REGISTRATION OF A COMPANY IN CROATIA
Croatia is a state situated on the Balkan Peninsula. The country shares borders with such states as Slovenia, Hungary, Bosnia and Herzegovina, Serbia, and Montenegro. Croatia is washed by the Adriatic Sea.
The capital city is Zagreb.
Croatia is classified by the World Bank as a high-income economy and ranks very high on the Human Development Index. Service, industrial sectors, and agriculture dominate the economy, respectively. Tourism is a significant source of revenue, with Croatia ranked among the 20 most popular tourist destinations. The state controls a part of the economy, with substantial government expenditure. The European Union is Croatia's most important trading partner. Croatia provides social security, universal health care, and tuition-free primary and secondary education while supporting culture through public institutions and corporate investments in media and publishing.
The Republic of Croatia holds a good number of assets to appeal to multinational investors including, EU membership, good quality infrastructure, low-cost multilingual and well-skilled workforce, an advantageous geographical location enabling a very dynamic tourism sector. The Croatian government has committed itself to invest heavily in transport networks, telecommunications, and energy infrastructure.
If you decide to buy or register a company in Croatia, pay attention to the following information.
Since January 1, 2012, the Law for Foreigners has come into force, which has an impact on the company's formation in Croatia and requires the fulfillment of new requirements by non-EU citizens.
For example, the average amount of the authorized capital is about 2,850 euros. But at the same time, the person who does not reside in any of the EU countries shall contribute capital in the amount of 13,500 euros. And if he is not a citizen of the EU and tends to work in Croatia (as the director), there should be at least 3 Croatian citizens in the company.
Registration of business in Croatia is usually used to purchase real estate by citizens of those states with which Croatia has not signed relevant agreements and who cannot become owners of real estate in this jurisdiction as natural persons, and the Russians are among them.
The company registered in Croatia with the participation of foreign capital (if its founder is a foreign natural or legal person) enjoys the same rights as any Croatian enterprise in which the founder is a Croatian citizen. Such a company with foreign participation is entitled to purchase real estate in Croatia with the acquisition of property rights.
Foreign legal/natural persons can establish the enterprise with 100% foreign capital. They can also obtain patents for engaging in any activity (doctor, journalist, etc.)
Economic opportunities in Croatia
Croatia is a member of the United Nations, the Organization for Security and Cooperation, and the Council of Europe. The currency is stable, and industrial production is continuously growing.
Foreign investments are constantly encouraged to strengthen trade and business relations especially between Great Britain and Croatia. This can only present numerous advantages to those who consider running a business and register a company in Croatia.
What do you need to know before registering a company in Croatia?
Croatian law states that companies need to have a person (accountant) that will submit a tax declaration, communicate with the government, do payroll accounts, etc.
Get to know the VAT system; VAT in Croatia is 25%. If your company is registered in the VAT system, you are entitled to a tax refund
Company’s address: once you have registered a company in Croatia, we advise you not to change its address. The change of address is done in the presence of a notary public after which the process is reported to the government of Croatia. Depending on the notary public, all the costs can run up to 4000 HRK
Focalization: as of 1 January 2013 every company needs to have a focalization software that automatically informs the authorities of every cash transaction.
The steps you’ll need to follow in order to start a business in Croatia:
- Submit application with FINA (Financial Agency of Croatia).
- Choose a name for your business and check its availability at HITRO.hr.
- Prepare the company by-laws and get them certified in front of a notary public.
- Submit the company’s by-laws electronically at HITRO.hr.
- Open a business bank account in a local bank.
- Deliver the certified by-laws to FINA, pay the required initial capital, and proceed to registration with the court registry. FINA will forward the documents to the Commercial Court of Croatia.
- Receive a Decision on the Establishment and obtain an OIB (a Croatian abbreviation for personal identification number).
- Get registered with the Croatian Health and Pension Insurance Agency.
- Obtain a statistical number.
Different types of businesses in Croatia:
- A public limited liability company (A.D.) is incorporated in Croatia by at least one founder, with a minimum share capital of approximately HRK 200,000 divided into shares and it is designed for large businesses. The similarity with the Croatian private limited liability company comes from the fact that the liability of the members is limited by the contribution to the capital. The management of this type of company is assured by the management board (with at least one manager), the supervisory board (with at least three members), and the general meeting of the shareholders. The last one is the main body for taking major decisions related to the appointment of all the other bodies of the company, the revision of the foundation deeds, the increase or decrease of capital. At the base of each Croatian A.D. sit the articles of association which contain all the internal regulations of the company.
- A Croatian general partnership is a type of business adopted by two or more partners fully liable to cover with their personal assets the company’s debts in case of liquidation and who can benefit from the profits after paying all the specific corporate taxes. The name of the Croatian general partnership must be composed by the name of the partners followed by the termination “JTD”. No share capital is necessary to start this type of business.
- A limited partnership is a form of business incorporated in Croatia by two or more persons with different statutes in the business. There is at least one general partner, fully liable with his assets for the company’s debts, and one limited partner with liability limited by his contribution to the entity’s capital. Only the general partner may represent the partnership on the market. Just like in the case of the general partnership, there is no need to submit a minimum share capital at registration. Usually, the name of this type of partnership is formed by the general partners’ names followed by the termination “KD”.
