Tax Insight

Signing of Protocol to US-Croatia treaty suggests significant development on US treaty program

Insight
5 minute read
May 04, 2026

What happened?

The United States and Croatia signed a protocol (the Protocol) amending the pending US-Croatia income tax treaty (the Treaty) on April 28, 2026. The delay in advancing the Croatian income tax treaty, signed in 2022, was due to needed discussions between the US Treasury Department and the Senate regarding an acceptable Double Tax Relief article. A key point of discussion was whether US tax treaties should obligate the United States to provide an indirect foreign tax credit consistent with Section 960. This issue is addressed in the Protocol.

Why is it relevant?

The Treaty was signed on December 7, 2022, but has not yet entered into force. The Protocol makes changes that Treasury believes will facilitate its transmission to the Senate for advice and consent to ratification. No treaties or protocols have advanced to the Senate ratification stage since the ratification of the US-Chile treaty on June 22, 2023. The resolution of coverage of the indirect tax credit could open the door to advance other pending agreements and further treaty negotiations. One long-awaited agreement is a new or revised treaty between the United States and Switzerland. Although it previously had been reported that the United States and Switzerland had reached agreement on the details of a new or revised treaty, there could be further discussions regarding the Double Tax Relief article in light of the revised approach reflected in the Protocol.

Actions to consider

Because the Treaty and Protocol reflect what has been indicated to be Treasury’s current tax treaty policy, taxpayers that have investments or dealings with Croatia--and taxpayers that rely on US tax treaties in general--should monitor these developments.