Protocol Amending Convention... US and Croatia.... Taxes on Income, April 28, 2026

PROTOCOL
BETWEEN
THE GOVERNMENT OF THE UNITED STATES OF AMERICA
AND
THE GOVERNMENT OF THE REPUBLIC OF CROATIA
AMENDING THE CONVENTION BETWEEN
THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND
THE GOVERNMENT OF THE REPUBLIC OF CROATIA
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF TAX
EVASION WITH RESPECT TO TAXES ON INCOME

The Government of the United States of America and the Government of the Republic of
Croatia,
Desiring to amend the Convention between the Government of the United States of
America and the Government of the Republic of Croatia for the Avoidance of Double Taxation
and the Prevention of Tax Evasion with respect to Taxes on Income, done at Washington
December 7, 2022 (hereinafter the "Convention"),
Have agreed as follows:

Article I
1. Subparagraph (g) of paragraph 7 of Article 22 (Limitation on Benefits) of the Convention
shall be amended by deleting the final "and
".
2. Clause (ii) of subparagraph (h) of paragraph 7 of Article 22 (Limitation on Benefits) of the
Convention shall be amended by deleting the final "." and replacing it with "; and ".
3. The following new subparagraph shall be added to the end of paragraph 7 of Article 22
(Limitation on Benefits) of the Convention:
"i) the term "active conduct of a trade or business" means a specific unified group of
activities of a resident of a Contracting State that: constitutes (or could constitute) an
independent economic enterprise carried on for profit; ordinarily includes every operation
which forms a part of, or a step in, a process by which an enterprise may earn income or
profit, as well as the collection of income and the payment of expenses; and involves the
regular performance of active and substantial management and operational functions
through the resident’s own officers or employees."

Article II
Paragraphs 2, 3 and 4 of Article 23 (Relief from Double Taxation) of the Convention shall be
deleted and replaced by the following:

"2. In the case of the United States, double taxation shall be relieved in accordance
with the provisions of, and to the extent allowed under, the law of the United States (as it
may be amended from time to time without changing the general principle hereof) as
follows:
a) the United States shall allow to a resident or citizen of the United States as
a credit against the United States tax on income applicable to residents and citizens,
the income tax paid or accrued to Croatia by or on behalf of such resident or citizen;
b) the United States shall allow to a United States company that is a United
States shareholder of a company that is a resident of Croatia and from which the
United States company receives dividends, a deduction in the amount of the
dividends in computing the taxable income of the United States company; and
c) the United States shall allow to a resident or citizen of the United States that
is a United States shareholder or a foreign controlled United States shareholder of
a controlled foreign corporation or a foreign controlled foreign corporation, as
applicable, that is a resident of Croatia, as a credit against the United States tax on
income applicable to residents and citizens, the income tax paid or accrued to
Croatia by the controlled foreign corporation or foreign controlled foreign
corporation, as applicable, that is properly attributable to the profits giving rise to
an income inclusion of such resident or citizen.
For the purposes of applying subparagraphs (a) and (c) of this paragraph, the taxes paid or
accrued to Croatia that are referred to in subparagraph (a) of paragraph 3 of Article 2 (Taxes
Covered) shall be considered income taxes.
3. For the purposes of applying subparagraphs (a) and (c) of paragraph 2 of this
Article, an item of gross income, as determined under the law of the United States, derived
by a resident of the United States that, under this Convention, may be taxed in Croatia shall
be deemed to arise in Croatia.
4. Where a United States citizen is a resident of Croatia:
a) with respect to items of income, profit or gain that under the provisions of
this Convention are exempt from United States tax or that are subject to a reduced
rate of United States tax when derived by a resident of Croatia who is not a United
States citizen, Croatia shall allow as a credit against Croatia tax only the tax paid,
if any, that the United States may impose under the provisions of this Convention
other than taxes that may be imposed solely by reason of citizenship under
paragraph 4 of Article 1 (General Scope);
b) for purposes of applying paragraph 2 of this Article to compute United
States tax on those items of income, profit or gain referred to in subparagraph (a)
of this paragraph, the credit referred to in paragraph 2 of this Article shall be
determined after the credit referred to in subparagraph (a) of this paragraph; the
credit so allowed shall not reduce the portion of the United States tax that is

creditable against the Croatia tax in accordance with subparagraph (a) of this
paragraph; and
c) for the exclusive purpose of relieving double taxation in the United States
under subparagraph (b) of this paragraph, items of income, profit or gain referred
to in subparagraph (a) of this paragraph shall be deemed to arise in Croatia to the
extent necessary to avoid double taxation of such income under subparagraph (b)
of this paragraph."

Article III
Paragraph 1 of Article 24 (Non-Discrimination) of the Convention shall be deleted and replaced
by the following:
"1. Nationals of a Contracting State shall not be subjected in the other Contracting State
to any taxation or any requirement connected therewith that is more burdensome than the
taxation and connected requirements to which nationals of that other Contracting State in
the same circumstances, in particular with respect to residence, are or may be subjected.
This provision shall also apply to persons who are not residents of one or both of the
Contracting States. However:
a) for the purposes of United States taxation, United States nationals who are
subject to tax on a worldwide basis are not in the same circumstances as nationals
of Croatia who are not residents of the United States; and
b) the provisions of this paragraph shall not be construed as obliging the
United States to grant to a national of Croatia any personal allowances, reliefs, and
reductions for taxation purposes, including those on account of civil status or family
responsibilities, if that national does not provide any social security number or
numbers required by the U.S. Internal Revenue Code (as it may be amended from
time to time) to claim such benefits."

Article IV
1. This Protocol shall be subject to ratification in accordance with the applicable procedures
of each Contracting State. The Contracting States shall notify each other in writing, through
diplomatic channels when their respective applicable procedures have been satisfied.
2. This Protocol shall enter into force on the date of entry into force of the Convention and
shall form an integral part of the Convention.

IN WITNESS WHEREOF, the undersigned, being duly authorized thereto by their
respective Governments, have signed this Protocol.

DONE at ____________________ in duplicate, in the English and Croatian
languages, both texts being equally authentic, this day of , 2026.

FOR THE GOVERNMENT OF
THE UNITED STATES OF AMERICA:

FOR THE GOVERNMENT OF
THE REPUBLIC OF CROATIA: