Starting a Business in Croatia: Your Quick Guide

Croatia, located in Southeast Europe, is an appealing destination for entrepreneurs everywhere. With a population of just over four million, it offers a healthy business environment and a pool of skilled workforce that can make your investment lucrative. If you’re thinking about Croatia company incorporation, then check out this concise guide, which will lead you through the key steps and important considerations.

 

Why Choose Croatia?

Before we dive into the essential steps of setting up a company in Croatia, let’s explore why this nation is an attractive investment choice for your next business venture. Croatia’s strategic location, EU membership, tax benefits and growing market make it an ideal place to invest. Starting a business in Croatia would enable foreign investors to tap into other European markets easily. Take a look below for the available business in the country.

 

Types of Businesses in Croatia

Croatia offers several business structures, but let’s focus on the three main ones:

Joint-Stock Companies (JSCs)	These are typically suitable for larger enterprises with substantial growth potential. The JSC is a more complex type of business structure than the LLC (see below). Minimum share capital: EUR 25 000
Limited Liability Companies (LLCs)	Known locally as D.O.O (Drustvo s Ogranicenom Odgovornoscu). Very popular business structure in Croatia Easy to set up and manage – less complex Limited liability protection for shareholders Minimum share capital: EUR 2 500 At least one director and one shareholder
General partnership	Known locally as JTD (Javno Trgovačko Društvo). No share capital is required. Established by a minimum of two members.
Sole Proprietorships	This structure is suitable for small businesses and individuals looking to start a business on their own.

 

 

Steps To Incorporate a Company in Croatia

Once you’ve chosen your company type, you can proceed with your Croatia company formation.

Step 1: Choose and Reserve a Unique Business Name.

Pick an appropriate business name and register it. You can do this online or at the Financial Agency of Croatia (FINA). The fee is about EUR 90. This process would take you less than a day.

Step 2: Prepare the Articles of Association

This is the legal document that sets out the company’s name, purpose, registered office, share capital, and management structure. All shareholders must sign it. This process can take up to two days.

Step 3: Register Your Business With the Croatian Commercial Court

To register your business with the Croatian Commercial Court, you will need to submit the following documents:

• Articles of Association
• Memorandum of Association (if applicable)
• Proof of payment of the registration fee

You can submit these documents online through the e-Osnivanje (e-Establishment) service. Do note that you may be required to submit additional documents.

Step 4: Obtain a Tax Identification Number (TIN)

Once your company is incorporated, you will need to obtain a TIN and a business registration certificate. To obtain a TIN from the Croatian Tax Administration, you will need to submit the following documents:

• Application form
• Proof of identity
• Proof of address

You can submit these documents online or in person at a tax office. Steps 3 and 4 can take up to a few days.

Step 5: Register for Social Security and Health Insurance

Next, register your company with the Croatian Chamber of Commerce and the Croatian Social Security Agency. If you are planning to employ yourself or additional employees in your business, you must register for social security and health insurance. You can do this online or in person at a branch of the Croatian Institute for Health Insurance (HZZO).

Setting up a company in Croatia is generally considered to be relatively affordable. The process of incorporating is quick, and can be completed within weeks!

 

Launching Your Business in Croatia: Vital Insights

Securing a business visa is the first step before launching any business venture. The requirements for this visa can vary based on your nationality, so it’s crucial to be well-prepared.

Generally, here’s a list of documents you’ll need to provide:

• A valid passport
• A completed visa application form
• A company-issued letter detailing your business purpose
• Proof of adequate financial resources

Beyond the visa process, when incorporating a company in Croatia, one of the essential obligations is establishing a registered office within the country. Your office serves as your company’s official address and must have a physical presence within Croatia. Do keep in mind that changing your company’s registered address in the future can be a somewhat complex and costly process. This change typically requires the services of a notary, and there’s a chance you may need to refile certain documents during the address modification.

Here are a few more key considerations to keep in mind when embarking on your business journey in Croatia:

Corporate Tax Rate

Currently, Croatia maintains a corporate tax rate of 18%.

Minimum Wage

In Croatia, there is a legally mandated minimum wage, currently set at EUR 700 per month.

 

Navigating Business Regulations in Croatia

Starting a business in Croatia is a promising venture, but it comes with its own set of rules and considerations. Below is a breakdown of the regulations you need to be aware of:

Foreign Ownership Restrictions	Certain sectors are restricted and typically reserved for Croatian citizens or companies with predominant Croatian ownership. Examples of sectors are such as banking, insurance, telecommunications, and air transport. However, exceptions can be made. The Croatian government can waivers for foreign investors to hold larger stakes in limited sectors under specific conditions.
Understanding PDV (Croatia’s VAT)	Participating in the PDV system allows your company to recover the PDV you’ve paid to other companies. However, it’s essential to charge PDV on your bills to balance what you’ve paid and what you’re refunded. For those unfamiliar with PDV, having an accountant’s assistance speeds up processes and enhances long-term business benefits.
The Role of an Accountant	Accountants manage various financial aspects, including: – filing tax returns – liaising with government authorities – submitting PDV (Croatia’s VAT) – handling invoices, etc. The cost of an accountant in Croatia varies depending on the tasks and complexity, with fees starting at EUR 126 (approximately USD 140).

 

Ready To Take the Next Step? Let’s Help You Get There.

Venturing into the business landscape of Croatia can be incredibly rewarding, yet it does come with its own set of challenges like navigating the legalities and other formalities. But here’s the good news – you don’t have to do it alone. If you’re not sure where to start or how to navigate the process, consider teaming up with us at 3E Accounting. We’re here to lend a helping hand and simplify the process of Croatia company formation. Start by contacting us today!