Doing business in Croatia
- How quickly can I set up a business?
- What is the minimum investment needed?
- How can I raise finance?
- What are the legal requirements for setting up my business?
- What structure should I consider?
- What advice can you give me in regards to payroll and taxation requirements?
- Is there anything else that I should know?
How quickly can I set up a business?
A week should be enough if all requirements are met.
What is the minimum investment needed?
The minimum amount of share capital for establishing a joint stock company is EUR 25,000.00, and the nominal value per share cannot be less than EUR 1.00.
The minimum share capital for establishing a limited liability company is EUR 2,500.00 and the nominal amount of the business share may not be less than EUR 10.00.
Before entering the company in the court register, each founder must pay at least one quarter of the deposits paid in cash, provided that the total amount of all payments in cash may not be less than one quarter of the share capital.
A company that has a maximum of five members and one board member may be established in a simplified manner as a simple limited liability company. The minimum share capital of such a company is EUR 1.00, which is the minimum nominal amount a business share cannot. For such company incorporation, the record forms drawn up by a notary public must be used.
How can I raise finance?
To start with, equity and debt financing are available for corporate financing. In the context of self-financing, self-financing through profit retention or the capital increase by shareholders must be taken into consideration. When talking about debt financing, it can be structured in three types of resources: shareholder loans, supplier loans and bank loans.
Various investment incentives are at disposal to investors in Croatia:
• Incentive measures for investment projects refer to investment projects in:
o production and processing activities
o development and innovation activities
o business support activities and
o high value-added service activities.
• R&D incentive measures
• employment incentives
• regional and/or local incentives
• open calls for EU funds.
What are the legal requirements for setting up my business?
Legal entities can either establish a company with its own legal form or instead establish a branch, whereas private investors choose a type of a legal entity to establish.
What structure should I consider?
When thinking about investing in Croatia as in a form of a legal entity, legal structure mentioned in previous sections should be taken into account. From the tax perspective, all legal entities in Croatia are corporate income tax taxpayers.
What advice can you give me in regards to payroll and taxation requirements?
Croatian tax system has a similar structure to most European countries. The tax rates have generally been decreasing over the past years.
You may find a shortlist of taxes and contributions listed below:
• VAT – basic rate is 25%, on certain products or services reduced rate of 13% or 5% applies. From October 1st, 2022., a 0% rate applies on the supply and installation of solar panels on private residences, living quarters and public and other buildings used for activities of public interest.
• Income tax – either 20% or 30%, after the tax deduction of 530 eur/month is applied. Some towns and municipalities charge additional surtax on income tax (up to max. 18%). Income tax is also to be paid for dividends and profits paid out to shareholders.
Minimum brutto gross salary is set each year (EUR 700 in 2023).
• Contributions for pensions and health insurance – 20% for pension funds, and 16.5% for mandatory health insurance. Businesses can get tax deductions for additional health insurance policies paid for their employees and there are various incentives for reduction of both contributions.
• Corporate income tax – two rates: 10% if, during the taxation period, revenue has been generated up to EUR 995.421,06, or 18% if, during the taxation period, revenue has been generated higher than EUR 995.421,06. If tax losses occur, they may be utilised during 5 consecutive taxable periods.
Companies also pay small administrative fees such as tourist and forest fees (tax on non-market forest function). There can be local fees which companies pay depending on company office or factory location, such as utility charges.
Is there anything else that I should know?
Investors can access “the START” e-service via the e-Citizens digital platform, which enables them to set up a company or a trade business online in just a few days
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