A small yet diverse country in the heart of Europe, Croatia is always an attractive choice.  As an EU member state, it has access to the open market of the European Economic Area. EEA produces $20 trillion in GDP and has around 515 million consumers (with UK being a part until 2021). Find out all the latest info on legislation, taxes and procedures for setting up a company in Croatia in our quick guide.

A quick overview: language, legislation and currency

In Croatia, most people speak English and often other languages (German and Italian, notably). Croatia has around 4 million citizens, and there are roughly as much Croatian speakers abroad. Real estate and services are affordable. Its business legislation is similar to most European countries. The official currency in Croatia is the Croatian kuna introduced in the 1990s. Steps have already been implemented to switch to euro by 2025.

What do I need to know about taxes, costs and regulation?+

First and foremost, it should be emphasised that foreign citizens can be owners of companies in Croatia. Croatian tax system has a similar structure to most European countries. The tax rates have generally been decreasing over the past years. Many government services are available online and there are new solutions offered every few months.

You may find a shortlist of taxes and contributions listed below:

  1. VAT – the largest source of government income. Its rate is 25% (on certain products or services it can be lowered to either 13% or 5%, contact us for more details);
  2. Income tax – either 24% or 36%, after the tax deduction of 4,000kn/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;
  3. Contributions for pensions and health insurance also have to be accounted for. Their rates are 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;
  4. Corporate income tax rate – two rates: 12% up to HRK 7.5 m of company income and 20% on all amounts in excess of that mark;
  5. 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.

For a calculation of potential earnings/expenses for your employees, you can use a calculator of gross or net salary. One of them is available here.

Setting up a company in Croatia: type and name

Begin setting up a company in Croatia by selecting your enterprise structure. Will it be a limited liability or a public company? Take into account the number of owners or shareholders you would like to include. You should also decide in advance on the type of business activities you will be registered for, as they have to be listed. A Croatian company also has to have a seat within Croatia, which is an address where you own or rent an office. Your local taxes and charges will depend on your registered seat/office.

Finally, you should decide on company name: it can be in any of the EU languages, plus Latin or Greek. If it is a non-Croatian word, the court might ask for a source. But this happens only if you are very extravagant with your choice of words. You should make sure that a company under this name does not already exist, which you can do here. The bonus is that you are entitled to a free .hr domain after your company is registered.

What can Brojevi do for you?

The entire process of company registration can sometimes be difficult due to language or cultural barriers. Croatian is not always easy to comprehend! That is where we can be of help.

Since a lot of companies asked for our advice in the past years, we started publishing our answers and guides online. This turned into the most popular accounting company blog in Croatia, with tens of thousands of users each month. Now, we have decided to make our expertise available to foreign investors, by offering you the following services and benefits:

  • assistance in setting up a company for you
  • taking care of your accounting and administrative work
  • communicating in English, being available over Skype or other preferred channels
  • notifying you of all relevant changes regarding tax, business and regulation matters
  • advising you and assisting in finding skilled workers/service providers.

If are planning on setting up a company in Croatia, let’s get in touch and set up a meeting over Skype or Hangouts! Feel free to contact us here.