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Opening an enterprise in a foreign country can attract lengthy processes and heavy charges to set it up and maintain it. In Croatia, however, you don't struggle as much. The business environment is friendly for foreign investors to start a company or open up a branch. With the necessary documentation and share capital, you can create a public LLC or a private limited liability corporation. A public notary and investors must do the incorporation process, open a bank account, and hire a Croatian accountant. Remember to come up with the company's name to liaise with the Financial Agency of Croatia to make sure it is unique and available for use.
The costs included in creating a company in Croatia include registration fees, minimum share capital where applicable, company formation costs, accounting costs and virtual office costs. There are various Acts and laws like the Trade Act allowing investors to have a liaison office in the foreign country and the Company Act of Croatia enabling investors to change the company type if they want to expand. You can buy a shelf company, open a virtual office or a holding company with the required documents as explained below. Read on to find out the economic overview of Croatia, credit rating from credit rating agencies, and the trade register and how to access it.
To form a company, you will need a set of documents like:
Other requirements entail a bank account, a registered office, and a native accountant to incorporate a company in Croatia successfully. Remember, you need to go through all these procedures with the assistance of a public solicitor, which is a requirement of forming a company in Croatia.
A private limited liability firm (D.D.O) Drustvo s Ograbnicenom Odgovornoscu) is an entity for micro and medium enterprises made of one or more shareholders. A D.O.O should have a minimum of HRK 20,000 share capital apportioned into shares. However, the investors from countries outside the E.U. will have to have a share capital of at least HRK 200,000 as stipulated by the Croatian statutes.
The amount you invest dictates your liability limits. In case of problems like bankruptcy or liquidation of the D.O.O, your assets are safe. The essential documents required here are incorporation articles (suppose the founders are two or more) or a statement of the establishment (if there is a single founder). These two documents must cover:
A public LLC (A.D), exclusively for large enterprises, is formed by one or more founders, and the allowed share capital is at least HRK 200,000 distributed into stakes. Like the D.O.O, liability is directly proportional to the capital contribution for each member. This type of company requires you to have a management board, supervisory board, a shareholder board and the major board for making huge decisions. The articles of association are mandatory for the company's internal rules and regulations.
Partners can start a Croatian general partnership enterprise, say two or more, who are liable to pay for their company's debts with their personal assets if liquidation occurs. On the other hand, they also can acquire the profit proceeds after corporate taxation. With this type of business, you don't require a share capital, but the partnership's name must have the term" J.T.D." attached to it.
A limited partnership type of business in Croatia allows two or more founders to operate under different business rules. A general partner whose personal assets can be seized suppose liquidation takes place and a limited partner whose liability is limited by their capital contribution. The partnership name should be followed by "K.D.". There is no minimum share capital required for this enterprise type and the general partners are the only ones that can represent the business to the market.
First, the name must be unique, so it is checked at the Financial Agency of Croatia. If the name is acceptable, the founder members should notarize the association letter or the organizational agreements, the court registration application, and the statement of acceptance from the director. It is mandatory to all these documents be forwarded with a legitimate Croatian translation. The next step is to open a bank account and deposit the share capital. With all the necessary documents submitted, the company is registered as a member of the Croatian Chamber of Commerce. Tax registration is also a must for V.A.T. and income tax administration. This application should be submitted at the various Croatian administrative offices to receive a one-of-a-kind tax I.D. number.
The final step is registering with the Croatian Institute for Health Insurance and the Croatian Pension Insurance Institute before 15 days pass since the incorporation day. The required documents to create a Croatian company include:
On completing the registration, you can begin your operations once you hire an accountant.
The major steps you need to follow are:
If you are a foreigner in Croatia who wants to open up a company in Croatia, here are the costs you may incur.
Foreigners who want to invest in Croatia by establishing branches to stretch their operations are allowed to do so under certain specifications. For example, the mother company must give out certain documents during registration, details on the native branch representative, and assurance that the company will put in place similar activities as the foreign parent company. Investors should share the manager's details in the Articles of Association.
To register a subsidiary in Croatia is straightforward with perks like double taxation agreements in line with the Companies Code and Act. Foreigners can create subsidiaries through private L.L.C.s with the least share capital of EUR 2,700 or public L.L.C.s by depositing a minimum share capital of EUR 27,000 to the local bank.
