Step-by-Step: Company Incorporate in Croatia

Croatia, nestled in Southeast Europe, may be a smaller European nation, with a population of just over four million citizens. Nevertheless, the favourable business environment and skilled workforce makes it a prime destination for foreign investors and entrepreneurs like yourself. If you’re considering setting up a company incorporate in Croatia, this guide will walk you through the essential steps and considerations.

 

Types of Businesses in Croatia

First of all, it is important to understand the three types of businesses that can be incorporated here. While JSCs offer is usually for bigger companies and growth potential, LLCs tend to be the preferred choice for foreign investors as it is less complicated to set up. See below for the breakdown.

Limited liability company (LLC)	Known locally as D.O.O (Drustvo s Ogranicenom Odgovornoscu). The most popular type of business structure in Croatia.  It is relatively easy to set up and manage. Offers limited liability protection for its shareholders.  The minimum share capital is EUR 2 500. An LLC must have at least one director and one shareholder.  The director/shareholder can be natural persons or legal entities.
Joint stock company (JSC)	The JSC is a more complex type of business structure than the LLC.  The minimum share capital is EUR 25 000.  A JSC must have at least three directors and at least one shareholder.  The director/shareholder can be natural persons or legal entities.
General partnership	Known locally as JTD (Javno Trgovačko Društvo). Does not require any share capital. Must be established by a minimum of two members.

 

Steps To Incorporate a Company in Croatia

After you have chosen a business type, it is time to company incorporate in Croatia. You will need to:

Choose a Business Name and Reserve It

The first crucial step is selecting a unique business name that is not already in use by another company in Croatia. Following your name choice, you can either reserve it online or in person at the Financial Agency of Croatia (FINA). The application fee is about EUR 90.

Prepare the Articles of Association

The Articles of Association are the governing documents of the company. They set out the company’s name, purpose, registered office, share capital, and management structure. The Articles of Association must be signed by all shareholders.

Register With the Commercial Court and obtain TIN

Once your company is incorporated, you will need to obtain a tax identification number (TIN) and a business registration certificate. You will also need to register with the Croatian Chamber of Commerce and the Croatian Social Security Agency.

Again, the cost of setting up a company in Croatia can vary depending on the type of business and the location. However, it is generally considered to be relatively affordable. The incorporation process itself is also relatively straightforward compared to other European countries and can be completed in a few weeks.

 

Additional Considerations

Here are some additional things to keep in mind when setting up a company in Croatia:

Corporate Tax Rate	Currently, Croatia’s corporate tax rate is 18%.
Visas	Foreign nationals will need to obtain a business visa. The requirements for a business visa vary, depending on the nationality of the foreign national. In general, foreign nationals will need a valid passport, a valid visa application form, a letter from the company stating the purpose of the business, and proof of financial resources.
Minimum Wage	The minimum wage in Croatia is EUR 700 per month.
Registered offices	All companies incorporated in Croatia must have a registered office in Croatia. The registered office is the official address of the company and it must be located in physical premises in Croatia. Do take note that changing your company’s registered address in the future can be expensive. This is because the process will necessitate a notary, and there’s a possibility that you may have to refile your documents.

 

In Croatia, it’s important to note that specific sectors are restricted. What this means is that they are reserved for Croatian citizens, or companies with a predominant Croatian ownership. These restricted sectors mostly involve significant industries such as banking, insurance, telecommunications, and air transport. However, these are not set in stone.

There can also be exceptions to these rules in some cases. To give you an example – the Croatian government may grant a waiver to allow a foreigner to hold a bigger stake in a company in a limited sector (than their Croatian nationals).

Apart from this, you will need the help of an accountant who would manage various financial aspects of a business. Some of the tasks your accountant will help you with includes filing tax returns, liaising with government authorities, submitting PDV and facilitating invoice. Another aspect of setting up a business in Croatia that you need to pay close attention to is PDV (a.k.a Croatia’s VAT). When you’re part of the PDV system, your company can get back the PDV you paid to other companies.

You also need to charge PDV on your bills to balance what you paid, and what you get back. This keeps things even between what you pay and what you’re refunded. PDV in itself is actually an in-depth subject, which gets quite complex if you aren’t familiar with it. Hence, having the assistance of an accountant would greatly expedite matters and benefit you in the long run. The cost for an accountant varies on the tasks and complexity, starting at EUR 126.

 

Let Us Give You A Hand

Croatia presents a promising environment for foreign investors wanting to make their break in the European market. However, starting a business in a new country by yourself may be a lengthy process. With the piles of paperwork and legal practices to adhere to, it may take up a lot of your time to go through it one-by-one. So, if you’d rather spend your energy on building the core competencies of your business, we’ve got you covered…

Our team at 3E Accounting specialises in setting up businesses around the globe are here to help you. Let us expedite the process, so that you can get your business up and running at the earliest. Want to get started on your business in Croatia? Contact us here and we’ll get you started.