Eternity Law International — News — Doing business in Croatia

Doing business in Croatia

Published:
September 9, 2022

Investors’ increasing desire to conduct business in Croatia is directly correlated with the tourist sector’s explosive growth in this nation. Croatia now has a good investment climate thanks to the country’s stable political status and the development of its infrastructure to a standard comparable to that of Europe. It’s easy to start a business in Croatia. Any businessman can travel freely to most of Europe’s nations and apply for a residence visa there as a citizen of Croatia.

Top sectors for foreign investment in Croatia

There are two primary business sectors in Croatia. They are tourism and commercial real estate rentals to visitors. This is hardly a comprehensive list of things you can do in this nation, though. There are blooming fields of business in Croatia for foreign entrepreneurs:

  • Tourism. The magnificent coastline region with more than 1000 islands is the Republic of Croatia’s greatest pride and greatest resource. It is not unexpected that the local economy’s most potential areas for foreign capital investment are the service industry and tourism. It relates to the development of rental businesses, hotels, cafés, and institutes for healthcare and prevention.
  • Services. The tourist industry is intimately tied to it. Businesses like laundries, translation services, gyms, hair salons, and tiny bakeries will always have consumers in Croatia.
  • Property. The cost of real estate in Croatia is rising by 20% annually. The acquisition of land for agricultural purposes, the building of communications, and the construction of a house plot with a later sale or lease are all currently extremely popular projects. Here, average home costs are still far cheaper than those in Italy, Spain, and other nearby Mediterranean nations.
  • Manufacturing. The food industry and shipbuilding/ship servicing come first. Olive oil, meat, dairies, lavender goods, wine, and canned vegetables are all produced in Croatia. Additionally, the nation is effectively growing its textile and chemical sectors and producing electronics.
  • Purchasing sailboats in Croatia to rent to tourists.
  • One type of investment strategy that is quite well-liked among international investors is the restoration or conversion of insolvent businesses.

The most typical property investment plan

The money that has been officially designated as a loan given to the firm is transferred by the founder to its account. After drafting a loan agreement, a sell-and-buy transaction is carried out. Real estate ownership is eventually recorded and the asset is added to the company’s balance sheet when the relevant taxes have been paid. In general, the complexity of purchase tax and clearing expenses is less than 10% of the overall cost of the bought product. In Croatia, there is no yearly land and property tax.

In addition to buying or building hotels, resorts, apartments, villas, cafés, and bars, private investors are also interested in businesses that offer associated tourist services:

  • organizing discos, and sporting activities, such as paintball, diving, and skydiving;
  • creating and implementing excursion routes (mountain safari in jeeps);
  • renting out yachts, automobiles, water motorbikes and bicycles;
  • providing cosmetic and health-improving medical treatments, etc.

Purchasing a ready-made company in Croatia

It is necessary to obtain a business visa and conduct the transaction on Croatian soil for those who want to buy a business there. Purchasing a ready-made firm frees the entrepreneur from having to pay the permitted capital, modify the work of the company, and engage in customer base development.

However, you should pay attention to the following crucial factors when purchasing a business or firm:

  • The cost of signing the agreement;
  • any limitations on the sale of the company’s real estate;
  • tax reporting.

Challenges an investor faces while starting a business in Croatia

Real estate items are frequently listed for sale at somewhat exaggerated rates.

But even so, it is far more lucrative to purchase land and homes along the Croatian coast than, for instance, in Spain or Italy, where buyers looking to invest in property near the Mediterranean Sea are most likely to look.

Subjective variables have an impact on the property valuation process. For instance, international investors think that Croatia offers better protection for their money than Montenegro, which is nearby. Real estate costs twice as much here as they do in upscale tourist destinations in Montenegro as a result.

The bureaucratic red tape that comes with property registration paperwork also poses substantial challenges for investors and can cause a delay of up to 2.5 years in the transaction’s completion. Although there are still issues with buying real estate, they are getting fewer and farther each month. This is a result of a methodical and unambiguous approach of the government of Croatia to bring the nation’s legal framework and economic foundation in line with European standards.

Organizations from the neighbouring country of Slovenia, who not only operate in the tourism market sector but also own several flats and hotels, are rather active participants in the Croatian real estate market.

The dynamics of real estate values and visitor flows are somewhat correlated. The wealthiest investors and travellers from Northern Europe, the United Kingdom and the United States pick items in South Dalmatia for purchase and pleasure, so prices in South Dalmatia are rising much more quickly than, say, in Istria or the Kvarner Bay.

Please contact us to get more information.

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