WHO CAN BUY CROATIA REAL ESTATE?

You can buy real estate in Croatia as a private individual or as a company.

Buying as a company is quicker but engages you in a certain amount of regular paperwork and expense after the sale.

REQUIREMENTS FOR PRIVATE INDIVIDUALS

Croatian Citizens:Proof of Croatian citizenship, either in form of citizenship certificate, passport or personal identification card are required.

Foreign Citizens: Are able to buy and own Croatia real estate provided that the condition of reciprocity is satisfied.

• The condition of reciprocity is satisfied if Croatian individuals can legally purchase and own real estate in the country of origin of the foreign individual who intends to purchase real estate in Croatia. (For example: The U.S.A, UK, France & Germany has reciprocity – check to see if your country has reciprocity.

  (Croatia is expected to become a member of the EU, perhaps in 2008, thus all European countries will have reciprocity.)

• Proof of reciprocity must be submitted to the Land Registry (Zemljisne Knjige) when the foreign individual seeks to register title to real estate in Croatia. Proof of reciprocity is obtained in the form of a confirmation from the Croatian Ministry of Foreign Affairs (MFA), but prior to reaching a decision the MFA will seek an opinion from the Ministry of Justice, Administration and Local Self-Government. Therefore the entire process may take a number of months.

STEPS IN BUYING CROATIA REAL ESTATE FOR FOREIGN CITIZENS:

• The first stage of purchase is to sign a preliminary contract (or pre-contract) with the selling party which usually involves paying a deposit of 5-10% of the sales price.

• Contract is sent to the Ministry of foreign affairs in Zagreb (together with other related documentation.)

• Ministry issues the buyer its statement on consent entitling the foreign citizen to register the Croatia real estate onto their name at the Municipal court - Cadastry department where they pay the real estate purchase tax.

  (*Foreign citizens that establish, or already have an established company in Croatia, can purchase real estate on behalf of their company.)

CROATIA REAL ESTATE TAXES

When Buying:

The Republic of Croatia has a unified tax rate of 5% for all types of real estate and respective transactions. The tax is defined based on the price of the real estate in the sales contract and the value estimate by the authorized tax authority in charge for the area in which the real estate is located.

The buyer is obliged to register the purchase at the authorized tax authority within 30 days from the day of conclusion of the contract and pay the real estate purchase tax within 15 days from the day of reception of the decision received from the tax authorities on the exact tax amount.

When Selling:

If the property has been owned for less than three years and sold at higher price than originally purchased, the seller has to pay a 35% income tax on the difference in value of the real estate (purchase and sales price) increased for local taxes – which is different in every municipality.

BUYING REAL ESTATE AS A CROATIAN REGISTERED COMPANY

If you are looking to own real estate in Croatia and you are a citizen of a country that does not have reciprocity with Croatia, you can register a corporate entity in Croatia, such as a Croatian limited liability company.

As a foreign individual you can be the sole shareholder of a Croatian limited liability company. Once an investor incorporates a company in Croatia, that company can enter into a contract for the purchase of the particular real estate of interest to the investor. Thus a confirmation of reciprocity from the Croatian Ministry of Foreign Affairs will no longer be required.

This is the fastest route to buying Croatia real estate, and one of the most common, but it is not without drawbacks.

You will need to do quarterly returns for your company, for which you will need an accountant. How complicated, and therefore how expensive, your returns will be depends on what you want to use the property for.

If you want to use it as a holiday home and to let it out during the periods you’re not using it, then your returns won’t be too costly. You'll have to pay corporate tax on any profits your company makes.

SETTING UP A CROATIAN REGISTERED COMPANY

Setting up a company in Croatia is relatively fast, inexpensive and simple.

• The paper work is processed by a Notary Public and it takes about 2-3 weeks to finalise and will require evidenced of personal details such as passport number, address, etc. You will also be asked for a list of the activities your company will be partaking.

• The name you choose for your company must be either Croatian or Latin.

• You are rquired to open a kuna account for your company with a minimum deposit of 20,000 kunas (about 3,000€). The receipt of your deposit will be required by the Public Notary. This money can be used freely later once you have bought the property, so it is not a cost.

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