Company Formation Croatia
Updated on Sunday 20th January 2019
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Croatia welcomes foreign investments and the law allows foreign entrepreneurs to benefit from the same rights to incorporate and own a company as local investors. Registered companies are treated as domestic legal entities and have the right to purchase real estate.
Some of the top investment sectors include tourism, the food, and pharmaceutical industry, the logistics or the manufacturing of machinery and equipment. The country has a talented and knowledgeable workforce, had a modern infrastructure and it had a good geographical location in Europe, allowing transport and logistics companies as well as trade businesses to conveniently position themselves so as to access important markets. The tourism sector is one of the most developed ones in the country and this is also owed to its great geographical positioning, with the spectacular Adriatic coast being one of the focal points for various types of tourism. The investment climate, the tax incentive and the good regulatory regime for foreign companies – which have the same rights as local ones and, in addition to this, foreign investors can also access incentives, are some of the strongest reasons why Croatia is a worthy investment destination in Europe.
Our team of offshore company formation agents in Croatia can assist foreign investors during the incorporation procedure and can provide adequate details about the types of companies, the incentives for businesses as well as the rights of foreign entrepreneurs.
Foreign investments in Croatia
The Croatian Companies Act is the main legal resource on the formation, management, and control of legal entities and other legal resources, such as the Act on Investment Promotion regulate the manner in which investment projects are supported and encouraged.
Certain incentives are available to investors who open a company in Croatia that can be included in one of the categories:
- manufacturing and processing;
- development and innovation;
- strategic business support;
- high added value services.
The condition for benefiting from tax incentives is largely based on the minimum investment and it is at least 50,000 euros for micro-entrepreneurs who are also required to open three new workplaces, depending on the size of the company. For large companies, the minimum investment is 150,000 euros and another condition is to open at least five new workplaces. The Ministry of Economy, Entrepreneurship, and Crafts is the one largely overseeing the incentive measures.
Our team of offshore incorporation specialists in Croatia can assist foreign investors who are looking towards starting a business in one of the top investment fields. Choosing the right type of company is important and our agents can provide complete assistance for making this choice, by taking into consideration the nature of the business, the incentives it can benefit from and the applicable taxation regulations.
When deciding to do business in Croatia, foreign investors can choose between opening a new company, which will be treated as a locally registered entity, or opening a branch – a form that will be an extension of the parent company and for which the foreign business will be liable. Companies that wish to first test the Croatian market can open a representative office and engage only in promotional or market search activities.
Requirements for company formation in Croatia
The Companies Act sets forth the conditions for company formation in the country as well as describes the available types of companies, from corporations to sole traders. Some of the key regulations for shareholders and for opening a company in Croatia are:
- any person - no matter his or her nationality or residency - can be a director or a shareholder in a company in Croatia;
- shareholders of a Croatian company can be natural persons or legal entities;
- the company must have a local registered office (BridgeWest offers this type of service).
The company name will include the abbreviation that indicates the type of business and it can either be written in Croatian or in an official language of an EU member state. The name can contain foreign words when there is no correspondent in the Croatian language or when the words are part of a dead language. One of our offshore company formation agents in Croatia can help investors reserve and register their company name which must be a unique one (we can also help with name verification).
Services provided for Croatian company incorporation
Our team can assist foreign investors throughout the entire company formation procedure. The services listed below are part of the one we provide for company formation purposes in Croatia. For more details about these services, please feel free to reach out to one of our agents. These are:
- drawing up the articles of association that can be signed through power of attorney (Croatian laws require powers of attorney for any public notary proceedings);
- drawing up documents for company incorporation in Croatia: specimen signatures, identification papers copies, application form required by the Company Registration Office;
- arranging public notary proceedings (all procedures for company incorporation are done in front of a Croatian public notary);
- obtaining a tax ID number for the director/directors of the company;
- providing a registered office in Croatia on demand; the registered office serves as headquarters for the company in Croatia and it will be made public;
- setting up a bank account for the company in Croatia; BridgeWest will help you in setting up the share capital bank account, as well as a current bank account once the company is incorporated.
- recommending a Croatian accountant, as accounting services are needed for new businesses in Croatia.
- assistance for company incorporation, irrespective of business type.
- assistance for opening a Croatian branch, subsidiary or representative office.
Our services are tailored to the needs of the client and we take into consideration the particular business field in which the company will operate. We can also provide assistance for obtaining the needed permits once the company is registered, for those businesses that require additional licensing.
Types of companies in Croatia
Investors in Croatia can choose between several business forms, according to available capital, the number of shareholders or the available initial capital. Below, we describe the main company forms:
- The private limited company (d.o.o): this is a commonly used type of legal entity where the shareholders are only liable to the extent of the amount they invest; it can be incorporated by one or more legal or natural persons and the company assets are separate from that of the founders; the minimum share capital is 20,000 HRK and the company is run by a management board (with at least one member/director who can also be a foreign national).
- The simple limited company (j.d.o.o): this is a version of the private limited company that is incorporated by no more than three members and has a lower initial authorized capital of at least 10.00 HRK with the nominal value of one share at least 1.00 HRK; this company can increase its capital until it reaches that of a regular private limited company.
- The public limited company (d.d.): suitable for large businesses, this type of company can also be incorporated by at least one shareholder but the required authorized capital if 200,000 HRK; the same limited liability principle applies.
- The general partnership (j.t.d.): this is a business started by two or more individuals who share common goals and incorporate a business under the same name; they both bear joint and unlimited liability for the partnership with all of their assets; the partner can be either na natural or a legal person, foreign or local; no minimum share capital is required and the partners generally bring equal investments, unless otherwise stated in the articles of incorporation; may be founded using cash and in-kind contributions.
- The limited partnership (k.d.): this type of partnership is also founded by two or more individuals, however, they are not all required to bear unlimited liability (only one of them is fully liable and he is the general partner; the rest are liable up to the extent of their investments); it does not require an authorized capital and can be formed by local and foreign individuals and companies.
- The branch: foreign businesses can also start their activities in Croatia through a branch office; it will conduct the same activities as the head office and it will not have a legal identity, like a private limited company; the liabilities for its actions are covered by the foreign company and the branch must also have the same name as its head office. An alternative to the branch is a subsidiary, a partially foreign-owned local registered company; one of our offshore company formation agents in Croatia can give you more details.
Croatia key facts
Croatia has a relatively low corporate income tax rate compared to other EU countries and there are several incentives available to companies, subject to some conditions for qualification. Below, we highlight the main tax facts for companies:
- the standard VAT rate in Croatia is 25%, with two reduced rates of 13% and 5% applicable to certain types of goods and services. Companies are required to register when their annual transaction value is above 300,000 HRK.
- the corporate tax in Croatia is 18% and a lower rate of 12% applies to companies that have an annual income of less the 3 million HRK.
- other taxes for companies include the social security contributions, the transfer tax, the withholding tax on dividends, interest, and royalties (that can be reduced when a double tax treaty applies), and the capital gains tax.
BridgeWest can help taxpayers comply with the requirements for VAT registration and our agents can provide complete tax counseling for annual filing and reporting as well as the needed information about auditing.
We can help investors open a new company in Croatia or buy a ready-made (shelf) company – which has been incorporated but was never used for trading thus maintaining a clear transaction history and no debts.
Please contact us for more information and prices for opening a company in Croatia.