As of January 1, 2019, the Croatian government amended the Croatian Income Tax Act to provide that the “grant of treasury shares” or the grant of an “option to purchase treasury shares” to employees or members of management will be treated as capital income and taxed at capital gains rates (as opposed to “other income in kind,” which is subject to gross-up taxes that make such awards very costly). Although it is unclear given the recent nature of the amendment and the lack of any clarifying guidance from the Croatian tax authorities, the income realized from other equity compensation awards settled in treasury shares (e.g., restricted stock units, performance stock units, stock purchase rights) also could be treated as capital income and companies granting equity awards to employees in Croatia should stay tuned for further clarifications. In the interim, companies that are interested in pursuing this favorable treatment prior to the issuance of any clarifying guidance can seek a binding tax ruling from the Croatian tax authorities addressing the contemplated awards.