September 26, 2020 - A 20-year-old diplomatic and business stumbling block has finally been resolved - Croatians don't need a visa for the USA from 2021

With a considerable amount of the country's diaspora living in English-speaking countries, the issue of visa requirement to enter the USA has been of significant interest to Croatians for years. Discussions have been ongoing since the late 1990s, complicated by the fact Croatian passports can be issued in a different country altogether - Bosnia and Herzegovina. But now, the wait is finally over - Croatians don't need a visa for the USA from 2021.

As detailed in Total Croatia News on 7th September, the final hurdle for the removal of visa requirements was the issuing of 2000 further visas before the end of this month. Sources inside the Croatian Ministry of Foreign Affairs have revealed this criterion has now been met and thus the annual level of rejected applications will be less than 3%. This was the bar set by the USA to the Croatian state.

Meeting this figure was complicated by the decrease in travel due to the ongoing pandemic. Therefore, with full disclosure to their American counterparts, sections of the Croatian government set about orchestrating the required number of applications. They enlisted the help of the Croatian business community and members within it who were sure to submit successful applications.

Next Friday, US Secretary of State Mike Pompeo will arrive in Croatia. Final details for the abolition of visas will be discussed between his accompanying team and that of Prime Minister Andrej Plenković, Foreign Minister Gordan Grlić Radman and Minister of Defense Mario Banožić, who will meet him in Dubrovnik. The official announcement that Croatians don't need a visa for the USA from 2021 could potentially come as soon as the end of the US Secretary of State's visit.

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As Novac/Marina Klepo writes on the 14th of September, 2020, last week, US Ambassador Robert Kohorst presented the Croatian Government with a proposal for a draft agreement on avoiding double taxation between the United States and Croatia, a document that the two countries have now been negotiating for a quarter of a century. But just what would the Croatian-American agreement bring, and what are the details?

After the US ambassador met with Finance Minister Zdravko Maric at the Banski dvori, they reported that the long anticipated Croatian-American agreement would provide "additional legal security to taxpayers, especially those with dual citizenship, prevent double tax payments and protect them from possible discriminatory practices."

Cooperation between the Croatian and US tax services will be established in order to resolve possible ambiguities and misunderstandings during the implementation of the Croatian-American tax agreement itself. Negotiations between the two sides are scheduled for the end of the year, with Croatia being represented by the Ministry of Finance. When asked when this Croatian-American agreement could enter into force, Minister Maric was reluctant to state a time frame, emphasising that it doesn't depend only on the Croatian side.

''We've been waiting for this moment for a long time, we're going to do everything to make it happen as soon as possible,'' said the Minister of Finance. The first negotiations on the avoidance of double taxation between Croatia and the United States began back in 1995, and a year later, standard model agreements were exchanged. However, the official start of negotiations didn't take place. The most probable time for signing such a Croatian-American agreement seemed to be in 2008, just before Croatia's accession to NATO, when US President George W. Bush also visited Croatia, but it didn't happen even then.

There were several initiatives after that, primarily on the Croatian side, and the last one was launched two years ago by the American Chamber of Commerce in Croatia (AmCham), which also presented the publication "Arguments in favour of signing a double taxation agreement between Croatia and the United States". The conditions for a higher phase of negotiations, both on signing an agreement on avoiding double taxation and on abolishing visas, are now clearly ripe.

Given that double taxation is the most harmful thing to would-be investors, agreements to avoid such practices are an important tool for protecting investors and foreign direct investment. In its analysis, the US Chamber of Commerce states, among other things, that avoiding double taxation would lead to increased investment between the two countries, that existing cumulative tax rates in the US are higher than in Croatia and that they have a disincentive effect on Croatian companies.

An additional reason for this step is the fact that the current situation encourages companies on both sides to operate through subsidiaries registered in other countries, which means additional financial expenditures. The agreement would bring the greater and cheaper transfer of knowledge and experience, especially for small and medium-sized companies and companies in the IT sector, and ultimately "better tax treatment of US citizens who work, reside or own real estate in Croatia."

