CompanyFormationCroatia.com offers all the necessary actions in order to incorporate a company or partnership in Croatia, it also provides all the necessary details for incorporating a branch, a subsidiary or a representative office, with complete support offered by Law Firm Ivan Župan.
Law Firm Ivan Župan can provide comprehensive legal services and support for local and international investors in Croatia. Ivan Župan is a young but experienced lawyer who graduated the Faculty of Law in Zagreb and who practiced as an attorney before he founded his law firm with a few lawyer partners with experience in the Commercial Law, Employment Law, industrial property rights, statutory trade issues, real estate business, Labor Law, collection of claims, administrative law and many more.
Ivan Župan is honored of being part of the Croatian Bar Association. Professional legal support and information are offered by specialists at Law Firm Ivan Župan in Croatia. The firm is part of the American Chamber of Commerce in Croatia, an important institution that addresses to international investors interested in business operations in Croatia among other things. Law Firm Ivan Župan isalsoaffiliated to HG.org, the first website containing information and details about the legislation and the government of countries all over the world. The services provided by Law Firm Ivan Župan are vast and among these, we mention company and business formation, tax compliance, trademark registration, drafting contracts, compensation claims, land registry, debt collection, company relocation, company litigation and company dissolution among others.
Croatian company formation is based on a series of documents such as:
•the articles of association, that can be signed through a power of attorney;
•the passport copies of the shareholders of the new company in Croatia;
•the specimen signatures (legal support in this sense can be offered);
•the special forms from the registration office (certain fees might be imposed in this sense).
Anyhow, it is important to keep in mind that all procedures for company formation in Croatia must be performed through a public notary. A registered office is also necessary for setting up a company in Croatia. It is also required to have a bank account and a local accountant before incorporating a company in Croatia.
What types of business entities can I open in Croatia?
A private limited liability company (D.O.O. – Drustvo s Ogranicenom Odgovornoscu) incorporated in Croatia is a legal entity for small and medium-size businesses formed by at least one shareholder with a minimum share capital of at least HRK 20,000 divided into stakes. As a particularity, due to the Croatian Law on Foreigners, the non-EU citizens willing to incorporate a Croatian D.O.O must provide a minimum share capital of HRK 200,000.
The members’ liability is limited to the amount of invested capital. In case the Croatian D.O.O is facing troubles, such as liquidation or bankruptcy, the personal assets of the members are protected. The documents standing at the base of the private limited liability company are the articles of incorporation (in case there are more than two founders) or the statement of establishment (in case there is only one founder) and must contain:
•details regarding the representatives, the name of the company and the address of the registered office;
•complete information about the future activities of the company in Croatia;
•details regarding the authorized capital or the minimum share capital;
•information about the amount of each member’s contribution;
•information regarding the rights and obligations of the members and procedures which needs to be followed in case of liquidation or transformation.
A public limited liability company(A.D.) is incorporated in Croatia by at least one founder, with a minimum share capital of approximately HRK 200,000 divided into shares and it is designed for large businesses. The similarity with the Croatian private limited liability company comes from the fact that the liability of the members is limited by the contribution to the capital. The management of this type of company is assured by the management board (with at least one manager), the supervisory board (with at least three members) and the general meeting of the shareholders. The last one is the main body for taking major decisions related to the appointment of all the other bodies of the company, the revision of the foundation deeds, the increase or decrease of capital. At the base of each Croatian A.D. sit the articles of association which contain all the internal regulations of the company.
A Croatian general partnership is a type of business adopted by two or more partners fully liable to cover with their personal assets the company’s debts in case of liquidation and who can benefit from the profits after paying all the specific corporate taxes. The name of the Croatian general partnership must be composed by the name of the partners followed by the termination “JTD”. No share capital is necessary to start this type of business.
A limited partnership is a form of business incorporated in Croatia by two or more persons with different statutes in the business. There is at least one general partner, fully liable with his assets for the company’s debts and one limited partner with liability limited by his contribution to the entity’s capital. Only the general partner may represent the partnership on the market. Just like in the case of the general partnership, there is no need to submit a minimum share capital at registration. Usually, the name of this type of partnership is formed by the general partners’ names followed by the termination “KD”.
Incorporation procedure in Croatia
In the beginning, the entrepreneurs must check the uniqueness of the name chosen for the business at the Financial Agency of Croatia. If the name is available, the founders must notarize the memorandum of association or the company charters along with the application for Court Registration and the director’s statement of acceptance of the appointment. All the documents must be accompanied by a certified translation into Croatian. After that, a bank account must be opened and the minimum share capital has to be deposited. The company becomes a member of the Chamber of Commerce in Croatia once all the documents are submitted. The next step of company incorporation in Croatia consists in registering at the tax administration office for paying the VAT and employee income tax. The application can be submitted at the several administrative offices located throughout Croatia. As a result of registration, the company receives a unique tax identification number.
