On September 18, 2025, Croatia opened a consultation on a Draft Bill to amend its Minimum Tax Act. The amendments are primarily to amend the QDMTT accounting standard so that the Croatian QDMTT qualifies for the QDMTT Safe Harbour and to provide for the notification deadline for appointing a designated filing entity. The amendments are proposed to apply from January 1, 2024.
QDMTT Accounting Standard
Article 13(4) of the Minimum Tax Act provides that a local accounting standard (as opposed to the accounting standard used by the UPE for the consolidated accounts) can be used for calculating income for QDMTT purposes, where the Croatian entity uses a local accounting standard for its financial accounting (and it has been adjusted to avoid significant distortion of competition, if any).
However, whilst the definition of a QDMTT under the OECD Model Rules expressly permits the calculations to be based on a Local Financial Accounting Standard, the Second Set of OECD Administrative Guidance restricts the use of a Local Financial Accounting Standard for the purposes of the QDMTT Safe Harbour.
In particular the Local Financial Accounting Standard of the QDMTT jurisdiction can only be used where all of the Constituent Entities located in that jurisdiction have financial accounts based on that standard and:
– are required to keep or use such accounts under a domestic corporate or tax law; or
– such financial accounts are subject to an external financial audit
If this requirement wasn’t met the domestic minimum tax may still be a QDMTT but the QDMTT safe harbour would not apply.
Therefore, the Draft Bill proposes to amend Article 13(4) so that the accounting standard for QDMTT purposes will the one used in the default GloBE rules.
As such, the profit or loss of the constituent entity for QDMTT purposes will be the accounting standard used in the preparation of consolidated financial accounts of the UPE. However, if this is not reasonably practicable, it can be determined by applying another approved or authorised accounting standard (ie a local standard, which in Croatia is the application of Croatian Financial Reporting Standards or International Financial Reporting Standards).
Designated Entity Notification
Article 46(8) of the Minimum Tax Act provides that if two or more constituent entities of the same MNE or a large domestic group that are subject to GloBE rules, are located in Croatia, they are required to appoint one of them who will be considered responsible for all tax rights and obligations (ie filing and payment).
The Draft Bill amends this provision to provide that the appointment of the designated filing entity must be made by the deadline for filing the GloBE tax returns in Articles 48 and 49 of the Minimum Tax Act.
Article 48(1) of the Law provides that an entity subject to the IIR or UTPR is required to file a top-up tax return within 30 days from the GIR filing deadline.
Entities subject to the QDMTT are required to submit a QDMTT return by the GIR filing deadline, under Article 49 of the Law.
For detailed information on the application of the GloBE Rules in Croatia, based on the latest Law, see our:
OECD Administrative Guidance: Domestic Implementation Matrix
Transitional CbCR Safe Harbour: Domestic Implementation Matrix
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