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The United States and Croatia on December 7 announced that the two parties had signed a new income tax treaty. Once the treaty process has been completed this will be the first bilateral income tax treaty between the United States and Croatia, the only EU member country that currently does not have an income tax treaty with the United States. While trade and investment between the United States and Croatia may be relevant for only a relatively small subset of taxpayers, the implications of this new treaty’s reach may be broader than initially apparent. 

Observation: Taxpayers relying on benefits under a US bilateral income tax treaty should monitor this development and may wish to engage with their advisors and potentially with lawmakers, as the new treaty provisions may signal trends for other US treaty negotiations.