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Paying Taxes in Croatia

Paying Taxes in Croatia

The taxes in Croatia allows foreign investors to benefit from varied incentives in a stable business climate. Taxpayers, whether nationals or foreigners must align with the requirements in this sense and the applicable legislation. The VAT, the capital gains tax, and the income tax must be observed before commencing any activities in Croatia. If you would like to open a company in Croatia, we suggest you ask for support and complete details from our team of company formation in Croatia.

The VAT in Croatia

National and foreign companies are seen as taxpayers in Croatia, therefore, the registration for the value added tax is mandatory, especially if the products and services offered on the market generate incomes of more than EUR 30,300. The standard VAT rate in Croatia is set at 25% but there are also lower rates of 13% and 5% for certain categories of services and goods. For instance, the VAT of 13% rate applies to restaurant services, hotels and accommodations, entertainment services, sugary products, and water supply in Croatia. As for the VAT rate of 5%, this is imposed on dairy products, medicines, medical equipment, and newspapers.

When setting up a company in Croatia, the VAT registration needs to respect the conditions imposed, but instead of dealing with misunderstandings, you may get in touch with our team of advisors for support and information. More about Croatian tax rate can be discussed with our experts.

The income tax in Croatia

The incomes of companies in Croatia are levied at certain rates, depending on the registered amount, such as:

  •     incomes between 0 and EUR 3,480 are levied at a 12% rate;
  •     incomes between EUR 3,480 and EUR 13,900 are levied at a 25% rate;
  •   incomes above EUR 13,900 are levied with a 40% rate.

If your company in Croatia generates the above-mentioned revenues, then it is suggested to observe the income tax imposed on such amounts. 

Other taxes in Croatia

Croatia is part of the European Union since 2013 and respects the tax legislation just like any other country member. In this sense, Croatia imposes the following taxes:

  •     inheritance and gift tax;
  •     the consumption tax;
  •     the tax on holiday houses;
  •     the tax on vessels;
  •     the real estate transfer tax;
  •     special taxes on motor vehicles.

Companies with gambling activities in Croatia need to pay the fees for the lottery, casino, and betting games. These also involve the fees for organizing award games in Croatia. If you would like to know more about the taxes in Croatia, feel free to get in touch with us.

VAT registration in Croatia

If you want to register a company this year in Croatia, it is important to get an idea about the Croatia tax rate and the rules imposed by the authorities. Registration for VAT purposes is mandatory in Croatia, and those interested must keep in mind some essential rules.

For example, companies importing products, those with foreign customers such as companies not registered for VAT purposes in Croatia, must take this tax into account. The companies that organize events for which tickets are paid must be registered for VAT, one of the most important taxes in this country. Here are some essential steps for registering a company for VAT purposes:

  • Financial authorities in Croatia require several documents required for VAT registration such as the Articles of Association which contain all the data of a company.
  • In the case of foreign companies, a document is required to certify that they are registered for business purposes. This document is issued by the Trade Register of the respective country.
  • The specific forms with extra details about the company’s activities, including the financial ones, are the necessary documents for the registration for VAT purposes.

In order to benefit from simple registration and tailor-made formalities, you can call on specialized help offered by our team of company formation agents in Croatia. Our experts have experience in working with foreign entrepreneurs and business owners who want to open their businesses in this country and understand the Croatia tax rate.

Property tax in Croatia

Property owners in Croatia, whether we are talking about buildings or lands, must consider the related taxes. For example, in the case of properties sold, inherited, or given as a gift, a 5% real estate transfer tax is applicable. This tax is calculated according to the price of the respective property. Here are other taxes to consider:

  • In addition to the above-mentioned tax, the 25% VAT calculated also based on the final purchase price is added.
  • The owners of holiday properties must also consider the property tax, depending on the square meter of the respective house.
  • In the case of properties sold after three years from the acquisition, they are subject to capital gains tax. This fee is normally paid by those who sell the properties.
  • the fixed annual tax is also imposed on those who have rented properties for tourist purposes.

So, if you are interested in the taxes to be paid for properties owned in Croatia, do not hesitate to talk to us. We will explain everything you need to know about the taxes imposed in this sector and also about Croatia tax rate.

Inheritance tax in Croatia

According to Inheritance Law in Croatia, there is no tax for inheritances in family property, and here we refer to husband, wife, and children. However, in the case of other relatives, an inheritance tax of 4% is applied, calculated based on the price of the respective real estate, after the eventual debts have been eliminated. It is important to emphasize that inheritances received as a gift by first-degree relatives are exempt from taxes, but not for those of distant degrees.

As for foreigners who inherited a property in Croatia, they will be subject to the same tax rules, according to Inheritance Law in Croatia. However, there are cases in which the laws of the country apply to the person who bequeathed the property to Croatia but not before determining whether he or she resided in that country before death.

Although things are extremely clear about what kind of taxes should be paid for family inherited property, it is still recommended to talk to a specialist and find out all the details about this topic. You can rely on our support for details about the taxes in Croatia.

Why invest in Croatia

Croatia is an extremely attractive country in terms of foreign investments due to the many advantages enjoyed by both local and foreign entrepreneurs. If you are wondering why Croatia is attractive from this point of view, well the quality infrastructure, the advantageous tax system, the incentives offered by the government, the possibility to open a company in a relatively short time, and the competitive operating costs are just some of the pluses of the business climate in this country. The following statistics and figures underline several times the good economic direction of Croatia:

  1. Almost USD 30 billion represented the total FDI for Croatia in 2019.
  2. According to the 2020 Doing Business report, Croatia ranked 51st out of 190 world economies in terms of business and simplification of formalities.
  3. Most of the foreign investments are absorbed by Croatia’s services sector, one of the most prolific.

If you want to know more about taxes in Croatia, please do not hesitate to contact our team of company incorporation specialists in Croatia.