When rxplaining what double taxation means, for example, for a company in Croatia that is 100 percent owned by an American company, AmCham states that it must pay 18 percent income tax in Croatia and interest, fees and dividends, so the total amount paid to the American owner is significantly less than it would have been if the Croatian-American agreement had been signed. The same applies to the operations of Croatian companies in the United States.

"The burden is even greater than the above example, because in the United States, all three tax rates are 30 percent deductible for countries that haven't signed an agreement. This is especially true for Croatian IT companies, which are very much present over on the US market,'' reads the AmCham analysis.

As for the most common example of economic double taxation, it has been stated that the company pays income tax, and then the tax is paid by the shareholders on the dividend paid from that taxed profit. One country can tax income according to the criterion of its origin, and the other on the basis of residence. Agreements usually deal with the fact that the country in which the taxpayer is resident doesn't collect income tax that has already been subject to taxation abroad or grants a tax deduction in the amount of tax paid abroad. In the case of companies, a dividend deduction system, imputation systems or separate tax rates are most commonly used.

According to the Croatian Chamber of Commerce, Croatia currently has 63 double taxation agreements in place, including with all EU countries except Cyprus, most of which have been in force since Croatia's accession to the EU. The only exceptions to that, meaning agreements which came before Croatia joining the bloc are the agreements with three European countries - Portugal, the United Kingdom and Luxembourg.

These agreements differ in the scope and tax rates agreed upon, with some regulating only income tax and some covering both income and assets. Each agreement specifies exactly which taxes in the signatory countries are the subject of the agreement and defines who has the right to tax, how those taxes are distributed or what the highest amount of taxation stands at. As an example, the Croatian Chamber of Commerce cites the agreement between Croatia and the Czech Republic, which defines that a state in which a dividend is paid to a resident of another state has the right to collect tax on that dividend, but in the maximum amount of 5 percent gross dividend.

When it comes to the United States, which has 68 double taxation agreements, Croatia is the only European Union country with which it still doesn't have such an agreement.

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As Lucija Spiljak/Poslovni Dnevnik writes on the 11th of September, 2020, with the acquisition of its European subsidiary Interxion, the American company Digital Realty took over the Zagreb company Altus IT, the first Croatian data centre independent of a telecom operator. This acquisition will further increase the global user presence with access to the global PlatformDIGITAL, which helps users worldwide to connect their entire digital ecosystem through a single data centre service provider.

''We believe that this is an extremely significant step further that brings our customers a stronger global presence and opens up new opportunities for growth and development. We'll certainly use Interxion's access to a global network of more than 280 facilities at 47 metro locations in 22 countries across six continents and established relationships with 700 telecoms, to further develop the established telecommunications hub,'' said Goran Djoreski, the current director of Altus IT, which connects more than 45 telecoms, including Cogent, CenturyLink, NTT, Cloudflare, DT, A1 and others, making Altus IT the focal point of all communications between the region and Western Europe.

The company has established itself on the Croatian market as the leading independent provider of data centre services and one of the main communication hubs, and last year they earned 18.71 million kuna, with a growth compared to last year of 26.42 percent. They currently have about fifteen employees, and that number will follow future development plans, the company says. Djoreski will take over the position of Interxion's business director in Croatia. The price of the acquisition isn't yet known, and it is too early, they say from the company, to discuss concrete plans and investments on the Croatian market. However, the business model of Altus IT, Djoreski added, is similar to that of Interxion, so they don't expect major changes in the continuation of business and organisational structure, and the company will continue to operate in Croatia as an independent legal entity.

