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Investments

Types of Investment

Types of Foreign investment:
A foreign investor can establish any type of legal entity foreseen by the Law on trading companies. Foreigners, like locals, can establish branches, companies with limited liability, share companies, command companies and public trade companies.
Foreigners can make investments independently or as a group investment together with a local legal entity or person, with the share of foreign ownership being unlimited.

Incentive measures and privileges:
Depending on the size of the investment and the number of newly opened jobs, the Law on incentives for investments allows investors notable incentive measures, tax relief and customs privileges.

Incentive measures are numerous, the granting of permits for construction - usually at no charge, the issuing of property or other infrastructural objects for use from the portfolio of the Fund of Properties for the enticement of Investments under commercial or notably favourable conditions, aid for the opening of new jobs in the form of a single award of 15,000 kn per employee, aid for professional education or retraining by allowing up to 50% of the cost of the education or retraining.

Tax relief is approved according to the size of the investment and the securing of the employment of a specific number of employees as per the following criteria:

Special privileges are granted to investors who are situated in the areas of Special State Care where tax on profits are charged at 5, 10 or 15%, depending on the area in which they operate.

Customs privileges relate to the waiving of the payment of custom duty on the import of equipment which forms a part of the investment (except for personal automobiles with a motor capacity of more than 1500 ccm).

Investment in Free Zones
Apart from the usual exemption from paying taxes and customs for all goods, intended for export, that are produced in the zone, users of the zone who invest over 130,000 EUR in infrastructure are exempt from profit tax for a period of five years. Other users of the zone pay 50% of the standard rate of profit tax.

Property ownership rights:
Respecting the principle of reciprocity and the approval of the Ministry of Foreign Affairs, a foreigner can obtain ownership rights for property in the Republic of Croatia. When a foreigner opens company in Croatia, that company treated as a local one and is permitted to obtain ownership rights without limitation.

Concession rights:
Concession rights can be issued to foreigners dependent on the results of a public tender for a maximum of 99 years or 40 years in the case of agricultural land.

Taxes and tax rates:
Profit tax - 20%
Income tax - 15, 25 and 35%, depending on the amount of income
Value added tax - 22%, apart from exemptions which are 0%
Transfer of property tax - 5%
Inheritance of gifts tax - 5%
Luxury goods tax - 30% and so on

Investment possibilities in Croatia

The economy of the Republic of Croatia is relatively modern and in the structure of the Gross Domestic Product, two thirds of the newly made assets come from the Services sector, a little under 10% from Agriculture, about 5% from Construction, with the remainder coming from Industry, including mining, the extraction and supply of electrical energy, gas and water.

The Croatian economy is not heavily reliant on any one activity. However, some sectors and some activities are more prospective, propulsive and have more potential than others. With it's dominance in the formation of the Gross domestic product, the Services sector stands out as having the leading role, a position it will surely keep in the future, especially as far as tourism, the financial section and trade are concerned. According to experts, other areas attractive for investment are industry, agriculture and food production, construction, transport, communications and so on.

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