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Taxation of Investment Funds in Croatia

Updated on Wednesday 17th July 2019

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NameThe legislation related to foreign investments in Croatia is created in such a way that allows foreigners to have the same rights as domestic entrepreneurs, the mutuality standards being applicable from the start. The same goes for the investment funds which can be established by any international investor in Croatia. Because the incomes generated by investments come in the form of dividends, the taxation is made on dividends and capital gains. Our company formation specialists in Croatia are at your service if you would like to know more about the taxation of investment funds and about how you can register a company in Croatia.
 

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:
 
  1. The equity funds are the type of investment funds mainly based on stock investments, whether small or large.
  2. Index funds are meant to track specific indexes with values that depend on such indexes if they go down or up.
  3. The specialty funds are the type of funds focused on commodities, real estate and socially answerable investing, avoiding companies dealing with tobacco, alcohol, etc.
  4. The balanced funds are a mix of fixed income securities and equities with the target of returning as much as possible.
  5. 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 HRK 3 million. We remind that Croatia signed a series of double taxation agreements with numerous countries, therefore, the avoidance of paying the 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 are 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 the 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 of 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 and many cases, the business environment, and the 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 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.
 
We kindly invite you to find out more about the taxation of investment funds in Croatia and about how you can open a company in Croatia from our team of consultants. Feel free to contact us at any time.
 

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