On 25 January 2019, the Croatian parliament approved the law for the ratification of the pending income tax treaty with Vietnam. The treaty, signed 27 July 2018, is the first of its kind between the two countries.
The treaty covers Croatian profit tax, income tax, local income tax, and any surcharges. It covers Vietnamese personal income tax and business income tax.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services through employees or other engaged personnel within a Contracting State for the same or connected project for a period or periods aggregating more than 6 months within any 12-month period.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries apply the credit method for the elimination of double taxation.
The treaty will enter into force once the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.