- Dividend Taxation: Dividends are taxed at a rate of 5% if the beneficial owner is a company directly holding at least 10% of the paying company’s capital. Otherwise, a 15% rate applies.
- Interest Taxation: Interests earned in one state and paid to a resident of the other state may be taxed in the other state at a rate of 10%.
- Capital Gains Taxation: Capital gains derived by a resident of one contracting state may be taxed by the other state as outlined in the DTAA.
- Royalties and Fees for Technical Services: Royalties and fees for technical services arising in one state and paid to a resident of the other state may be taxed in the other state at a rate of 10%.
- Tax Elimination: The credit method system is used by both countries to eliminate double taxation.
- Dispute Resolution: Disputes are to be resolved through the mutual agreement procedure as agreed upon in the DTAA.
The India-Croatia DTAA is a significant step taken by the governments of both contracting states to strengthen economic ties. This agreement has promoted economic and trade cooperation between the two countries. It has facilitated the exchange of tax-related information and extended support for tax collection.
Furthermore, the provisions in the DTAA align with international standards such as Base Erosion and Profit Shifting (BEPS) and The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. This alignment helps curb tax evasion, avoidance, treaty shopping practices, and conduit company practices.
The India-Croatia DTAA is an essential tool to enhance economic relations, promote trade and investment, and ensure that taxpayers in both countries are treated fairly and equitably in matters related to income taxation.
For comprehensive legal guidance and assistance regarding the India-Croatia Double Taxation Avoidance Agreement or any other legal matters, please do not hesitate to contact Chandrawat & Partners. We specialize in international tax agreements and are dedicated to providing expert legal assistance for all your needs.
We are committed to offering professional legal services, and we look forward to assisting you with any legal concerns or inquiries you may have. Your satisfaction and peace of mind are our top priorities.
For more information or to seek our expertise on this agreement or other legal matters, please don’t hesitate to reach out to us. We are here to serve your legal needs with the utmost professionalism and diligence.
To know more about DTAA relations between India and Croatia, please download our Guide.