The investment environment in Croatia is regulated by the Croatian Companies Act, the Investment Promotion Act, the Act on Strategic Investment Projects of the Republic of Croatia as well as other laws.
Foreign investors have the same rights, obligations and legal status within an enterprise as domestic investors, provided the condition of reciprocity is met. The Croatian Constitution states that no law or any other enactment shall reduce the rights acquired through capital investment. It also ensures free repatriation of profits and capital upon termination of investment.
The Investment Promotion Act (OG No. 63/22) provides the legal framework that prescribes certain incentives to investors.
Whether established with domestic or foreign capital, legal entities registered in Croatia are considered domestic legal entities and they have the right to acquire real estate. Mortgage on real estate is possible in favor of foreign entities.
If you are an EU citizen or a legal person from an EU Member State, Republic of Iceland, Principality of Liechtenstein or Kingdom of Norway, you can acquire ownership rights in real estate in Croatia under the same conditions as Croatian citizens and legal persons with a registered seat in Croatia, with the exception of real estate in exempted areas – agricultural land is governed by a special law, so the acquisition of ownership rights in such land is not subject to consent by the Minister of Justice and Public Administration.
More details Ministry of Justice
Incentive measures for investment projects in Croatia are regulated by the Investment Promotion Act (OG, No. 63/22) and are applicable to projects in:
Minimum investment required in order to become a beneficiary of incentive measures:
In order to be granted the status of a beneficiary of incentive measures a microenterprise, small, medium, large enterprise or a natural person liable to income tax, intending to use support for initial investment should apply for incentive measures to the Ministry of Economy and Sustainable Development, before the beginning of investment (start of the investment – the start of construction works or the first assumed obligation in the sense of the equipment work order, excluding the preparatory feasibility studies).
The minimum period for maintaining the investment and newly created jobs linked to investment is five years for large enterprises, and three years for small and medium-sized enterprises, but no less than period of use of the incentive measures.
No less than 25% of justified expenses of investment must be secured by holder of incentive measures and cannot contain any kind of aid granted by the state.
The application to be granted a status of a beneficiary of incentive measures must be submitted to the Ministry of Economy and Sustainable Development before the start of investment!
Ministry of Economy and Sustainable Development
Address: Grada Vukovara 78, 10000 Zagreb, Croatia
Telephone: +385 1 6106 111
1. Tax incentives for micro entrepreneurs
2. Tax Incentives for small, medium and large entrepreneurs
New vacancies have to be filled within 3 years after the start of investment.
Minimal period for maintaining investment project:
3. Incentives for eligible costs of creating new jobs related to investment project
*Mandatory period for retaining new jobs
– Eligible costs of opening new workplace are calculated as gross wage over a period of two years
– New workplaces related to an investment have to be kept for 5 years for large enterprises or 3 years for SMEs after the investment is finished and have to be opened in the period of 3 years after the construction finishes.
4. Incentives for eligible costs of training related to investment project
- by 10 percentage points if the training is conducted for disabled workers
- by 10 percentage points if the aid is granted to medium-sized enterprise
- by 20 percentage points if the aid is granted to small and micro entrepreneurs
– trainers’ costs spent in conducting the training
– expenses related to trainers and trainees directly related with the project of education, such as travel expenses, operating costs directly linked to the project, depreciation of tools and equipment, if used exclusively for the training project (accommodation costs are excluded)
– costs of advisory services related to the training project
– costs related to trainees and general indirect costs (administrative costs, rent, overheads) occurred for the hours of training that trainees spend in training.
5. Additional incentives for specific business activities
Additional incentive measures are approved for investment in the following business activities:
- development-innovation activities
- business support activities
- high added value services
Non-refundable aid for the creation of new workplaces created is increased as follows:
For investment in the development and innovation activities, a non-repayable grant is approved for the purchase of equipment/ machinery in the amount of 20% of the actual eligible costs, and in the maximum amount of €500,000 in equivalent HRK value, provided that the purchased machinery represents high technology equipment.
