The definition of permanent establishment (PE) under Croatian law closely follows Art. 5 of the OECD Model.

Under Croatian law, a PE is defined as a permanent place of business, through which the company’s business activities are performed entirely or partially and includes the following:

Place of effective management;
Subsidiary;
Office;
Factory;
Workshop;
Mine, oil or gas source, quarry or any other place of utilization of natural resources;
A construction site or project if the activities continue for more than 6 months;
Performance of services, including advisory and business services, if the provision of such services for the same or a related project lasts for more than 3 consecutive months in any 12-month period;
An agent while not having the authority to conclude contracts on behalf of the non-resident principal, maintains a stock of goods from which he regularly makes deliveries on behalf of the non-resident principal.

Effective 1 January 2019, the definition of PE is expanded to harmonize it with existing tax treaties and the 2017 OECD Model Tax Convention, including in relation to dependent agent PEs and introducing anti-fragmentation rules.

The following activities do not form a PE:

use of a facility exclusively for storage, presentation or delivery of goods belonging to the company;
maintaining a stock of goods belonging to the company exclusively for the purpose of storage, presentation or delivery;
maintaining a stock of goods belonging to the company exclusively for the purpose of processing, which is performed by another company;
maintaining a permanent place of business exclusively for the purpose of purchasing goods or for collecting data for the company;
maintaining a permanent place of business exclusively for the purpose of performing any other activity of preparatory or ancillary nature for the company;
maintaining a permanent place of business for the purpose of combining activities mentioned above provided that the entire activity has a preparatory or ancillary importance;
a company is not considered to have a PE only because it performs its business by means of an intermediary, general commissioner or another representative with an independent status if these persons work within the scope of their regular business activity.

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