With technological advances, it is no longer necessary to have a traditional office as you can work from your native country and still operate your business in Croatia. Having a virtual office cuts the costs of renting physical space in a specific location. For you to fully perform your virtual office duties, you will have access to a business address, a local telephone number, a personal telephone number, bank statement collections, call redirecting, mail receiving and forwarding, both incoming and outgoing fax messages.
Croatian shelf companies are existent companies ready to be bought by foreign investors. These company types come with a series of benefits. You will have easy market penetration, and the ownership rights transfer is subject to less bureaucracy. It will save your time because, with a new company, you will have to undergo the Croatian company incorporation process.
A Croatian holding company is an enterprise formed through a legal process that controls the stakes and manages companies in Croatia. Investors and owners have much power because they can evaluate business implementations and fire the managers and directors if they perform dismally. Some of the benefits of a Croatian holding company include protecting investors' personal assets, corporate income tax, or withholding tax for annual distributions to the firm's shareholders. With a holding company, you have access to debt instruments at particular times to raise money.
To promote your foreign company in Croatia, you can develop a liaison office in line with Croatia's Trade Act. The liaison office is viewed as the intermediary between the foreign company and the future partnerships and is only allowed to promote and not run operations. Although a liaison office is not permitted to run financial operations, it can advertise and market the foreign company in Croatia. Registering a foreign company's liaison office in Croatia is easy with just an application form with certain information to be filled. The parent organization's information and its operations and information on the representatives running the liaison office operations in Croatia.
The Croatian company Act and other related provisions allow you to alter the company type. Yes, you can change the company type from private L.L.C. to a public L.L.C. if you want to expand your business. The Croatian Trade Register processes the change supervises, and validates companies in this situation.
There are documents needed to go through this process like the resolution from managers of the company, a financial report from an authorized auditor from Croatia, and a legal declaration with the needs of extension and altering the business structure.
Before setting up a business, investors should register with the Commercial Court to begin their business transactions. The Croatian Trade Register is called the Croatia Company Registry and is upheld by the Croatian Commercial Court and is operated by he Chamber of Commerce. The Financial Agency of Croatia similarly takes part in registering companies in Croatia.
Companies registered by the Croatian register are entered into the electronic database called the Croatian Company Directory that can be accessed online by the general public. Although the Croatian Company Directory offers details in Croatian language, it is relatively easy to navigate. Anyone looking to find out details on any registered company, traders, organizations, or company branches in Croatia can look it up on the database.
A limited liability company is the standard business type for most foreign and local entrepreneurs. The registration procedure is straightforward and time-efficient to authorize the beginning of the operations. First, investors need to find a name, decide the activities they want to undertake and fill in the articles of association. The members should formulate the board of managers and the company seat too. Next, you should deposit the share capital to a native bank and register for taxation. The taxes stand at 20% for income tax, 25% V.A.T. for sale of goods and services and 13% for Croatian catering and accommodation services.
The Croatian economy is quite robust, powerful and well-founded. The backbones of the economy lie in production, tourism and trading. If you consider introducing a company in Croatia, you will enjoy a series of perks, including the availability of extensive resources sourced locally. With these resources, the country is prosperous because of enormous production rates and its incentives to encourage foreign investors to start their companies in Croatia. The business environment is friendly, making more and more foreigners flood the Croatian market with easy incorporation and registration.
Croatia's credit rating, according to the rating agencies
Before the new agency, in 2016, the credit rating of Croatia was undertaken and maintained by Fitch rating company at the B.B. level. Croatia's credit rating stability is credited to the 1.1% inflation rate in May 2017, increased credit activity, and continued use of economic rules and regulations. Some of the risks investors should consider first before creating a business in Croatia are:
Moody's announced the better Ba2 credit rating back in May 2017. The unprecedented growth of the Croatian economy after a collapse lasting six years was not expected but its proven by the improved credit rating from the well-known agency. The upward trend of the credit rating of Croatia can be maintained by political stability and inclusive reforms.
Factors which determine credit rating in Croatia
Financial professionals consider several factors when determining the Croatian credit rating. Some of the factors include:
Final thoughts
Croatia offers a business environment suitable for any business type. With its recent growth in credit rating, Croatia assures you markets in trading, tourism and production, which are the three core industries backing the Croatian economy. The taxes imposed are friendly, and they have a Trade register you can access to check out any information on companies registered in Croatia.
This guide is well detailed to educate you on the main concerns of opening a company in Croatia; costs, documentation, credit rating, Croatian economy and the types of companies you can consider opening. The incorporation process ends with registering at the pension institute for employee pensions in case of retirement. Investors also need to register for Health insurance for their future employees.
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