Having an appealing business climate and a legislation that sustains the investments in varied forms make Croatia a great destination for business for international and also local entrepreneurs. Opening an investment fund is not a difficult process, but it is advisable to respect the Act on Open-ended Investment Funds with Public Offering and the Alternative Investment Funds Act in Croatia. Our company formation agents in Croatia can assist you in opening an investment fund in Croatia and can take care of the formalities involved in matters of documents, licenses, approvals, etc.
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Opening UCITS in Croatia
UCITS or Undertakings Collective Investment in Transferable Shares are open-ended investment funds that can issue shares as long as there are calls on the market in Croatia. This kind of investment fund can be established by one or more investors or entrepreneurs where collective assets are invested and raised through public offering of units. The Croatian Financial Services Supervisory Agency or Hanfa is the supervisory body in charge of the ways the investment funds are established and developed in the country. Management companies in Croatia or legal persons can deal with the activities of UCITS in Croatia, mentioning that a written business cooperation agreement is needed in this case. The following information about UCITS might be useful for entrepreneurs wanting to establish such an investment fund in Croatia:
- The promotion of UCITS can be made with the help of newspaper advertisements, brochures, telemarketing, personal contacts, letters, etc.
- The management company is in charge of promoting UCITS in an accurate manner.
- UCITS are also regulated by the EU legislation on investment funds which is applicable to all EU countries.
- Any modification or even termination of UCITS must be directed to the entitled authorities (Hanfa).
If you need support for opening an investment fund like UCITS in Croatia, feel free to talk to one of our company formation specialists in Croatia.
Can I open Alternative Investment Funds in Croatia?
Yes, AIFs are available in Croatia and can be created by an investment fund manager with the purpose of raising capital through private and public offerings. This capital can be invested in all sorts of assets, with exclusive advantages to unit holders of the AIF. The Alternative Investment Funds can be opened in agreement with the Act on Open-Ended Investment Funds with Public Offering. The legislation of investment funds in Croatia might be complex, but it is good to know that the EU regulations and directives are applicable in this country. It is recommended to have the support of a specialist in company formation in Croatia and ask any question about how you can open an investment fund.
Short facts about the investment supervisory board in Croatia
The Croatian Financial Services Supervisory Agency or Hanfa as it is known in Croatia has concrete and complex activities concerning the investment funds available in this country. This is the regulatory body that oversees the ways in which the investment funds are registered, the activities on the stock exchange and the operations of management companies, investment advisors and brokers. The same authority that was established in 2005 respects the Act on Open-ended Investment Funds with Public Offering and the Alternative Investment Funds Act in Croatia, two important sets of laws under which the investment funds are established in Croatia. UCITS and AIFs are important investment funds which can be established in Croatia, in respect with the above-mentioned regulations and laws. The support of our company formation agents in Croatia is recommended for opening an investment fund in Croatia. Below you can find information, statistics and facts about investments and business in Croatia:
- • USD 1,159 million is the FDI inward flow for 2018 in Croatia;
- • according to UNCTAD 2019 World Investment Report, the total FDI stock was USD 32.8 million in 2018;
- • according to “2019 Doing Business Report”, Croatia ranks 58th out of 190 worldwide economies;
- • most of the foreign investments in 2018 in Croatia (29.9%) were directed to the financial services sector.
Types of investment funds in Croatia
The open-ended investment funds are the preferred types of investment funds for international entrepreneurs looking to generate profits and benefit from a solid and respected business climate. The following types of investment funds are at the disposal of those who want to do business in Croatia:
- • AIFs or the Alternative Investment Funds can be established as close-ended or open-ended investment funds for raising capital through public or private offerings instead of other assets.
- • UCITS are the Undertakings Collective Investment in Transferable Shares that work under the rules of collective assets of more than just one investor, foreign or local.
Mutual funds are at the disposal of investors who want to diversify their portfolios using the following types of investment funds:
- The equity funds are the type of investment funds mainly based on stock investments, whether small or large.
- Index funds are meant to track specific indexes with values that depend on such indexes if they go down or up.
- The specialty funds are the type of funds focused on commodities, real estate and socially answerable investing, avoiding companies dealing with tobacco, alcohol, etc.
- The balanced funds are a mix of fixed income securities and equities with the target of returning as much as possible.
- The fixed-income funds deal with fix rate investments on a regular basis.
For complete details about how you can open an investment fund in Croatia, please feel free to get in touch with one of our company formation representatives in Croatia.
What are the taxes for investment funds in Croatia?
The taxation of the above-mentioned funds involves the withholding tax applicable on dividends and profit shares at a rate of 12%. Also, the corporate income tax of 18% or 12% rate is applicable to close-ended and open-ended investment funds established as public limited liability companies in Croatia. As for the taxation of capital gains on the sale of shares in a close-ended real estate investment, this involves a tax rate of 12%.
In the case of domestic corporate investors in Croatia, the corporate income tax of 12% is applicable to profits not exceeding EUR 395,400. We remind that Croatia signed a series of double taxation agreements with numerous countries, therefore, the avoidance of paying taxes twice and having tax exemptions are possible and applicable. Feel free to talk to one of our experts in company formation in Croatia and find out more about how you can open an investment fund or about how you can start a business in Croatia. Also, one of our local accountants can tell you more about the taxation of investment funds and also about the tax minimization methods if needed.
Mutual fund fees in Croatia
The mutual funds in Croatia and anywhere in the world work under certain established principles when it comes to payable fees. For instance, the annual operating fees are called expense ratio which is calculated based on the administrative costs and management fee. These are normally established at the time the investment fund is created by local or foreign investors in Croatia. When purchasing or selling funds in Croatia, the stockholder fee comes in the form of commission, redemption fees or sales charges. Also, early withdrawals or selling might come with penalties and other fees.
There are many reasons to make investments in Croatia and set up varied investment funds, in many cases, the business environment, and taxation will play a major role. Below you can find some information and statistics about the business and the investments in Croatia:
- from 2000 until 2018, the foreign direct investments summed up to around EUR 403 million.
- around $60.81 billion was the GDP of Croatia in the past year.
- the financial services sector received around 29.9% of the total FDI for 2018.
- $1.15 is the tola FDI flow in Croatia in 2018.
What is the legislation controlling the investment funds in Croatia?
The Alternative Investment Funds Act and the Act on Open-Ended Investment Funds with Public Offering are two important legal frameworks that control the activity and the scope of investment funds registered in Croatia by domestic and international entrepreneurs. The management of investment funds in Croatia can be handled by different types of companies that can control alternative investment funds if such companies are registered in Croatia. UCITS or the Undertakings Collective Investment in Transferable Shares are the preferred investment funds in Croatia.
Why make investments in Croatia
The answer is quite simple and because there is a multitude of investment opportunities in Croatia in sectors like tourism, agriculture, IT and telecommunication, import and export, automotive, manufacturing, and many more. The attraction to the banking sector is quite visible, as there are numerous foreign banks that have branches and subsidiaries in Croatia, sustaining the financial sector in a large percentage. Being a competitive and appealing market, Croatia is open for business at any time and in any sector, letting international players benefit from tolerant legislation when it comes to investment funds in this country.
We invite you to contact our team of company formation agents in Croatia and find out more about how you can open an investment fund, and about how you can start a business in this state. Feel free to ask for complete information, prices and details about the needed company formation services in Croatia.