Can I change the company type in Croatia?
Yes, investors looking to expand their businesses and turn a private limited liability company into a public one may do so in compliance with the Company Act in Croatia and the related provisions. The company type change is done with the Trade Register in Croatia, the same institution that supervises and accepts the formation of companies in this state. The resolution issued by the managers of the firm, the financial report issued by an official auditor in Croatia, and a legal statement showing the company needs to extend and change the business structure are among the necessary documents for such operation.
List of Required Documents for Company Formation in Croatia
Your filing for incorporation in Croatia should include a set of the following documents:
- The articles of Incorporation with the name of the company,
- Bank confirmation that the required amount of initial capital is paid,
- A list with the name of the shareholders and members of the board, and
- Details about the owners (names, nationality, residency).
What are virtual office services in Croatia?
A virtual office in Croatia represents a set of services destined for foreign investors who do not want to set up traditional offices for their future companies in this country. It is good to know that virtual office services are subject to low costs. A notable business address, a local phone number, incoming and outgoing faxes, mail collection and forwarding, collection of bank statements, call redirecting, and a private phone number can be provided for foreign entrepreneurs interested in virtual office services in Croatia. Our team of advisors can offer complete information on this matter.
Taxes in Croatia
The company established for the purpose of owning real estate in Croatia pays only the corporate tax and the registration fee (60 kunas per month or 720 kunas per year).
For the commercial company, the tax rates are as follows:
- 20% - income tax;
- 12% - a tax on dividends (on the account of the company).
The Croatian authorities have the right to strike off the company if the owner evades paying taxes.
Once per year (or more often in case of special requirements) annual report shall be submitted to the tax authorities.
What is a shelf company in Croatia?
Shelf companies in Croatia are ready-made companies that can be purchased by foreign investors in Croatia. It is good to know that a shelf company comes with varied benefits like easy access on the market, complete transfer of the ownership with less bureaucracy, and time efficiency because such entity is already incorporated in Croatia.
Facts about company registration in Croatia
The limited liability company is a common business structure for most entrepreneurs, whether domestic or from foreign countries. The registration process is not only simple, but it is also less time-consuming, allowing business persons to start rapidly their activities on the market. Choosing the name of the company, deciding on the type of activities, creating the Articles of Association and the board of managers, plus the company seat are the first steps for business registration in Croatia. The minimum share capital is then deposited in a local bank account. The registration for tax purposes is the next step as soon as the business has been registered in Croatia. We remind that the corporate income tax in Croatia is set at 20% rate. As for the standard VAT rate, this is set at 25% for main goods and services for sale purposes and 13% for catering and accommodation services in Croatia.
Economy overview in Croatia
As far as the economy of Croatia is regarded, the country is quite powerful and well-developed. The main income is brought in the country by fields like production, trading, or tourism. Starting a company in Croatia has the advantage to benefit from the rich natural resources offered by the country itself. This is the reason why the nation is situated in a top position as far as the production rates in Europe are concerned. When it comes to foreign investments, the Croatian government encourages starting companies in Croatia and offers important incentives for developing the business environment. In this way, foreign investors can find Croatia a rather comfortable destination for business incorporation and investment.
Striking off the company in Croatia
The owner can dissolve the company. And even in the case of the company's liquidation by the Croatian authorities, the owner of the real estate remains the founder of the LLC, which can dispose of the property at his own discretion.
We will register a readymade company in Croatia, business in Croatia for you within the shortest time possible. It is now easier than ever to buy the company in Croatia. Registration of business in Croatia is one of the simplest and cheapest ways to start a legitimate international business. Registration of companies in Croatia is one of the main directions of our work.
Factors that determine credit rating in Croatia
Several aspects are taken into consideration by financial experts when determining Croatia's credit rating. These include the following:
• The economic improvement of the trading relations of Croatia with its traditional partners: Germany, Italy, Slovenia;
• A favorable evolution of wages and employment;
• Improved absorption of the EU funds and strong tourist inflows to the local budget;
• An expansionary monetary policy due to moderate inflation;
• Croatia's debt burden was reversed in the upward trajectory.
Frequently asked questions
1. Can foreigners set up companies in Croatia?
Yes, foreign investors can open companies in Croatia and can direct the attention to limited liability companies which can suit most of their activities and purposes.
2. Does the business have to be established in Croatia?
Yes, foreigners need to register an office in Croatia before placing the activities on the market.
3. What types of companies are available in Croatia?
Foreign investors can set up limited liability companies, joint-stock companies, general or limited partnerships, or can act as sole traders in Croatia.
4. What are the main stages in company incorporation in Croatia?
Company registration in Croatia starts with a name verification and reservation with the trade register. The next step involves drafting the Articles of Association which must contain information about the owners, the activities, the business address, the minimum share capital.
5. How much time does it take to register a company in Croatia?
Companies in Croatia can be incorporated fast as soon as all the documents are provided to the authorities in charge. There are fewer formalities and foreigners benefit from the same conditions of incorporation as imposed for nationals.
6. Can I receive virtual office services in Croatia?
Yes, all foreigners who do not want to open a traditional office in Croatia can ask for virtual office services. Our team can offer details on this matter.
7. Do I need a bank account in Croatia?
Yes, companies with establishments in Croatia must consider opening a bank account for their future financial operations in this country.