DOING BUSINESS IN CROATIA IN 2021
Since 2003, Healy Consultants Group PLC has efficiently assisted our Clients with starting their new business in Croatia. Our services include i) Croatia business registration ii) assistance to license the company iii) corporate bank account opening services in Croatia without personal travel required iv) recruitment services v) visa strategies and vi) office business premises solutions in Croatia.
Summary table of Croatia company registration
|Summary||LLC||Cryptocurrency entity||Free zone LLC||Limited liability partnership||Representative office|
|Also known as||D.O.O.||Udruga za Kriptovalute||Slobodna zona LLC||P.O.O||P.O.|
|Best use of company?||All products and services||All products and services||Manufacturing and export trading||Professional services||Marketing & research|
|How soon can you invoice Clients/sign sales contracts?||2 weeks||3 weeks||3 weeks||3 weeks||Cannot trade|
|How soon can you hire staff?||2 weeks||3 weeks||3 weeks||3 weeks||3 weeks|
|How soon can you sign a lease agreement?||1 week||1 week||1 week||1 week||1 week|
|How long to supply corporate bank account numbers?||6 weeks||8 weeks||6 weeks||6 weeks||6 weeks|
|How long to supply company registration/tax numbers?||2 weeks||3 weeks||3 weeks||3 weeks||3 weeks|
|Corporate tax rate on annual net profits?||18%||18%||15%||0%||0%|
|Limited liability entity?||Yes||Yes||Yes||Yes||No|
|Government grants available?||Yes||Yes||Yes||Yes||Yes|
|Government approval required for foreign owners?||No||No||No||No||No|
|Resident director/partner/manager/legal representative required?||No||No||Yes||No||Yes|
|Minimum paid up share capital?||€2,694||€2,694||€2,694||€2,692||None|
|Can bid for Government contracts?||Yes||Yes||Yes||Yes||No|
|Corporate bank account location?||Raiffeisen bank||OTP Bank||Sberbank||Imex Banka||Privredna Banka|
|Can secure trade finance?||Yes||Yes||Yes||Yes||No|
|VAT payable on sales to local customers?||25%||0%||25%||25%||None|
|Average total business set up engagement costs?||€12,220||Request a proposal||Request a proposal||Request a proposal||€12,520|
|Average total engagement period?||2 months||3 months||3 months||3 months||3 months|
Croatia company registration summary
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Advantages and disadvantages
Advantages of Croatia company registration
- It is easy to register a company in Croatia because you only require: i) one shareholder and ii) one director, who both can be foreigners and be residing outside of the country; iii) the minimum paid-up capital for company formation is just HRK20,000 (€2,500) and iv) our Clients are not required to travel to complete Croatian business registration procedures;
- Croatia is a great place to form a manufacturing company because:
- Companies running manufacturing operations in Croatia have lower labor costs than in most other European countries. Average hourly labor costs are recorded below €10, the 7th lowest amount amongst the 28 European Union members. Minimum salary is also below €400 per month;
- Croatian manufacturing companies also benefit from i) low industrial and warehousing space costs and ii) low electricity costs for commercial and industrial use, recorded below US$0.14 per kWh;
- Our Clients running a manufacturing business in Croatia can register it in a free trade zone. This will confer to the company’s products and services some fiscal advantages, including the possibility not to charge local VAT;
- Infrastructure in Croatia are also good. For instance, the country’s roads are ranked as the 19th best in the World and the 9th best within the European Union, according to the World Economic Forum’s Competitiveness Index for 2016
- Due the country’s EU membership, a manufacturing company formed in Croatia can also i) sell its products and services to other EU markets without any restriction ii) free movement of capital and labor iii) reduction or exemption from withholding taxes on dividends distribution and interest payments to other EU countries and iv) access to an integrated European market of 500 million people.
- A Croatian PLC, along with another EU based PLC can incorporate an EU stock corporation. This will help our Clients in targeting other European markets without having to set up a complex network of subsidiaries under different national laws;
- Croatia boasts record-breaking growth in Tourism revenue, reaching €8.5 billion in 2016. Consequently, registering a tourism-oriented business will ensure convenient access to a growing number of international clientele;
- Croatia is rich in its natural resources consisting of oil, gas and hydrocarbon reserves:
- The nation has 19 gas production platforms, 1 compression platform and 51 wells totalling up to approximately 1.3 trillion cubic feet of gas reserves;
- Croatia currently has 7 oil exploitation fields and 39 wells that are operational, producing up to 14 thousand barrels of oil per day;
- In 2014, Croatia’s first-ever offshore hydrocarbon licensing permits were implemented. These licenses cover hydrocarbon fields totalling an area of up to 36,823 sq km. As a result, many entrepreneurs have been willing to invest in Croatia in this and related industries.
Disadvantages of Croatia company registration
- Market opportunities are limited in Croatia. This country is a small market with i) a population of only 4.3 million inhabitants and ii) a GDP per capita of only US$21,880, according to the World Bank in 2015;
- The country is also suffering from a significant public debt (90% of its GDP): recent efforts to reduce the fiscal deficit have contributed to low economic growth, expected at only 1% by the IMF in 2016;
- Due to lack of established international diplomatic relations with Taiwan and other Asian countries, legalization of documentation is a time consuming and costly process;
- Croatian is the official language of Croatia so all corporate and personal documents will have to be translated in this language during the engagement, creating additional costs for foreigners willing to invest in this country. The majority of the population does not speak English so doing business in Croatia may be impeded by communications issues;
- Croatia has been poorly ranked at the 92nd position (out of 180 economies) in the 2018 Index of Economic Freedom. This is majorly due to the challenging macroeconomic environment of the nation contributed by its widespread corruption and an unstable political environment.
Best uses for a Croatia company
- Croatia is a great place to form a manufacturing company, thanks to low operational costs and access to the European Union markets;
- A tourism-oriented company is a great alternative for business investors looking to take advantage of Croatia’s trendy vacation status and the booming numbers of international tourists visiting the country each summer.
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Useful links for Croatia
Government and public authority websites:
- Croatia Tax Authority
- Croatia Company Registrar
- Croatian National Bank
- Croatia Stock Exchange
- Investment Authority
- Croatian Chamber of Economy
- Croatia airport
- Visiting Croatia
- Doing Business in Croatia – UHY
- Investment in Croatia – KPMG
- Croatia – Investment Climate & Opportunities
- Croatian Tax News – EY
- Time to invest in Croatia