Application of FATCA in the Republic of Croatia

As of 1/7/2014 Croatian financial institutions began with the collection of data according to the obligations imposed by FATCA (the US Foreign Account Tax Compliance Act). As it follows from the press release published on the website of the Ministry of Finance and the Tax Authority, Croatia decided to enter into the Agreement with the US government on improvement of fulfilment of tax obligations at international level and implementation of FATCA based on the principle of reciprocity.

The purpose of the act is to reduce the cross-border tax evasion and fulfilment of tax obligations through improvement of existing methods of data collection by the US Tax Authority (IRS). FATCA stipulates, among others, that foreign financial institutions are obliged to provide data to the IRS on financial accounts of American taxpayers, but at the same time the US government is obliged to collect data on accounts and financial assets held by Croatian taxpayers in the US.