INFORMATION
FOR DOMESTIC AND FOREIGN INVESTORS
Purchasing Method
Members of the European Union can be registered in the land registers as natural persons through a normal sales contract or through a simple sales contract
The notary public, after certifying the contract, enters it into the court records, registering the right of ownership in favor of the foreign citizen.
A system recommended for someone who is interested in a property for personal use, has no speculative property interests and no intention of renting it out.
• Benefits: No additional costs other than property, legal fees and 3% real estate transfer tax where applicable.
• Disadvantages: none.
Purchasing Method
Members of the European Union can be registered in the land registers as natural persons through a normal sales contract or through a simple sales contract
The notary public, after certifying the contract, enters it into the court records, registering the right of ownership in favor of the foreign citizen.
A system recommended for someone who is interested in a property for personal use, has no speculative property interests and no intention of renting it out.
• Benefits: No additional costs other than property, legal fees and 3% real estate transfer tax where applicable.
• Disadvantages: none.
This system is recommended for someone who is interested in a property for personal use, has no speculative property interests and no intention of renting it out.
- Benefits: No additional charges other than property, legal fees and 3% real estate sales tax where applicable.
- Disadvantages: none.
Through establishing a company
just like the Italian s.r.l., the shares are owned by foreign citizens.
The company as a legal entity is registered with the court as the owner of the real estate after it has been certified.
A system recommended for someone who is going to buy a property for profit, eg for resale or rental purposes.
The property can be used as a company headquarters for foreign nationals who intend to start an activity in Croatia.
- Advantages: refund of VAT (VAT) 25% (monthly or quarterly refunded in cash to the company account, no tax payment at the end of the year as in Italy)
In the case of construction and furnishing, you can recover 25% of the costs of billable materials, installations and labor. - Disadvantages: initial costs of setting up a company, management costs, such as an accountant. You must take the time to be present for periodic balance closings
The cost of establishing a company: around 2,000.00 euros depending on the members, statute, company name or names.
An accountant costs from 100.00 to 300.00 euros per month, depending on the amount of accounting work.
You must take time to manage the company: at least once every three months for the quarterly balance closing.
The share capital that needs to be paid, which is available on the company’s account approximately 30 days after registration with the Chamber of Commerce, amounts to HRK 20,000.00, i.e. EUR 2,700.00, the minimum share capital amount.
Through establishing a company
just like the Italian s.r.l., the shares are owned by foreign citizens.
The company as a legal entity is registered with the court as the owner of the real estate after it has been certified.
A system recommended for someone who is going to buy a property for profit, eg for resale or rental purposes.
The property can be used as a company headquarters for foreign nationals who intend to start an activity in Croatia.
- Advantages: refund of VAT (VAT) 25% (monthly or quarterly refunded in cash to the company account, no tax payment at the end of the year as in Italy)
In the case of construction and furnishing, you can recover 25% of the costs of billable materials, installations and labor. - Disadvantages: initial costs of setting up a company, management costs, such as an accountant. You must take the time to be present for periodic balance closings
The cost of establishing a company: around 2,000.00 euros depending on the members, statute, company name or names.
An accountant costs from 100.00 to 300.00 euros per month, depending on the amount of accounting work.
You must take time to manage the company: at least once every three months for the quarterly balance closing.
The share capital that needs to be paid, which is available on the company’s account approximately 30 days after registration with the Chamber of Commerce, amounts to HRK 20,000.00, i.e. EUR 2,700.00, the minimum share capital amount.
TAXES
Real estate tax is paid in the amount of 3% of the market value. There is no other annual property tax.
When you buy real estate from an individual, you pay 3% real estate sales tax calculated on the value of the real estate. When you buy a property from a company, the 3% will not be required from the buyer. The company selling the property has already paid the construction tax to the Croatian state through the payment of VAT.
The transfer of water, electricity, utility fees and waste disposal is carried out immediately after submitting the title deed to the competent authorities.
The cost of communal services is estimated based on the average Croatian salary of 400 euros per month, which is quite low for a European citizen.
The annual property management costs based on these costs are low, the summer rental of the property would bring an income of about 4%-5% per year of the price of the property.
The market shows an annual increase in the value of square meters in Istria of 5-10%, depending on the location and quality of construction and finishing.
The profits of a limited liability company are taxed at a rate of 12% for small businesses up to 18% per annum, after taking into account all expenses incurred and a rate of depreciation ranging from 5 to 10% per annum based on all goods sold the company bought. Unsold real estate does not generate annual taxes for the company that owns it. At the end of the sales process, the activity is closed, calculated and taxed. Therefore, it is possible to start a new activity before the last sale, which would increase the budget costs and would not provide an obvious profit. Further taxation for shareholders’ dividends amounts to 12% of the company’s net profit.
For informational purposes, the estimated summer income of the apartment is about 4% of the real estate value. Annual expenditure on consumption is estimated on the basis of the average Croatian salary, which is therefore low for a European consumer.
We hope that this short information will help you to understand the investment mechanisms in the Croatian market, whether you want to invest in a holiday home or apartments, as a small or medium-sized enterprise.
Our agency can find real estate or land, help clients in establishing a company, we offer clients offers from numerous construction companies (we are in partnership with construction companies based in Novigrad), estimation of design costs and we can manage the sale or resale of built or purchased real estate. We advise and cooperate with Croatian technicians, legal advisors and notaries public. Thanks to our travel agency, we can organize the summer rental of your apartments purchased as an investment.
We remain at your disposal for any additional information you may request or if you want to come to Istria to meet us and consider possible cooperation.