The Croatian legal framework governing foreign investment has been designed in a way that does not make any difference between domestic and foreign investors. All possibilities in relations between domestic investors are also open to foreigners investing capital in Croatia, provided reciprocity principle is met.
Moreover, foreign investors enjoy additional guarantees that are not given to domestic investors. The Croatian Constitution provides that no law or other legal document shall reduce the rights granted to a foreign investor at the time of investment in Croatia. It also guarantees the free repatriation of profits or capital upon fulfillment of all legal obligations.
Foreign Investors Status
Under the provisions of the Companies Act (Official Gazette 111/93, 34/99, 121/99, 52/00, 118/03, 107/07, 146/08, 137/09, 125/11, 152/11, 111/12, 68/13, 110/15), domestic and foreign companies conduct their business activities on an equal footing. A foreign investor may establish or participate in the establishment of a company and may acquire rights and/or obligations as any other domestic investor. Foreign investors with headquarters or resided in non-WTO member countries need to meet reciprocity conditions.
Establishing a Company
Foreign companies and sole traders, under conditions prescribed by law, are considered to be domestic legal entities with all rights and obligations as applied to Croatian nationals. However, they cannot continuously perform activities on Croatian territory until they have established a subsidiary in Croatia. Activities shall not be considered as continuous if they are an occasional or one-time undertaking of the activity or specific work (the concept of freedom to provide services in accordance with the EU).
Both foreign and domestic legal entities have the right to establish and own businesses and engage in income producing activities. Foreign investors can acquire ownership and shares of joint stock companies. The lowest amount of initial capital for establishing a joint stock company is HRK 200,000 and the nominal value per share cannot be less than 10 HRK. Minimum initial capital for establishing a limited liability company is 20.000 HRK, while individual representation per investor cannot be less than 200 HRK. Companies that have no more than three members and one Board member may be established through a simplified procedure as a simple limited liability company. The minimum initial amount for the establishment of such companies is 10 HRK, while individual representation per investor cannot be less than 1 HRK.
Intellectual Property Rights
Croatia is a member of the World Intellectual Property Organization (WIPO) and is a signatory of all basic international instruments in the field of intellectual property. All relevant information about Intellectual Property Rights protection can be obtained from the State Intellectual Property Office (www.dziv.hr).
The Tax Administration is the administrative organization within the Ministry of Finance whose basic task is to implement tax regulations and regulations concerning the payment of obligatory contributions.
SUPPORT FOR RESEARCH AND DEVELOPMENT PROJECTS
State aid for research and development projects are regulated by the Act on State Aid for Research and Development Projects (NN 64/18) effective from 26 July 2018.
State aid provider: Ministry of Economy, Entrepreneurship and Crafts
Implementing Body: Croatian Agency for SMEs, Innovations and Investments (HAMAG-BICRO)
Beneficiaries: legal and natural persons, corporate or personal income taxpayers
Type of state aid: tax relief for research and development projects and feasibility studies (income tax base reduction)
The research and development (R&D) project can fall under one or more research categories: fundamental research, industrial research and experimental development or feasibility study for R&D project.
Application: Entrepreneurs must submit a state-aid application before starting the project activities.
Application forms can be found at the link: https://hamagbicro.hr/bespovratne-potpore/programi-podrske-inovacijskom-procesu/drzavna-potpora-za-iri-projekte/
Project implementation period: up to three years from the beginning of the project.
Croatian bank for Reconstruction and Development (HBOR) is a development and export bank of the Republic of Croatia and an export credit agency. The main HBOR task is to encourage sustainable and balanced development of the Croatian economy. HBOR pays special attention to supporting projects that create new values based on knowledge economy.
Supporting the development of small and medium-sized enterprises by following products and services
Guarantees are issued for loans approved by credit institutions and other legal entities approving loans to SMEs
Grant schemes implementation is intended for crafts and companies with at least ten employees, which are in the category of small and medium entrepreneurship. Grants are aimed at projects in the manufacturing industry, environmental protection and the IT sector. Part of the funds are also aimed at innovative SMEs projects.
The Croatian Agency for SMEs, Innovations and Investments (HAMAG-BICRO) was founded with the aim of supporting the development of small and medium-sized enterprises, improving the innovation process and encouraging investments.
