Croatia has a tranquil beauty rarely found elsewhere in Europe today. A distinctive combination of beauty & style creating an intoxicating mix which is hard to beat. The countries stunning natural splendor, largely unspoilt natural habitats, more than 1500 islands and 5835km of coastline turn it into a heavenly place to visit or stay.
Many of our clients that purchase property in Croatia are searhing for a so called 'lifestyle home abroad'.
There's two methods of purchasing property in Croatia, a shorter explanation of which follows. This information is intended as a guide only. For additional information FIRST will put you in exposure to an experienced and reputable tax advisor or accountant depending on the complexity of your situation and / or purhcase.
Private Individual
As of February 2009 citizens of European have the same property purchase rights as Croatian citizens and may therefore buy property in Croatia as private individuals and without the need to gain permission from the Ministry of Foreign Affairs, as had been necessary.
For individuals who are not individuals the European Union but have nationality in a very country with which Croatia has built reciprocity in property purchase (e-mail us for further information) they need a blessing from Croatian Ministry of Justice. They should apply for approval once the final contracted price has been paid.
The approval can take from 6 months but where you will be allowed to enter into possessing the property. When the approval is granted, your contract might be deposited at the Court and processed enabling you to obtain the title dead. At this time the relevant Tax Authority will invoice for the real estate purchase tax.
People buying property in Croatia as private people are not subject to capital gains tax on the sale proceed of their property as long as they sell it later than Several years from the date of purchase.
Croatian Company
A Foreign legal entity or natural person may establish a private limited company in Croatia, termed as a doo i.e John Smith doo
Incorporating private limited company is a process that takes up to 2 weeks and involves your lawyer, notary public (fee of ca 700 EUR required) as well as the Commercial Court. Authorized capital (HRK 20,000) add up to ca. 2,700 EUR has to be paid in cash to the company bank account, and the receipt of deposit ought to be enclosed when registering a business.
An accountant needs to be engaged in running the corporation during and after the buying process. The cost of running a company in Croatia starts at ?100 / month for a basic service upto ?300 / month to get a full service. The basic services are the most relevant for those clients that are buying a single property to rent. A full service is necessary for those that have a diverse portfolio and who're generating sizeable income through the business.
When the company buys the exact property, the contract is deposited in the local Court and is processed so that you can obtain title dead. As is also the case in most countries, capital gains tax doesn't apply to a Croatian doo. Instead, company (profit) tax is payable at a rate of 20% . If a client buys a firm that owns a single piece of real estate the property is not susceptible to the Croatian real estate transfer tax (stamp duty).
Buying property in Croatia via company route is suggested if the property will be utilized in commercial purposes (renting) and if the vendor is a VAT registered developer (in case there is which you could claim back VAT contained in the property price), or by a person with citizenship in a country without recipricol ownership rights which includes most countries outside the EU.
It is important the clients appreciate that running a Croatian doo comes with additional costs and must be monitored properly. This is particularly the case if the company is registered for VAT and VAT has claimed by the company against the purchase of the property or for furnishings or any other. Understandably if your company is claiming VAT, the Croatian Tax Authorities will expect to see the company is generating earnings of some kind.
If you require more info before making a decision regarding purchasing using the company route we will place you in contact with an established and competent tax advisor.
These are typically looking for a holiday home that works as an investment, and they are influenced to coastal living. They have been encouraged by their unique experience as a tourist in Croatia, enjoying the rich diversity of history & culture, natural splendor, weather, and laid back Mediterranean lifestyle. Moreover, while using forecast growth in tourism and pending EU entry, they perceive Croatia being a good medium to long-term property investment, with rental income to start covering costs and capital appreciation giving a good return.
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If you have a plan to spend old age in Croatia, now is excellent time to appear Croatia real estate .
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