Company Formation in Croatia

STEPS FOR COMPANY FORMATION IN CROATIA

Note to the investor: As of January 1st, 2012, the new Croatian Law on Foreigners entered into force. This Law affecting company formation also, imposes new requirements on non-EU citizens. For instance, although the standard share capital amount is approximately EUR 2,850, non-EU citizens are required to inject a base capital amounting to EUR 13,500. Additionally, if a non-EU client wishes to work in Croatia (as director) the newly established company is required to employ at least 3 Croatian citizens. Should two non-EU citizens wish to work as directors in the company, then 10 Croatian citizens must be employed.

A non EU citizen can work in Croatia:

Either as Key personnel if:
- the share percentage of the respective citizen is less than 51%
- the value of the company’s share capital exceeds HRK 100,000 (approx. EUR 13,500)
- at least three Croatians are employed by the company in non-administrative positions (similarly, the company will be required to employ ten Croatians, in case two non-EU citizens will work as directors)
- the salary of the non-EU citizen is received in Croatia

Or as self-employed worker if:
- the share ownership is greater than 51%
- the share capital of the company exceeds HRK 200,000 (approx. EUR 27,000)
- at least three Croatians are employed by the company in non-administrative positions (similarly, the company will be required to employ ten Croatians, in case two non-EU citizens will work as directors)
- the salary of the non-EU citizen is received in Croatia
- the company operates on profit

1) The decision to establish a company in Croatia entails initially the provision of a name for the future business and also of details pertaining to the shareholding structure. Depending on the shareholding structure, i.e. whether the company will be founded by natural persons or legal entities, the documents necessary in the first stages of the process of opening a company in Croatia will include, but not be limited to: passport copies of the directors and shareholders, special power of attorney, utility bills, trade register certificate showing that the founding company is dully registered in the country of origin, articles of association of the founding company, certificate of incorporation etc. Nevertheless this list is not guaranteed to be complete as requirements could be subject to certain changes. It is worth mentioning that these documents must be properly prepared, notarized and apostilled and that some of them, such as the trade register extract, are extremely time sensitive when opening a company in Croatia; should merely a day be exceeded in the submission time-frame and they are susceptible of being rejected by the Croatian competent authorities. While these documents are being prepared, the proposed name of the company is sent to a judge for approval.

2) The above mentioned phase I of the company formation procedures would be complete after obtaining the initial confirmation of the Croatian court with respect to the stated documents and the name of the company. Phase II of the procedures of opening a company in Croatia references the actual company incorporation and the board of the company. At this point, a number of papers in which the company director accepts the appointment and signs certain statements are provided to the client in order to be notarized and apostilled. Concurrently, the shareholder is required to obtain a Tax ID number, which is a quite straight-forward process, and the bank account set up documents are prepared so that the share capital can be injected prior to the registration of the company (the share capital is available after the incorporation) These procedures can be conducted both through personal presence of the client in Croatia or via Power of Attorney, the decision being left at the client’s discretion.

3) The final step is to register the company with the Trade Register and to obtain the Tax ID number of the company.

REQUIREMENTS FOR COMPANY FORMATION IN CROATIA

- Any person of any nationality or residence can be director or shareholder in a Croatian company;
- the shareholders of a company registered in Croatia can be both natural persons or legal entities;
- a company opened in Croatia must hold a local registered office (service provided by BridgeWest)
- the registration of a D.O.O (Limited Company) requires the injection of a share capital amounting to 2,850 EUR.

SERVICES PROVIDED FOR CROATIAN COMPANY INCORPORATION

> Preparing the Articles of Association of your company;
> Drafting all other documents required for the registration of the Croatian Company;
> Arranging Public Notary meeting and procedures (The procedures for establishing a company in Croatia have to be performed by a Croatian Public Notary);
> Obtaining a Tax ID number for the director/s
> Providing a Registered Office in Croatia for your company (if required);
> Opening a Bank Account and providing the necessary forms and documents for the setup of a bank account
> Accounting and Payroll Services in Croatia;
Accountancy services are recommended for any new business establishment in Croatia.

> Establishing a Drustvo s Ogranicenom Odgovornoscu (D.O.O.  - limited liability company) This type of Croatian company can have one shareholder and one director and must maintain a local address (office) and a minimum share capital of HRK 18,700 (approx. EUR 2,850) which needs to be paid in full prior to incorporation.

> Setting up a Dionicko Drustvo (D.D. - joint stock company) This type of Croatian company must have at least one shareholder, and one director and must maintain a local address and a minimum share capital of HRK 188,000 (approx. EUR 25,000).

> Croatian Branch, Subsidiary or Representative Office Any foreign company is able to set up branch entities in Croatia. These can be set up as separate entities from the parent company (Croatian companies having the foreign company as shareholder) or extensions of the parent-company in Croatia.

CROATIA KEY FACTS

> The standard VAT rate in Croatia is 23%, but there are also exceptions, when several goods and services are only subject to a 10% or 0% VAT rate.
> The corporate income tax rate for legal entities that are registered in Croatia is 20%.
> According to the current tax laws in this jurisdiction, the dividend tax does not apply to any type of company opened in Croatia, be it resident or non-resident in Croatia.

BridgeWest is also able to offer ready-made Croatian companies and VAT registration.

Please contact us for more information and prices for opening a company in Croatia.