Registration of company in Croatia

Registration of a company in Croatia

Croatia is a state situated on the Balkan Peninsula. The country shares borders with such states as: Slovenia, Hungary, Bosnia and Herzegovina, Serbia and Montenegro. Croatia is washed by the Adriatic Sea.
The capital city is Zagreb.

About 4.5 million people reside in the country. The Croats are majority ethnic group (about 78%).

In Croatia, Catholicism, Islam, Orthodox Christianity and other religions are confessed.

The Croatian language has the official status.

The national currency is the Croatian kuna.

If you decide to buy or register company in Croatia, pay attention to the following information.

Since January 1, 2012, the Law for Foreigners has come into force, which has impact on the company's formation in Croatia and requires the fulfillment of new requirements by non-EU citizens.

For example, the average amount of the authorized capital is about 2,850 euros. But at the same time the person who does not reside in any of the EU countries shall contribute capital in the amount of 13,500 euros. And if he is not the citizen of the EU and tends to work in Croatia (as the director), there should be at least 3 of Croatian citizens in the company.

Registration of business in Croatia is usually used to purchase real estate by citizens of those states with which Croatia has not signed relevant agreements and who can not become owners of real estate in this jurisdiction as natural persons, and the Russians are among them.

The company registered in Croatia with the participation of foreign capital (if its founder is foreign natural or legal person) enjoys the same rights as any Croatian enterprise in which the founder is the Croatian citizen. Such company with foreign participation is entitled to purchase real estate in Croatia with the acquisition of property rights.

Foreign legal/natural persons can establish the enterprise with 100% foreign capital. They can also obtain patent for engaging in any activity (doctor, journalist, etc.)

Forms of doing business in Croatia.

Business in Croatia is constantly growing and developing. The most prevalent form of companies in Croatia is the Limited liability company (Drustvo s ogranicenom odgovornoscu (DOO). The LLC is also the most convenient for purchasing real estate in the country.

The legislative framework

The activities of the LLC in Croatia are governed by the Commercial Companies Act, 1993. In 1999, amendments and additions were inserted to it.

DOO company formation in Croatia. The main provisions

• In order to act as a director, a person shall contribute from 51% or more of the authorized capital. And the amount of the authorized capital should be more than 100,000 kuna.
• In addition to three Croatian employees in non-administrative positions, the company shall employ 10 Croats, if two of the directors are not citizens of one of the EU countries.
• The directors who are non-resident of the EU countries receive salaries in the territory of Croatia.
• The contributions of the founders of the company should not be equivalent. Any of their ratio is possible. At the same time, the amount of contributions shall be equal to the total amount of the authorized capital.
• Foreign natural person who is the founder of the LLC in Croatia has the opportunity to obtain residence permit. As the director of the company, he is entitled to freely invite any person to Croatia in order to stay in the country for up to 90 days.
• The company's participants can be one or more legal entities / natural persons of any citizenship, nationality, tax residence status.
• The name of the company should be in Croatian or Latin (it is better to provide several variants), and there should necessarily be the indication of limited form of liability, namely the abbreviation d.o.o.
• The standard charter capital of the LLC is 20,000 kuna.
• The company shall have legal address in the territory of Croatia.
• The basic constituent document is the Memorandum of Association, which is required to be notarized. If there is only one participant in the company, then instead of the Memorandum of Association, the Statement of the founder is provided, and it should be notarized.
• The managing bodies are the General Meeting of Participants and the Director. The Charter can provide for the existence of the Board.
• The obligatory body of the LLC in Croatia is the General Meeting.
• The directors (one or more) in the Managing Board of the company can have any citizenship, nationality and tax residence status. The number of Directors is determined by the Memorandum of Association.
• The supervisory board is necessarily formed, if the company has more than 300 employees during the year. This requirement is also relevant for companies conducting activities subject to licensing.
• If the authorized capital exceeds 600,000 kuna and the company consists of more than 50 participants, the supervisory board should include at least three members. Members of the supervisory board can be foreign persons, and they are appointed at the General Meeting of Participants.
• The company in Croatia shall maintain the register of participants.
• The LLC shall be also registered in the commercial court of the Republic of Croatia. Before registration it is necessary to pay registration fees, contribute authorized capital, make payment for the service of publication of the information concerning establishing the company in the official printed publications. The register of the commercial court is public, so any person concerned has the access to it.
• As soon as the company obtains the extract regarding registration, it is necessary to register with state statistical agency, state tax and customs authorities, (if the company conducts foreign economic activities), and pension and health insurance funds.
• The procedure for company registration in Croatia lasts from 1 to 4 weeks.

Bookkeeping in Croatia

Even if the company does not conduct actual activities, it is necessary to submit accounting reports. Otherwise, the company will have to pay a penalty, the amount of which is determined on an individual basis and depends on a number of factors.
The deals in relation to real estate shall also be reflected in the financial statements.

Taxes in Croatia

The company established for the purpose of owning real estate in Croatia pays only the corporate tax and the registration fee (60 kunas per month or 720 kunas per year).

For the commercial company, the tax rates are as follows:
- 20% - income tax;
- 12% - tax on dividends (on the account of the company).

The Croatian authorities have the right to strike off the company, if the owner evades paying taxes.

Once per year (or more often in case of special requirements) annual report shall be submitted to the tax authorities.

Striking off the company in Croatia

The owner can dissolve the company. And even in the case of the company's liquidation by the Croatian authorities, the owner of the real estate remains the founder of the LLC, which can dispose of the property at his own discretion.

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