Supporting investors in the following services:
- Distributing information about the advantages of the investment environment in Croatia
- Providing information about investment opportunities in Croatia
- Providing support to foreign investors regarding their investment activities
- Providing foreign investors with information about legislation, incentives, locations and potential suppliers
- Providing assistance with applications for investment incentives
- Facilitating communication between foreign investors and national and local authorities
- Aftercare services for foreign investors already operating in Croatia
Through four national programmes, Croatia has been allocated EUR 10.74 billion from ESI Funds over the period 2014-2020. With a national contribution of EUR 1.9 billion, Croatia has a total budget of EUR 12.67 billion to be invested in various areas, from research and innovation
EU funds projects through Operational Programme Competitiveness and Cohesion, OPKK 2014-2020
Ministry of Economy, Entrepreneurship and Crafts has one of the largest data-bases of the available business zones in Croatia, including all relevant information.
The main feature of the business zones is joint use of organized area equipped with infrastructure in order to rationalize the costs.
Business zones are specifically designated areas of industrial real estate owned by the Republic of Croatia, local municipalities or private entities. There are more than three hundred infrastructure-ready zones, ranging in size from ten thousand square meters to several million square meters.
The land located within the business zones is ready for investment projects:
- legal issues regarding the land ownership have been settled;
- physical plans have been adopted; and
- land is equipped with the utilities, transport and ICT infrastructure.
Each of these business zones offers numerous benefits to potential investors, such as:
- full or partial exemption from the communal contribution fee;
- full or partial exemption from the communal contribution tax;
- low price of land;
- developed infrastructure; and
- direct and indirect state incentives.
Business zones provide the ideal infrastructure for quick and successful establishment of business activities, and are often equipped with available office space.
Integral Entrepreneurial Infrastructure Register is kept by the Croatian Ministry in charge of Economy, Entrepreneurship and Crafts.
Provide the so-called “soft-services” for SMEs, supporting them in both: start-up and scale-up phases.
In Croatia, we recognize seven categories as follows:
- entrepreneurship centres,
- business incubators,
- development agencies,
- entrepreneurship accelerators,
- business parks,
- scientific-technological parks,
- competence centres.
Registered legal entities are responsible for operative implementation of measures for economy and entrepreneurship development at local (regional) level, investment promotion and attraction as well as initiation and realization of the projects for economic development and entrepreneurship promotion by means of integrating the activities of economic operators, local and regional entrepreneurial institutions and institutions for higher education and knowledge centres.
Strategically well-positioned EU member state with a highly-skilled workforce, modern infrastructure and favorable business climate conducive to investment
As the Mediterranean gateway to Central Europe, Croatia is being called upon to play an increasingly important role in linking Asia and Europe. As a member of the European Union, Croatia offers unhindered access to a market of over 500 million people.
Enjoying a favourable geographical position in the centre of Europe, within a two-hour flight to most European capital cities, Croatia offers a modern infrastructure, political and economic stability and good business climate. The Croatian workforce is competent, multilingual and highly educated, while expats praise living in a safe country with a high quality of life. The country is highly digitized, with excellent broadband Internet coverage.
The Croatian legal framework governing foreign investment treats domestic and foreign owned companies equally. Croatian legislation ensures business activities of the EU standard, while the country’s membership of the European Union opens the possibility of co-financing projects with EU funds. In addition, Croatia has signed Agreements for the avoidance of double taxation with over 60 countries worldwide.
Incentives for investors
With the aim of stimulating investments in manufacturing sector activities, technology centres, business support services and high value-added services as well as tourist activities, investors are offered various incentives.
They range from tax incentives, incentives for employment and training, to investment incentives for research and development and innovation activities as well as for capital costs of the investment project. They also include additional incentives for R&D and investment in areas of special state concern.
Investments in the sector of industry, especially in the less-developed parts of the country, are strongly supported in order to stimulate the creation of new job opportunities and preconditions for strengthening export-oriented sectors.
Depending on the amount of investment and the number of newly created workplaces, investors are granted the following incentives:
- Tax incentives – Partial or full exemption from profit tax for a period of up to 10 years, depending on the amount of the investment. Standard profit tax rates are 12% and 18%.
- Employment incentives – Up to 18.000 euros per employee, depending on unemployment rate in the investment area.
- Training Grants – Coverage of up to 70% of employee’s training costs, depending on the type of training and the size of the business.
Key reasons to invest in Croatia:
Competitive operational costs
Return on investments
Incentives covering up to 45% of investment costs
Attractive tax incentives, double taxation avoidance agreements with numerous countries and 0% customs within the EU.
All of Europe in 2 hours – with its favorable position Croatia is conveniently located for easy access to all European markets
Efficient, innovative, highly qualified and multilingual workforce committed to achievement.
Pro-business oriented environment encourages new investments and ensures stability.
Assistance free of charge
Professional assistance by Government institutions.
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