How to start a business in Croatia: here is a guide for foreign citizens

The Croatian market is a great option for foreign investors looking for business opportuinities within the tourism, medical, IT and other sectors. Since Croatia is about to enter the Schengen area and to adopt Euro, the real estate market is starting to boom again.

That facts itself are green light for investors in real estate to have a look at this small, beautiful and safe country as an opportunity to achieve high ROI in the next few upcoming years.

Also the Croatian government encourages startups through a series of measures aimed at strengthening entrepreneurship, stimulating exports and foreign investments, increasing competitiveness and employment and reducing the cost of administration.

Business in Croatia

It is relatively easy and fast to established a company and start a business in Croatia. Usually the whole procedure can be done in a one week time. There is a large tendency to reduce administrative requirements, costs, and make online options available as well.

Once things are completed, it is necessary to keep business books and submit reports to the tax authorities

.In most cases, the entrepreneurs entrust the external associates i.e. the accounting services with that part of work.

Most of the government-run services have online systems which are very easy to use for licensed accounting firms.

The Croatian tax system is very similar to the majority of tax systems of other member EU states.

Tax System in Croatia

The profit tax rate amounts to 12% for companies with a turnover up to 3.000.000,00 HRK (approximately 400.000,00 EUR) per year and 18% for companies with a turnover exceeding the aforementioned amount.

As for the payment of profit to foreign owners, Croatia has signed agreements that avoid double taxation with a major part of countries.

The general value-added tax rate is 25% and some of the products are taxed at reduced rates of 13% and 5%. The entrepreneur has the right to choose to be out of the value-added tax system if s/he has a yearly income less than 300.000,00 HRK (40.000,00 EUR).

5 reasons for starting a business inCroatia

1. Labour force costs are significantly lower than those in Germany, Austria or Switzerland. The business costs can be far lower than are those in places situated in other EU member states.

2. The investment in real estate is certainly to be recommended because the prices are still considerably lower than those in other European Union member states. There is still no real estate tax.

3. The profit tax rate is one of the lower ones in the European Union, especially if you are in a lower class (income up to 400.000,00 EUR).

4. The country grants subsidies. There are subsidies for employment, capital investments and various projects carried out by the Ministry of Economic Affairs. If you have a high-quality project and a high-quality consultant for European Union funds, it is possible to obtain, in a non-repayable manner, up to 80% of the project amount.

5. In Croatian cities, you can move without problems at any time at day and night. The criminal rate is lower than the European average rate.

How to set up a company in Croatia in 5 steps?

1. FINA (Financial agency). By going to Fina it is necessary to have a chosen name for the business. Availability of the company name will be checked in court registar.
2. Public notary. The required documentation is prepared and verified in the Notary’s office and then forwarded to the HITRO.hr.
3. Court Register and payment. Returning to FINA, the certified documents will be handed over and the registration process in the court register will be started, so the initial payment will be done (share capital and fees).
4. OIB (Personal identification number) and the Decision on the establishment. Waiting for the answer from the Commercial Court, and it is usually within 24 hours. If previously everything is validly processed and delivered, the company will be registered.  Within few days, a Company registration can already be accessed.
5. Bank. The opportunity for creating a bank account and the mandatory application in the Croatian Health and Pension Insurance is achieved by getting the Company registration, OIB and statistical number.

If everything is going well, the complete company setting up and the necessary time staying in Croatia for the Founders can be done in one week time.

Do you need help opening company in Croatia?

SAS accounting could help you open company and start your business in Croatia. We provide our services from beginning of your business adventure, so we can give you valuable advice even before you have started business in Croatia.

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