Last year, in an interview with Poslovni Dnevnik, Djoreski revealed that Altus IT concluded its fourth expansion by raising its capacity by an additional 200 square metres to a total of 830 square metres, marking the beginning of a phase of accelerated cloud-based growth and preparation for even greater investment. Since back in 2012, when Altus IT initially entered the cloud business, they have become a key cloud point in Croatia, from which they now generate a quarter of their revenue. Half of their customers are various IT and digital companies, and the other half are telecoms. Four years ago, Telia Carrier placed a direct connection to the Microsoft cloud platforms Azure and Office365 at Altus, which means that in the past three years, large companies and banks haven't needed to use Office365 over the Internet, but can optically connect to Altus IT and as such connect directly to Microsoft services. Thus, users store all their data in Croatia, and if necessary, transfer it to the Microsoft cloud and back. At Altus, both Amazon and Google have direct links to their clouds.

With this acquisition, it seems that it will try to strengthen globally, and the fact that Interxion: A Digital Realty Company, as a European independent provider of cloud data centres and collocation solutions, is a leader in the EMEA region, also supports this. It is a subsidiary of Digital Realty, which operates in 22 countries with 280 day centres on six continents. Last year, with 1,550 employees, they earned 3.2 billion US dollars, while profit was 579 million US dollars.

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August the 9th, 2020 - The US Embassy in Croatia has stated that the advise now being given to American tourists is to ''reconsider travel to Croatia'' amid the ongoing coronavirus pandemic.

As the US Embassy in Croatia has stated, the Centres for Disease Control and Prevention has issued a Level 3 Travel Health Notice to American citizens hoping to travel to the Republic of Croatia.

There have been numerous items added to the ''checklist'' for travel for US citizens for Croatia, which can be read by clicking the above link and by following the links provided within the US Embassy's webpage. A country information page is also available.

For more on travel to, from and within Croatia during the coronavirus era, follow our dedicated travel page.

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STEMI says that the ongoing coronavirus crisis has increased the prices of inputs by up to 20 and even 30 percent, and extended the procurement deadlines by two to three times. Croatian robots are wanted in the US!

As Poslovni Dnevnik/Bernard Ivezic writes on the 21st of July, 2020 the domestic startup STEMI set off on Tuesday with the first deliveries of its robots to California, the state where the famous Silicon Valley is located. More than 50 American schools located from California to Texas and Arizona, all the way to Florida, Connecticut and New Jersey, bought some Croatian educational robots in a package with educational content for STEM education around two months ago.

This is one of the greatest Croatian successes in adapting business to the conditions of the "new normal" that developed as a result of the coronavirus pandemic. Marin Troselj, the co-founder and director of STEMI, says that he almost had a nervous breakdown in March, because their work simply stopped completely.

Back at the end of last year, STEMI raised 319,000 euros or 2.4 million kuna of capital through Funderbeam SEE in order to expand to the American market in 2020.

"In March, we started selling and in the first three weeks we reached as much as 20 percent of the sales target for this year, and then quarantines started and schools from the USA started calling us and cancelling their orders," Troselj recalls.

He says they immediately changed their strategy that fourth week. They stepped up their communication through digital channels with American schools, introduced a series of changes and prepared for the next opportunity. It opened for them in May.

He states that schools in the US have money, they're very interested in STEM and they continue to invest. Even those who aren't currently buying robots are buying laptops intensively so that their students can work from home. Some schools have therefore frozen their budgets for other things as they wait for September to see how the situation with the coronavirus pandemic develops. Troselj says that the most important thing for them now is to deliver all the contracted orders, and emphasises that, as things seem at the moment, they will manage to achieve that.

"We were also a little lucky, because culturally, schools in the United States are like kindergartens, they also serve to look after children while their parents work so that they're still in function with them," says Troselj. He adds that the transformation of the company in such a short time has been very challenging indeed, not only in terms of sales but also in communication to investors and in production, as well as planning for future development. He states that STEMI now communicates with major investors on a daily basis, and with the bigger ones on a monthly basis. In addition, they are currently preparing to send out a quarterly report.