The last step of the incorporation consists in the registration at the Croatian Pension Insurance Institute and the Croatian Institute for Health Insurance no later than 15 days from the incorporation. The necessary documents for company formation in Croatia consist of:
•an application found at the local office where the registration takes place;
•a proof of company incorporation in Croatia (the registration certificate);
•the tax identification number to prove that the company is a taxpayer;
•registration form for each employee you wish to hire in the company.
After company registration in Croatia is completed, the business can begin its activity after you hire an accountant. We can recommend you specialists in accounting in Croatia and other European countries, such as Romania. We can also help you with information if you want to start a business in the Netherlands or Macedonia.
Steps in forming a company in Croatia
These are the main steps to consider when opening a company in Croatia:
Choose a suitable business structure in accordance with the purposes and the activities of the company.
Prepare at least 3 names for your future company and verify the validity with the Croatian Company Registry.
Open a bank account in Croatia in order to deposit the minimum share capital and to use it for further financial transactions.
Prepare and submit the Articles of Association and the Memorandum, the company’s main documents, with the Croatian Company Registry.
Register the company with the Pension Insurance Fund in Croatia.
Register for tax purposes (including VAT) as soon as the certificate of incorporation is issued.
Costs for opening a company in Croatia
Here are the main company formation costs in Croatia that you should bear in mind as a foreign or a local entrepreneur:
Registration fee: approximately EUR 90 for registering a company in Croatia (company registration certificate, company register procedure, etc.).
Virtual office cost: approximately EUR 300 per month if you would like a notable business address and an assistant for your future operations.
Minimum share capital: HRK 20,000 (EUR 2,700) for a private LLC or HRK 200,000 (EUR 27,000) for a public limited liability company in Croatia.
Company formation fee: approximately EUR 834 – Talk to our specialists for a detailed offer.
Accounting costs: starting from EUR 100 for bookkeeping, tax advice and many more (ask our team for a tailored offer).
How can I open a branch in Croatia?
Foreign investors who want to expand the operations in Croatia can set up branches under certain conditions. In this sense, the parent company must provide documents at the time of registration, details about the local representative of the branch, a guarantee that the entrepreneur will set up such entity with the same type of activities as the foreign business. Details about the board of managers must be provided with the Articles of Association.
How can I open a subsidiary in Croatia?
Foreigners can easily register subsidiaries in Croatia and can benefit from the advantages of such a business structure formed in this country like the double taxation agreements, in compliance with the Commercial Code and the Companies Act. Subsidiaries can be set up through private limited liability companies with a minimum share capital of HRK 20,000, or registering public LLCs if a minimum share capital of HRK 200,000 is provided through a local bank.
What are virtual office services in Croatia?
A virtual office in Croatia represents a set of services destined for foreign investors who do not want to set up traditional offices for their future companies in this country. It is good to know that virtual office services are subject to low costs. A notable business address, a local phone number, incoming and outgoing faxes, mail collection and forwarding, collection of bank statements, call redirecting, and a private phone number can be provided for foreign entrepreneurs interested in virtual office services in Croatia. Our team of advisors can offer complete information on this matter.
What is a shelf company in Croatia?
Shelf companies in Croatia are ready-made companies which can be purchased by foreign investors in Croatia. It is good to know that a shelf company comes with varied benefits like easy access on the market, complete transfer of the ownership with less bureaucracy, and time efficiency because such entity is already incorporated in Croatia.
What is a holding company in Croatia?
A holding company in Croatia is the type of enterprise formed in a legal manner and that controls the shares and the management of other companies registered in this country. Among the advantages of a holding company in Croatia it is good to know that the personal assets of the investor are protected, there is no corporate income tax and no withholding tax imposed on the annual distributions to stockholders in the firm. Moreover, with a holding company, investors can raise funds and can use varied debt instruments at specific periods. The right to assess the business implementations in a holding company in Croatia is at the disposal of the company owners who also have the power of firing managers or directors if under-performance is detected.
Liaison office in Croatia
Promoting the commercial interests and activities by foreigners in Croatia can be done with the help of a liaison office which can be established in respect to the Croatian Trade Act. A liaison office does not have financial operations and no related activities, but it can develop a series of marketing and advertising activities. Also, a liaison office is seen as an intermediary office between the company from abroad and the future collaborators in Croatia, and will only promote the operations of that foreign company. It is good to know that a liaison office in Croatia can be easily registered with an application form that contains information about the parent company and its activities, and about the representative who will be in charge of the operations of the liaison office in Croatia. Investors from overseas can talk to our specialists and find out how we can help in matters of liaison office registration.
Can I change the company type in Croatia?
Yes, investors looking to expand their businesses and turn a private limited liability company into a public one may do so in compliance with the Company Act in Croatia and the related provisions. The company type change is done with the Trade Register in Croatia, the same institution that supervises and accepts the formation of companies in this state. The resolution issued by the managers of the firm, the financial report issued by an official auditor in Croatia and a legal statement showing the company needs to extend and change the business structure are among the necessary documents for such operation.
