Croatia – Ready Made Shelf Companies – Company Formation

Croatia

Croatia is a country on the Mediterranean Sea that borders with such countries as Slovenia and Hungary. It is a member of NATO, WTO, and, most importantly, the European Union, even though it remains outside the Eurozone (the official currency is Croatian kuna or HRK). The country is developing at a considerable pace, with services as the driving force of economic growth.

A company is considered to be resident in Croatia if it has its registered office (seat) or place of effective management and control in the country. Company law in Croatia is governed by the Companies Act. The most popular business structure is a limited liability company. There are two types of limited liability companies: simple and regular. 

A simple limited liability company (j.d.o.o.) can have only one member of the management board and the minimal share capital amount is 10.00 HRK. For a regular limited liability company (d.o.o.) the minimum capital is 20,000 HRK. The company’s executive board may have one or more members (directors). 

Croatian companies, regardless of their size, are required to prepare annual financial statements and auditor’s reports.

Corporate income tax in Croatia is 18%. There are tax cuts with regard to profits generated through new investment (including new workforce). What is more, companies whose annual income falls below the threshold of 3,000,000.00 HRK benefit from the reduced corporate tax rate of 12%. To calculate tax base, both the income obtained in the country and abroad is taken into consideration. 12% withholding tax on dividends applies, with the exception of dividends paid to companies within the EU. Capital gains tax is 12% to 36%. Obligatory VAT registration applies to companies whose sales exceed 230,000 HRK a year. The standard VAT rate is 25%.

Croatia became an EU Member State in 2013 and receives considerable funding from the European Community. Although it encountered a few years of slowdown after the 2008 financial crisis, Croatian economy is seeing a considerable and steady growth, with GDP figures well above 2%. Croatian currency, kuna, is stable. Thanks to an extensive coastline, Croatia is one of Europe’s favourite holiday destinations and tourism sector constitutes an important part of the country’s economy. Another important industry is shipbuilding.

Formerly a part of Yugoslavia, Croatia declared its independence in 1991. The country is a parliamentary democracy. The executive power lies in the hands of the Prime Minister and the President of the Republic. Sabor, the Croatian parliament, is unicameral and can consist of 100 to 160 MPs. Parliamentary elections are held every four years. The President is elected every five years.

Banks, payment institutions and credit unions fall under the supervision of the Croatian National Bank (HNB). Currently in the country there are over 20 commercial banks, majority of which are foreign entities. The financial system is stable. The four biggest banks in Croatia are Zagrebačka banka (Unicredit Group), PBZ, Erste Bank and Raiffeisenbank.