Starting business in Croatia can be convenient from the taxation point of view, because tax on corporate profits is 20%. Ordinary value added tax (VAT, PDV in Croatian) is 25%, 10% in the fields of tourism, catering and hotels, and 5% on certain categories of goods. There would be a number of incentives should one decide to start a company in Croatia; subsidies which, in most cases, would allow a reduction in taxes for investment and staff recruitment.

Starting a company in Croatia has no particular obstacles, especially because of the similarity of legal forms with those provided for by Italian law. In addition to the typical individual entrepreneur who is personally liable with his/her capital for debts contracted, companies can be divided into companies of persons and companies of capital.

To start a business in Croatia by setting up a company of persons, the following options are open:

General partnership (javno trgovačko društvo – j.t.d.)

Established by at least two partners who have personal and unlimited liability for corporate obligations; the company is established by a contract (not necessarily a notary deed), which must indicate: company name, registered office, corporate purpose, personal details of all partners, list of partners with external representation powers and extension of their powers, contributions of partners, date of articles of association, duration of the company (if with fixed term) and causes of dissolution. No minimum capital is required for establishment of the company, but only the declaration in the constitution contract of the contributions made by the partners (which may consist of money, goods and services of any nature or rights). Partners are jointly and severally liable without limitations for all corporate obligations. Administration and external representation of the company are the responsibility of each partner severally, unless otherwise regulated in the articles of association. Unless authorised by the other partners, the partner cannot exercise a competing activity or assume the status of a fully liable partner in another company.

Simple limited partnership (komanditno društvo – k.d.)

The partner or active partners are liable personally and without limit for corporate debts, while the partner or limited partners are only liable within the limits of the allocated shares.

No minimum capital is required for establishment of the company, but only the declaration in the constitution contract of the contributions made by the partners (which may consist of money, goods and services of any nature or rights). Administration and representation of the company are up to only the active partners, in separate form among them (unless otherwise agreed in the articles of association).

The limited partner cannot perform administrative acts and cannot oppose the decisions or acts of active partners, unless these go beyond ordinary administration; he/she has access to the books and accounting records of the company and is responsible for verifying the correctness of the annual budget. On the other hand, the prohibition on competition in the general partnership applies only to active partners.

The main legal forms for the establishment of a company in Croatia are: the limited liability company (društvo s ograničenom odgovornošću – d.o.o.) and the joint-stock company (dioničko društvo – d.d.).

With regard to the limited liability company, which is the most widespread and used form, the main features are:

  • partners are only liable for corporate obligations within the limits of the allocated shares;
  • it can be established by a sole partner or by several partners;
  • the minimum share capital is 20,000 kune (about 2,600 euros), of which at least 50% must be paid before being registered in the Commercial Register;
  • each partner must make a cash contribution of not less than 200 kune;
  • in the case of several partners, the company must be established by notary deed; if there is a sole partner, it is sufficient to draw up the statement on the constitution. The articles of association must contain: names of the founding partners, name of the company, corporate purpose, total share capital, indication of the allocation of shares, the rights and obligations of the partners towards the company and any rights and obligations of the company towards partners, and indications of effective operativeness of the company.

In Croatia, it is also possible to start a business by establishing a simplified limited liability company (j.d.o.o.):

  • it can consist of a minimum of one partner to a maximum of three, while only one person can be a member of the administrative body;
  • The minimum share capital is 10 kune (about 1.3 euros), while the minimum shareholding of each partner is 1 kune.

Should there be a capital increase up to 20,000 kune, the j.d.o.o. becomes a classic d.o.o. and will be subject to the relevant regulations.

A Joint-Stock Company can be established by one or more natural or legal persons, whether Croatian or foreign. Two methods of establishment are envisaged:

  1. Simultaneous constitution: the founding partners stipulate the articles of association of the company, subscribing to the entire share capital; a notary certifies the allocation of the shares, the authenticity of the subscription of the partners and their declaration of wanting to establish the company; members of the corporate administration and control bodies are also appointed. Subsequently, payment is madeof the minimum required contributions and the company is entered in the Business Register.
  2. Constitution by public subscription: the founding partners draw up the articles of association of the company, subscribing only to a part of the share capital; they subsequently formulate a public offer of the shares not covered by their contributions, to be subscribed within three months. If, at the end of three months, the shares have not been fully subscribed, within the next 15 days the founding partners are required to subscribe for shares not placed among the public, in order to conclude the establishment procedure. the intervention of a notary certifying the articles of association is also indispensable for constitution by public subscription.

The minimum capital for establishment is set at 20,000 kune, the nominal value of the shares cannot be less than the amount of 10 kn and must be expressed in a whole number divisible by 10. Shares can be ordinary, privileged or without voting rights.

Before registration of the company, at least 25% of the nominal value of the shares subscribed must be paid in cash to a Croatian bank; If the shares are issued for a value higher than the nominal value indicated, the entire surplus amount must be paid. In the case of contributions in kind, appraisal of the assets or rights conferred must be certified by a court-appointed expert.

The company name must contain the abbreviation "d.d." and cannot be the same as the name of other companies already registered in the same register held by the specific court.

The shareholders' meeting, to be convened at least once a year, appoints and revokes members of the Supervisory Board; the Board of Directors/Sole Director (or Management) is appointed by the Supervisory Board (and not by the shareholders' meeting as in the S.r.l.) for a maximum of 5 years, and the members can be re-elected.

CROATIA

Croatia Flag
Average start-up times 10 days
Availability of pre-established (ready-made) companies Yes
Accounting Annual
Secretary No
Nominee Shareholder Yes
Nominee Director Yes
Average taxation 20%
Published information about the company's directors The names of directors and shareholders appear in the Public Register.
Accounting obligations Annual
Legislation and controls

The institution responsible for the establishment of companies is the Business Register (sudski registar).

There are three bodies specifically dedicated to investment support: HAMAG Invest Agency (small business and investment agency), CEI (Energy and Investment Monitoring Centre) and AIK (Investment and Competition Agency).

Confidentiality Bearer shares are not permitted
Required documents
  • certified copy of passport or ID
  • residence certificate dating back less than 3 months
Time Zone UTC+1
Currency Croatian kuna
Risk indicators Average political risk: 39%
  • Expropriation and breaches of contract: 49%
  • Risk of war and civil unrest: 31%
  • Transfer of capital and convertibility: 37%
Average credit risk: 64%
  • Failure to pay by sovereign counterpart: 50%
  • Failure to pay by bank counterpart: 71%
  • Failure to pay by corporate counterpart: 71%
GDP growth 2,9%