"We didn't reach the set goals for this quarter, but we couldn't have predicted the coronavirus pandemic. However, investors have an understanding, because we inform them in detail about everything we're doing and that's why we get to enjoy their support,'' says Troselj. In production and planning for future development, he states that the coronavirus crisis has increased the prices of inputs by up to 20 and even 30 percent, and extended the procurement deadlines by two to three times. He points out that some hardware factories in China have had to shut down, others have slowed down the pace of their deliveries, and transportation has slowed.

"The biggest challenge was the fact that we were supposed to start our production in May, and we were just starting a real 'new normal' sale and we couldn't immediately know how many robots we needed to produce," says Troselj.

He explains that they didn't want to overcrowd the parts warehouse, nor did they want to question the deliveries. In addition, before the coronavirus struck Croatia, they planned to go to China for a short time and personally perform some of the necessary tests before delivering the parts.

This way, he says, they had to hire an R&D company from Shenzhen to do the job for them. He adds that they intend to continue to adapt.

"Some schools have even increased their orders from us, because they're conducting education from home, so they ordered additional robots. However, we're already looking for space for growth in programmes that aren't related to hardware,'' concludes Troselj.

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ZAGREB, June 3, 2020 - A HRK 1 million donation of the International Medical Corps from the USA was presented to Croatia's Health Ministry on Wednesday by the head of the Croatian office of that global humanitarian organization, Ivana Petkovic.

The donation, delivered to the Croatian civil protection directorate's logistic centre in Jastrebarsko, consists of 70,400 KN95 ventilator masks, 12,000 face shields, and 18 pulse oximeters. The donation is aimed at contributing to the protection of Croatian medical staff against the coronavirus.

Seeing that Zagreb and its environs were struck by the March 22 devastating earthquake which put some of the health institutions and medical equipment out of use, the International Medical Corps made this donation in an effort to relieve the consequences of the earthquake, the civil protection directorate informed.

In attendance at the donation-delivery ceremony was US Ambassador to Croatia William Robert Kohorst, Croatian Assistant Interior Minister Damir Trut, and the director of the Croatian Emergency Medical Service, Maja Grba Bujevic.

The International Medical Corps is a global, nonprofit, humanitarian aid organisation dedicated to saving lives and relieving suffering by providing emergency medical services, as well as healthcare training and development programs, to those affected by disaster, disease or conflict.

Croatia has intensified its cooperation with the USA in the area of civil protection over the past five years particularly with the Minnesota National Guard in the segment of disaster response preparedness through exchanging the know-how in the prevention and participating in exercises in the field.

As Morski writes on the 27th of August, 2019, according to a report on the results of a digital campaign conducted by the Croatian National Tourist Board (HTZ) on the American market in collaboration with Expedia, the world's leading travel platform, 22.2 million impressions were generated.

A joint campaign called "Croatia Unlocked" ran from April to June this year, aiming to increase the country's overall visibility, strengthen its position, and promote Croatia as over on the United States market as an ideal year-round destination for the Mediterranean.

The famed Expedia Group includes some of the world's most trusted travel brands in its portfolio, such as Hotels.com, Trivago, Travelocity, Cheaptickets, HomeAway, etc. The platform receives over 144 million monthly unique visits, with over 7 million followers on social networks alone.

The primary objective of the Croatian National Tourist Board's American campaign was to stimulate American travellers' interest in Croatian destinations, while the idea of direct booking, set as an additional goal of the project, achieved some truly excellent results. Namely, accommodation was booked for the duration of the campaign and air tickets to Croatia worth a massive 3.2 million US dollars were purchased.

''The campaign conducted with Expedia and the results it has achieved show the utmost importance of cooperation with global tourism entities in promoting Croatian tourism. This is an excellent example of a campaign that simultaneously strengthened Croatia's position on the American market, but also directly influenced the booking of holidays in Croatian destinations,'' said the director of the Croatian National Tourist Board, Kristjan Staničić.

Make sure to follow our dedicated travel page for much more on Croatia's multitude of beautiful destinations, both on the coast and in the continental part of the country.

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