Effective 1 January 2018, the related party interest rate in Croatia has been set at 4.55%, a reduction from the 2017 rate of 4.97%. The related party interest rate applies as a minimum interest rate for interest income on cross-border financing between related parties when the Croatian resident provides the loan, and as a maximum rate for the deduction of interest expense on such cross-border financing when the Croatian resident receives the loan. The rate similarly applies for loans between resident related parties if one is in a favorable tax position.