The US Croatia tax treaty is one step closer to taking effect after Washington and Zagreb signed a protocol on April 28, 2026, designed to resolve the Senate objections that have kept the 2022 agreement on hold. Americans in Croatia have been waiting on it for more than three years.

U.S. Ambassador Nicole McGraw and Croatian Finance Minister Tomislav Ćorić signed the protocol in Dubrovnik on the margins of the Three Seas Initiative Summit. Croatia is the last European Union member state without a tax treaty in force with the United States.

Why the treaty stalled

The United States and Croatia signed their first comprehensive income tax treaty on Dec. 7, 2022. Croatia ratified it through its parliament in early 2023. The Senate did not.

The hold-up came from the Senate Foreign Relations Committee, which flagged how the treaty’s relief-from-double-taxation rules would interact with the 2017 Tax Cuts and Jobs Act. The committee laid out those objections in its June 2023 report approving the U.S.-Chile tax treaty, the last tax treaty the Senate has ratified.

Pressure built from both sides. Three House members from the Congressional Croatian Caucus pushed Treasury to resolve the dispute in June 2024. Croatian Parliament Speaker Gordan Jandroković pressed McGraw publicly in November 2025. The treaty stayed where it was.

What the protocol changes

The protocol rewrites three articles of the 2022 treaty, all aimed at the Senate’s objections:

• Article 22 (Limitation on Benefits). Adds a treaty-based definition of “active conduct of a trade or business” to govern who qualifies for treaty benefits.
• Article 23 (Relief from Double Taxation). Revises the U.S. rules on foreign tax credits, the technical point Treasury and the Senate had been negotiating since 2023.
• Article 24 (Non-Discrimination). Coordinates with the One Big Beautiful Bill Act of 2025, the Trump administration’s tax law signed July 4, 2025.

Treasury Assistant Secretary for Tax Policy Kenneth J. Kies said the package “reflects our current tax treaty policies.”

What it means for Americans in Croatia

Without a treaty, Americans in Croatia have spent years paying tax in both countries on the same income and relying on the unilateral U.S. foreign tax credit to recover what they could. Croatian-source dividends, interest and royalties paid to U.S. residents face standard Croatian withholding rates rather than the reduced treaty rates that apply almost everywhere else in the EU.

A ratified treaty would not change citizenship-based taxation. U.S. citizens in Croatia would still file with the IRS regardless of residence, the same as U.S. citizens anywhere in the EU. Croatian banks would still report American account-holder data to the IRS under the FATCA framework, which operates independently of any bilateral tax treaty.

What would change:

• Lower withholding rates on cross-border dividends, interest and royalties
• Clearer rules for pension and social security coordination
• Procedures to resolve disputes between the two tax authorities
• Tiebreaker rules for dual residents

The double-filing overhead is one of the reasons some Americans relocate in the first place. A ratified treaty would not lift it. It would only make one slice of the math less punitive.

What still has to happen

The 2022 treaty and the protocol go to the Senate together for advice and consent. Both then have to be re-ratified by Croatia’s parliament. The treaty enters into force only after each side notifies the other that its domestic procedures are complete.

Treasury believes the protocol resolves the issues that kept the Senate from acting. Whether the Foreign Relations Committee agrees is the next test. No tax treaty or protocol has reached a Senate ratification vote in nearly three years.