6. Incentive measures for capital expenses of investment project
Eligibility: over €5 milion and more then 50 new jobs opened within the period of 3 years after the start of investment
7. Incentive measures for labor intensive investment projects
8. Incentive measures for investment projects undertaking economic activation of inactive state property of the Republic of Croatia
9. Incentive measures for the modernisation of business processes - automation, robotisation and digitalisation of production and manufacturing processes
This incentive measure refers only to investment projects in manufacturing and processing activities. Minimum investment required in order to become beneficiary of this incentive measure:
Tax system in the Republic of Croatia is based on and divided into two major clusters: direct and indirect taxes. Direct taxes are paid in person or by an employer (personal income or corporate income tax) whereas the final burden of the indirect taxes (such as VAT and excise duties) is borne by the end-user (buyer) of products and services.
When considering the level of government authority, the tax system in the Republic of Croatia consists of a group of government, county, municipal or local, shared taxes as well as taxes and fees on games of chance and any winnings.
Some of the important taxes in Croatian tax system:
According to the Act on Investment Promotion (OG 102/2015, 25/2018, 114/18, 32/20, 20/21), corporate income tax can be reduced to 0% if the prescribed conditions are met.
*detailed table for each municipality and city is available on this link.
Withholding tax is a tax on profits earned by a non-resident in the Republic of Croatia. The taxpayer is an entity that makes disbursements to a non-resident legal entity whereas the tax base is considered as a gross fee, paid by the resident to the non-resident.
The withholding tax is paid for:
More information and details about the Croatian tax system can be found on the website of the Tax Administration of the Ministry of Finance.
The Republic of Croatia has signed over 50 treaties of avoidance of double taxation. The complete list of countries that Croatia has double taxation avoidance contracts can be found here.
*These tax exemptions are examples chosen for informative purpose. They do not represent all of the existing tax exemptions in the Croatian tax system.
The educational system in the Republic of Croatia is divided into preschool education, elementary education, secondary education and higher education.
Preschool education
Preschool education in the Republic of Croatia encompasses education and care of the children of preschool age, realized though educational, health care, nourishment and social care programs for children from six months of age until school age.
Elementary education
Elementary education in the Republic of Croatia lasts for 8 years and it is compulsory and free for all children between the ages of six and fifteen (this refers to all children with permanent residence in the Republic of Croatia, irrespective of their citizenship). There are around 860 elementary schools on the territory of the Republic of Croatia.
Secondary education
Secondary education is implemented through a network of more than 700 secondary schools that are divided according to the program they offer as follows:
Secondary school graduates
Technical and related secondary schools structure
(Enrolled students)
Industry and crafts secondary schools structure
(Enrolled students)
Higher eduaction
Croatia has three types of higher education institutions: universities (sveučilišta), polytechnics (veleučilišta) and colleges of applied sciences (visoke škole). Croatian education system is harmonized with the EU education system (Bologna). There are currently 128 higher education institutions in Croatia.
The Croatian higher education system comprises:
The Croatian higher education system has a long educational tradition preserved primarily through the work of its public universities, which are (in alphabetical order): J.J. Strossmayer University of Osijek, Juraj Dobrila University of Pula, University North, University of Dubrovnik, University of Rijeka, University of Split, University of Zadar and University of Zagreb.
There is a possibility of studying some degree programes entirely taught in a foreign language and these are offered by the following institutions:
English:
International Graduate Business School Zagreb, Josip Juraj Strossmayer University of Osijek, University of Rijeka, University of Split, University of Zagreb, Zagreb School of Economics and Management, University of Zadar, University of Dubrovnik, Juraj Dobrila University of Pula
Hungarian and German:
Josip Juraj Strossmayer University of Osijek
Italian:
Juraj Dobrila University of Pula
Source: www.mzos.hr; www.studyincroatia.hr
Registered unemployment by educational background, February 2020
Unemployment by activities (of previous employment), February 2020
Unemployment by groups of occupation, February 2020