Harmful Tax Practices – 2021 Peer Review Reports on the Exchange of Information on Tax Rulings

Croatia

Croatia has met all aspects of the terms of reference (OECD, 2021[3]) (ToR) for the calendar year 2021 (year in review), and no recommendations are made.

Croatia can legally issue four types of rulings within the scope of the transparency framework.

In practice, Croatia issued rulings within the scope of the transparency framework as follows:

 

Type of ruling	Number of rulings
Past rulings	0
Future rulings in the period 1 April 2017 – 31 December 2017	0
Future rulings in the calendar year 2018	1
Future rulings in the calendar year 2019	0
Future rulings in the calendar year 2020	0
Future rulings in the year in review	1

As no exchanges took place during the year in review, no peer input was received in respect of the exchanges of information on rulings received from Croatia.

Information gathering process (ToR I.A)

309. Croatia can legally issue the following four types of rulings within the scope of the transparency framework: (i) cross-border unilateral APAs and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (ii) rulings providing for unilateral downward adjustments; (iii) permanent establishment rulings; and (iv) related party conduit rulings.

310. For Croatia, past rulings are any tax rulings within scope that are issued either: (i) on or after 1 January 2015 but before 1 April 2017; or (ii) on or after 1 January 2012 but before 1 January 2015, provided they were still in effect as at 1 January 2014. Future rulings are any tax rulings within scope that are issued on or after 1 April 2017.

311. In the prior years’ peer review reports, it was determined that Croatia’s undertakings to identify past and future rulings and all potential exchange jurisdictions were sufficient to meet the minimum standard. In addition, it was determined that Croatia’s review and supervision mechanism was sufficient to meet the minimum standard. Croatia’s implementation remains unchanged, and therefore continues to meet the minimum standard.

312. Croatia has met all of the ToR for the information gathering process and no recommendations are made.

Exchange of information (ToR II.B)

313. Croatia has the necessary domestic legal basis to exchange information spontaneously. Croatia notes that there are no legal or practical impediments that prevent the spontaneous exchange of information on rulings as contemplated in the Action 5 minimum standard.

314. Croatia has international agreements permitting spontaneous exchange of information, including: (i) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011[1]) (“the Convention”), (ii) the Directive 2011/16/EU with all other European Union Member States and (iii) bilateral agreements in force with 66 jurisdictions.1

315. For the year in review, the timeliness of exchanges is as follows:

 

Future rulings within the scope of the transparency framework	Number of exchanges transmitted within three months of the information becoming available to the competent authority or immediately after legal impediments have been lifted	Delayed exchanges
		Number of exchanges transmitted later than three months of the information on rulings becoming available to the competent authority	Reasons for the delays	Any other comments
	0	1	See below	N/A

 

Follow-up requests received for exchange of the ruling	Number	Average time to provide response	Number of requests not answered
	0	N/A	N/A

316. In the prior years’ peer review reports, it was determined that Croatia’s process for the completion and exchange of templates were sufficient to meet the minimum standard. With respect to past rulings, no further action was required. During the year in review, Croatia identified one ruling that had not yet been exchanged and therefore, the exchange was transmitted with a delay in early 2022. Croatia notes that immediate action was undertaken after this delay had occurred, by updating the existing instructions on the implementation of the exchange of information on rulings and updating the Manual on Automatic Exchange of Information. Therefore, Croatia’s implementation in this regard continues to meet the minimum standard.

317. Croatia has the necessary legal basis for spontaneous exchange of information, a process for completing the templates in a timely way and has completed all exchanges. Croatia has met all of the ToR for the exchange of information process and no recommendations are made.

Statistics (ToR IV.D)

318. As no exchanges took place during the year in review, no statistics can be reported. The exchange transmitted with a delay will be included in next year’s peer review report.

Matters related to intellectual property regimes (ToR I.A.1.3)

319. Croatia does not offer an intellectual property regime for which transparency requirements under the Action 5 Report (OECD, 2015[2]) were imposed.

Summary of recommendations on implementation of the transparency framework

 

Aspect of implementation of the transparency framework that should be improved	Recommendation for improvement
	No recommendations are made.

References

[3] OECD (2021), BEPS Action 5 on Harmful Tax Practices - Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD Publishing, Paris, http://www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparency-framework.pdf.

[2] OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, https://doi.org/10.1787/9789264241190-en.

[1] OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris, https://doi.org/10.1787/9789264115606-en.