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Croatia
We have a team of experienced professionals dedicated to supporting all your business requirements—ensuring smooth operations and full regulatory compliance. This strong foundation enables you to confidently establish and grow your business in Croatia with efficiency and assurance.
WHY CROATIA?
Croatia, officially the Republic of Croatia, is a country in Central and Southeast Europe, on the coast of the Adriatic Sea. It borders Slovenia to the northwest, Hungary to the northeast, Serbia to the east, Bosnia and Herzegovina and Montenegro to the southeast, and shares a maritime border with Italy to the west. Its capital and largest city, Zagreb, forms one of the country’s primary subdivisions, with twenty counties. Other major urban centres include Split, Rijeka and Osijek. The country spans 56,594 square kilometres (21,851 square miles), and has a population of nearly 3.9 million. Croatia is a republic and a parliamentary democracy. It is a member of the European Union, the Eurozone, the Schengen Area, NATO, the United Nations, the Council of Europe, the OSCE, the World Trade Organization, a founding member of the Union for the Mediterranean, and is currently in the process of joining the OECD.
Croatia’s GDP grew by 3.1% in 2023, one of the highest levels of growth in the European Union (EU). It has made effective public investments with the funding it has received since joining the EU in 2013 and is now seeing favourable developments across its labour market, which has been strengthened by increased tourism and construction. Croatia’s economy is stable and enjoys a young, active, and experienced labour force. The country holds a strategic position in the heart of the EU with easy access to both Western and Eastern Europe in addition to the markets of Asia. It is a beautiful country which offers excellent standards of living. All of this makes Croatia extremely attractive for both foreign investors looking to expand and expatriate workers searching for opportunities in Europe.
ADVANTAGES
Strategic Location and Infrastructure:
Situated at the crossroads of Central Europe and the Mediterranean, Croatia acts as a gateway to the Balkans. It features modern, well-developed ports (e.g., Rijeka), highways, and airports that facilitate efficient logistics.
EU, Eurozone, and Schengen Membership:
As a member of these institutions, businesses benefit from a stable, transparent, and secure legal environment, with access to 450 million consumers.
Competitive Operating Costs:
Croatia provides lower labour costs, taxes (12% corporate tax for revenue up to EUR 400,000, rising to 18% thereafter), and operating overheads compared to Western European countries.
Highly Skilled Workforce:
A well-educated, multilingual workforce is available, with strong proficiency in English and German, particularly in STEM, IT, and engineering sectors.
Investment Incentives and Support:
The government offers attractive incentives, including tax reductions, grants for employment, and access to EU structural funds.
High-Growth Sectors:
Strong opportunities exist in tourism (contributing ~20% of GDP), logistics, IT, and manufacturing.
TAX REGIME
Personal Income Tax (PIT):
Progressive rates are determined by local governments, with lower rates ranging from 15%-23% and upper rates from 25%-33%.
Threshold:
The higher rate applies to annual income exceeding €50,400.
Personal Allowance:
A basic monthly allowance of €560 is deducted from the taxable base.
Corporate Income Tax (CIT):
Companies with revenue under €1M are taxed at 10%, while those over €1M are taxed at 18%.
Value Added Tax (VAT):
The standard rate is 25%. Reduced rates of 13% and 5% apply to specific goods like food, newspapers, and medicines.
Social Security Contributions:
Total contributions amount to 36.5% of gross salary, split between the employer (16.5%) and employee (20%).
Property Tax:
An annual tax on residential property ranging from €0.60 to €8.00 per square meter, depending on the municipality.
Capital Gains and Dividends:
Generally taxed at a rate of 10% (plus local surtax, if applicable).
CROATIA COMPANIES
Common Business Entities in Croatia
- Društvo s ograničenom odgovornošću (d.o.o.): The standard limited liability company, ideal for most businesses, requiring a minimum capital of €2,500.
- Jednostavno društvo s ograničenom odgovornošću (j.d.o.o.): A simplified, low-cost “simple” LLC designed for startups with minimum capital of €1.
- Obrt: A sole proprietorship or craft business, suitable for freelancers and tradespeople.
- Dioničko društvo (d.d.): A joint-stock company (public limited company) for larger enterprises, requiring a minimum share capital of €25,000.
Other Legal Forms
- Javno trgovačko društvo (j.t.d.): General partnership.
- Komanditno društvo (k.d.): Limited partnership.
- Podružnica: A branch office of a foreign company.
- Obiteljsko poljoprivredno gospodarstvo (OPG): Family farm enterprise.
- Udruga: Non-profit organization or association.
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Contact Us
Get in touch with the right people to get the right help in setting up your business in Croatia.
enquiries@chandrawatpartners.com.