The provisions of the Profit Tax Act, transferred from Council Directive (EU) 2017/952 of 29 May 2017 amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries, have been in force since 1 January 2020. 

In implementing this Directive, we use the applicable explanations and examples from the OECD BEPS report on Action 2. 

All provisions from Council Directive (EU) 2017/952 of 29 May 2017 amending Directive (EU) 2016/1164 as regards hybrid mismatches with third countries have been transferred over as we considered that the provisions with Council Directive 2014/86/EU amending Directive 2011/96/EU on the common system of taxation applicable in the case of parent companies and regulated of different Member States do not lead to the correction of hybrid mismatches in tax outcomes (Article 2 Council Directive (EU) 2017/952 of 29 May 2017) . 


Namely, since December 2014, the Profit Tax Act has introduced a provision to correct hybrid mismatches arising from the payment of profits pursuant to Council Directive 2014/86/EU amending Directive 2011/96/EU on the common system of taxation applicable in the case of parent companies and transactions of different Member States. 
The provisions on hybrid mismatches are prescribed by Profit Tax Act in articles 30e-30i, Article 5a, Article 6. (1) a,b,c  https://porezna-uprava.gov.hr/Regulations#142|145|146  

These articles deal with hybrid mismatches that are: the result of payments under a financial instrument, hybrid mismatches resulting from differences in the distribution of payments to a hybrid entity or permanent establishment, including as a result of payments to a permanent establishment that has not been taken into account, hybrid mismatches resulting from payments made by a hybrid entity to its owner or deemed payments between the head office and the permanent establishment or between two or more permanent establishments, double deductions resulting from payments made by a hybrid entity or permanent establishment, double deductions irrespective of the method of origin, hybrid transfers as a result of arrangements for the transfer of a financial instrument, hybrid transfers structured in such a way as to generate an excess of tax deductions (reliefs), structured arrangements, imported mismatches, double residence mismatch. 
Articles 39e, 39h, 11c and 12 of the Profit Tax Regulations clarify the application of the law.