What is the Trade Register in Croatia?
The Trade Register in Croatia is known as the Croatian Company Registry and it is actually represented by the Commercial Court in Croatia, which is managed by the Chamber of Commerce in Croatia. All companies must register with the Commercial Court in Croatia before starting their commercial transactions. The Financial Agency of Croatia also deals with registration of companies in Croatia.
How can I have access to the Croatian Trade Register?
All companies registered in Croatia are kept in an electronic database that is accessible to the public online. The database is called the Croatian Company Directory. Anyone can check information on Croatian private companies, registered traders, institutions, and foreign companies or Croatian branch offices. The database is available only in Croatian, but it is rather simple to use.
Short facts about company registration in Croatia
The limited liability company is a common business structure for most of the entrepreneurs, whether domestic or from foreign countries. The registration process is not only simple, but it is also less time-consuming, allowing business persons to start rapidly their activities on the market. Choosing the name of the company, deciding on the type of activities, creating the Articles of Association and the board of managers, plus the company seat are the first steps for business registration in Croatia. The minimum share capital is then deposited in a local bank account. The registration for tax purposes is the next step as soon as the business has been registered in Croatia. We remind that the corporate income tax in Croatia is set at 20% rate. As for the standard VAT rate, this is set at 25% for main goods and services for sale purposes and 13% for catering and accommodation services in Croatia.
Economy overview in Croatia
As far as the economy of Croatia is regarded, the country is quite powerful and well-developed. The main income is brought in the country by fields like production, trading or tourism. Starting a company in Croatia has the advantage to benefit from rich natural resources offered by the country itself. This is the reason why the nation is situated in a top position as far as the production rates in Europe are concerned. When it comes to foreign investments, the Croatian government encourages starting companies in Croatia and offers important incentives for developing the business environment. In this way, foreign investors can find Croatia a rather comfortable destination for business incorporation and investment.
Croatia credit rating, according to the rating agencies
In 2016, Croatia credit rating was maintained by the Fitch rating agency at a BB level, with a stable outlook. The experts pointed out that Croatia credit rating is generated by the improvement of the public finances and the exit from the excessive deficit procedure. The stability of the credit rating in Croatia is explained by a moderate inflation (1.1% in May 2017), a stimulated credit activity and the continuation of economic policies. Among the risks which should be taken into consideration by investors who want to start a company in Croatia are:
- the exchange rate fluctuations,
- the political uncertainty,
- the negative demographic trends.
An improved Ba2 credit rating was announced by Moody's in March 2017. Croatia's stronger than expected economic growth, after a six year recession, is the main reason for the rating provided by the renowned agency. The experts believe that comprehensive structural reforms and a more stable political environment could maintain the positive credit rating of Croatia. More information regarding credit rating and company registration in Croatia can be provided to you by our team of experts.
Factors which determine credit rating in Croatia
Several aspects are taken into consideration by financial experts when determining Croatia credit rating. These include the following:
• The economic improvement of the trading relations of Croatia with its traditional partners: Germany, Italy, Slovenia; • A favorable evolution of wages and employment; • Improved absorption of the EU funds and strong tourist inflows to the local budget; • An expansionary monetary policy due to a moderate inflation; • Croatia's debt burden was reversed in the upward trajectory.
Frequently asked questions
1. Can foreigners set up companies in Croatia?
Yes, foreign investors can open companies in Croatia and can direct the attention to limited liability companies which can suit most their activities and purposes.
2. Does the business have to be established in Croatia?
Yes, foreigners need to register an office in Croatia before placing the activities on the market.
3. What types of companies are available in Croatia?
4. What is the minimum share capital for an LLC in Croatia?
Limited liability companies in Croatia can be set up with a minimum share capital of HRK 20,000 or approximately EUR 2,700. As for the joint stock companies in Croatia, these can be established with a minimum share capital of HRK 200,000.
5. What are the main stages in a company incorporation in Croatia?
A company registration in Croatia starts with a name verification and reservation with the trade register. The next step involves drafting the Articles of Association which must contain information about the owners, the activities, the business address, the minimum share capital.
6. Can I open a subsidiary or a branch in Croatia?
7. How much time does it take to register a company in Croatia?
Companies in Croatia can be incorporated fast as soon as all the documents are provided to the authorities in charge. There are fewer formalities and foreigners benefit from the same conditions of incorporation as imposed for nationals.
Call us now at +385 95 9981 628 to set up an appointment with our consultants in Zagreb, Croatia. Alternatively you can incorporate your company without traveling to Croatia.
As a Law Firm Ivan Župan client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Croatia.
The team from CompanyFormationCroatia.com is very qualified and benefits from extensive expertise in this area. I would definitely recommend them to any entrepreneur decided to start his own business here.
Mihai Cuc, Partner of Enescu&Cuc; Law Firm www.romanianlawoffice.com