The investment environment in Croatia is regulated by the Croatian Companies Act, the Act on Investment Promotion, the Act on Strategic Investment Projects of the Republic of Croatia as well as other laws.
Foreign investors have the same rights, obligations and legal status within an enterprise as domestic investors, provided the condition of reciprocity is met.
The Croatian Constitution states that no law or any other enactment shall reduce the rights acquired through capital investment. It also ensures free repatriation of profits and capital upon termination of investment.
The Act on Investment Promotion (OG No. 102/15, 25/18, 114/18, 32/20, 20/21) provides the legal framework that prescribes certain incentives to investors.
Whether established with domestic or foreign capital, legal entities registered in Croatia are considered domestic legal entities and they have the right to acquire real estate. Mortgage on real estate is possible in favour of foreign entities.
Provided the condition of reciprocity is met, foreign natural persons and legal entities are free to acquire real estate in Croatia. The acquisition of real estate is regulated by the Property and Other Material Rights Act, and needs approval by the Ministry of Justice. More information about the necessary procedure is available on the website of the Ministry of Justice.
Labour relations in Croatia are regulated by laws, collective agreements and individual contracts, and rules adopted by employers. The Labour Act is in harmony with the conventions of the International Labour Organisation.
The main issues regulated by this Act are:
According to the Foreigner Act, a non-resident is allowed to work within the Republic of Croatia, providing that he/she holds a Permit for Stay and Work or Work Registration Certificate if the Act does not proscribe otherwise. Croatian Government establishes the annual quota for the employment of non-residents according to the migration policy and current situation on the labour market.
The Ministry of Interior issues the Permit for Stay and Work at the request of the employer, based on the place of nonresident’s stay. The Permit for Stay and Work is issued for a certain period of time, which corresponds to the duration of Work Contract or any other valid Contract, but no longer than one year. A Perimt for Stay and Work may be issued outside the annual quota to daily migrant workers under the condition of reciprocity, key personnel, providers of services, workers and their family members, whose status has been regulated by the Stabilisation and Association Agreement between the European Communities and their Member States and the Republic of Croatia, non residents performing key activities in companies, non-residents who are self-employed in a company they own or in a company in which they hold a share of more than 51% or in their own trade, professional athletes or sports workers, artists working at cultural institutions in the Republic of Croatia, teachers and lecturers who do their teaching at educational institutions or language school and other. A Work Registration Certificate is issued to a non-resident for the duration of their work within the Republic of Croatia.
Hence, Certificates may be issued for 30, 60 or 90 days per annum. Any legal or natural person, who is to use the services of a non-resident is obliged to acquire the certificate at the competent police administration or police station, prior to having started working. A legal or natural person, employing or using the services of a non-resident, is obliged to acquire a corresponding contract or any other relevant document signed with a non-resident, deploying the non-resident to work in the Republic of Croatia. More information on the rules and regulations governing the stay of foreigners can be found on the website of the Ministry of Labour and Pension System, Family and Social Policy.
Incentive measures for investment projects in the Republic of Croatia are regulated by the Act on Investment Promotion (OG, No. 102/15, 25/18, 114/18, 32/20, 20/21) and are applicable to projects in:
Minimum investment required in order to become a beneficiary of incentive measures:
* depending on the size of the investor
In order to be granted the status of a beneficiary of incentive measures a microenterprise, small, medium, large enterprise or a natural person liable to income tax, intending to use support for initial investment should apply for incentive measures to the Ministry of Economy and Sustainable Development, before the beginning of investment (start of the investment – the start of construction works or the first assumed obligation in the sense of the equipment work order, excluding the preparatory feasibility studies).
The minumum period for maintaing the investment and newly created jobs linked to investment is five years for large enterprises, amd three years for small and medium-sized enterprises, but no less than period of use of the incentive measures.
No less than 25% of justified expenses of investment have to be secured by holder of incentive measures and cannot contain any kind of aid granted by the state.
The application to be granted a status of a beneficiary of incentive measures must be submitted to the Ministry of Economy and Sustanable Development before the start of investment!
Ministry of Economy and Sustainable Development
Address: Grada Vukovara 78, 10000 Zagreb, Croatia
Telephone: +385 1 6106 111
The Act prescribes following incentive measures:
1. Tax incentives for micro entrepreneurs
2. Tax Incentives for small, medium and large entrepreneurs
New vacancies have to be filled within 3 years after the start of investment.
Minimal period for maintaining investment project:
3. Incentives for eligible costs of creating new jobs related to investment project
*Mandatory period for retaining new jobs
– Eligible costs of opening new workplace are calculated as gross wage over a period of two years
– New workplaces related to an investment have to be kept for 5 years for large enterprises or 3 years for SMEs after the investment is finished and have to be opened in the period of 3 years after the construction finishes.
4. Incentives for eligible costs of training related to investment project
- by 10 percentage points if the training is conducted for disabled workers
- by 10 percentage points if the aid is granted to medium-sized enterprise
- by 20 percentage points if the aid is granted to small and micro entrepreneurs
– trainers’ costs spent in conducting the training
– expenses related to trainers and trainees directly related with the project of education, such as travel expenses, operating costs directly linked to the project, depreciation of tools and equipment, if used exclusively for the training project (accommodation costs are excluded)
– costs of advisory services related to the training project
– costs related to trainees and general indirect costs (administrative costs, rent, overheads) occurred for the hours of training that trainees spend in training.
5. Additional incentives for specific business activities
Additional incentive measures are approved for investment in the following business activities:
- development-innovation activities
- business support activities
- high added value services
Non-refundable aid for the creation of new workplaces created is increased as follows:
For investment in the development and innovation activities, a non-repayable grant is approved for the purchase of equipment/ machinery in the amount of 20% of the actual eligible costs, and in the maximum amount of €500,000 in equivalent HRK value, provided that the purchased machinery represents high technology equipment.
6. Incentive measures for capital expenses of investment project
Eligibility: over €5 milion and more then 50 new jobs opened within the period of 3 years after the start of investment
7. Incentive measures for labor intensive investment projects
8. Incentive measures for investment projects undertaking economic activation of inactive state property of the Republic of Croatia
9. Incentive measures for the modernisation of business processes - automation, robotisation and digitalisation of production and manufacturing processes
This incentive measure refers only to investment projects in manufacturing and processing activities. Minimum investment required in order to become beneficiary of this incentive measure:
Tax system in the Republic of Croatia is based on and divided into two major clusters: direct and indirect taxes. Direct taxes are paid in person or by an employer (personal income or corporate income tax) whereas the final burden of the indirect taxes (such as VAT and excise duties) is borne by the end-user (buyer) of products and services.
When considering the level of government authority, the tax system in the Republic of Croatia consists of a group of government, county, municipal or local, shared taxes as well as taxes and fees on games of chance and any winnings.
Some of the important taxes in Croatian tax system:
According to the Act on Investment Promotion (OG 102/2015, 25/2018, 114/18, 32/20, 20/21), corporate income tax can be reduced to 0% if the prescribed conditions are met.
*detailed table for each municipality and city is available on this link.
Withholding tax is a tax on profits earned by a non-resident in the Republic of Croatia. The taxpayer is an entity that makes disbursements to a non-resident legal entity whereas the tax base is considered as a gross fee, paid by the resident to the non-resident.
The withholding tax is paid for:
More information and details about the Croatian tax system can be found on the website of the Tax Administration of the Ministry of Finance.
The Republic of Croatia has signed over 50 treaties of avoidance of double taxation. The complete list of countries that Croatia has double taxation avoidance contracts can be found here.
*These tax exemptions are examples chosen for informative purpose. They do not represent all of the existing tax exemptions in the Croatian tax system.
The educational system in the Republic of Croatia is divided into preschool education, elementary education, secondary education and higher education.
Preschool education
Preschool education in the Republic of Croatia encompasses education and care of the children of preschool age, realized though educational, health care, nourishment and social care programs for children from six months of age until school age.
Elementary education
Elementary education in the Republic of Croatia lasts for 8 years and it is compulsory and free for all children between the ages of six and fifteen (this refers to all children with permanent residence in the Republic of Croatia, irrespective of their citizenship). There are around 860 elementary schools on the territory of the Republic of Croatia.
Secondary education
Secondary education is implemented through a network of more than 700 secondary schools that are divided according to the program they offer as follows:
Secondary school graduates
Technical and related secondary schools structure
(Enrolled students)
Industry and crafts secondary schools structure
(Enrolled students)
Higher eduaction
Croatia has three types of higher education institutions: universities (sveučilišta), polytechnics (veleučilišta) and colleges of applied sciences (visoke škole). Croatian education system is harmonized with the EU education system (Bologna). There are currently 128 higher education institutions in Croatia.
The Croatian higher education system comprises:
The Croatian higher education system has a long educational tradition preserved primarily through the work of its public universities, which are (in alphabetical order): J.J. Strossmayer University of Osijek, Juraj Dobrila University of Pula, University North, University of Dubrovnik, University of Rijeka, University of Split, University of Zadar and University of Zagreb.
There is a possibility of studying some degree programes entirely taught in a foreign language and these are offered by the following institutions:
English:
International Graduate Business School Zagreb, Josip Juraj Strossmayer University of Osijek, University of Rijeka, University of Split, University of Zagreb, Zagreb School of Economics and Management, University of Zadar, University of Dubrovnik, Juraj Dobrila University of Pula
Hungarian and German:
Josip Juraj Strossmayer University of Osijek
Italian:
Juraj Dobrila University of Pula
Source: www.mzos.hr; www.studyincroatia.hr
Graduates from professional and university study
Registered unemployment by educational background, January 2021
Source: Croatian Employment Service
Unemployment by activities (of previous employment), January 2021
Source: Croatian Employment Service
Unemployment by groups of occupation, January 2021
Source: Croatian Employment Service