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Questions and Answers about real estate business in Croatia
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Real estates in Croatia: Questions and Answers
FAQ's about Properties
CAN FOREIGN CITIZENS BUY PROPERTY IN CROATIA?
WHAT IS CROATIAN MINISTRY OF FOREIGN AFFAIRS APPROVAL?
WHAT REQUEST TO CROATIAN MINISTRY MUST CONTAIN?
WHAT FOREIGN CITIZENS CAN NOT ACQUIRE?
HOW MUCH COST SET UP A COMPANY?
HOW MUCH DOWN PAYMENT SHOULD BE PAID?
IS IT POSSIBLE TO CONCLUDE AND VERIFY A SALES CONTRACT ABROAD?
WHO PAY THE REAL ESTATE PURCHASE TAX?
WHEN MUST THE REAL ESTATE PURCHASE TAX BE PAID?
DOES THE SELLER HAVE TO PAY TAXES?
ARE THERE ANY RESTRICTIONS ON TAKING MONEY OUT OF CROATIA?
WHAT ARE CROATIA TAX ADVANTIGES
Q. CAN FOREIGN CITIZENS BUY PROPERTY IN CROATIA?
A. Yes. Ownership of real property of foreign citizens in Croatia is regulated by Croatian Law on Property Ownership and other Real Rights. Real property can be acquired by sale, exchange, inheritance, gift, putting into or taking it out of a company, liquidation or bankruptcy procedure, pursuant to judicial decisions or any other transfer of the ownership of real property.
Foreign citizens have two ways of purchase real estates: as an individual or as a Croatian company. As individual, foreign citizens can acquire property in Croatia by legal transactions after Croatian Ministry approval.
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Q. WHAT IS CROATIAN MINISTRY APPROVAL?
A. The Croatian Ministry of Foreign Affairs give permission to purchase a property in Croatia, after seek an opinion from the Ministry of Justice, Administration and Local Self - Government.
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WHAT REQUEST TO CROATIAN MINISTRY MUST CONTAIN?
The request must contain the following enclosures:
- Legal basis for the acquisition of the property;
- Seller's proof of title;
- Original certificate issued by the authorities of the local administration responsible for urban planning;
- Proof of citizenship for the Buyer, or proof of the status of a foreign legal entity;
- Proof of citizenship for the Seller (a copy of his ID or passport will do);
- If an attorney is involved, it is necessary to submit the Power of Attorney;
- Non-legalised copies of all the enclosed documents
In addition to these documents, it is also necessary to enclose the proof of payment for the administrative fees.
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HOW MUCH COST SET UP A COMPANY IN CROATIA?
Set up company cost 1800 euro plus initial working capital which is going to be reclaimable as soon as the company is in operation.
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WHAT REAL PROPERTY FOREIGN CITIZENS COULD NOT ACQUIRE?
There are areas in the Republic of Croatia in which foreign citizens may not acquire ownership of real property, like the excluded areas (Art. 358 para 1 of the Law on Property Ownership and other Real Rights), agricultural land (Art. 1 para 3 of the Agricultural Land Act), protected natural areas (Art. 40 para 3 of the Nature Protection Act), forests and forest land (Art. 1 para 3 of the Forests Act).
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Usually is 10% of the sales price.
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IS IT POSSIBLE TO CONCLUDE AND VERIFY A SALES CONTRACT ABROAD?
Yes, In such a case it is the best to have it verified in a Croatian embassy or consulate, or you can give 'Power of Attorney' to a trusted person or a legal body in Croatia to sign the papers and act on your behalf in all matters relating to your purchase.
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WHO PAY THE REAL ESTATE PURCHASE TAX IN CROATIA?
The tax is paid by the person that is acquiring the real property:
- through sale: the purchaser
- exchange: each participant in the exchange,
- acquisition of an ideal, joint-ownership part: each person that acquires an ideal part separately,
- by inheritance or gift: the heir or recipient.
The Republic of Croatia has a unified tax rate of 5% for land and for properties built before 31.12.1997. New properties incurred VAT set at 22% on the building portion of the house.
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WHEN MUST THE PURCHASE TAX BE PAID?
After conclusion of the sales contract the customer is obliged to register the purchase at the authorized tax authority within 30 days from the day of conclusion of the contract.
DOES THE SELLER HAVE TO PAY TAXES?
No. Except in case the real estate is sold prior to the expiration of three years after it has been purchased.
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ARE THERE ANY RESTRICTIONS ON TAKING MONEY OUT OF CROATIA?
None. Most banks have internet banking facilities for your convenience. You or your Croatian company can have an account in euros or dollars rather than local currency kuna.
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WHAT ARE CROATIA TAX ADVANTIGES
These are exempted from the tax:
- bodies of national government and local government, public
institutions, foundations, the Red Cross and similar charitable
organisations founded according to special regulations, - foreign embassies and consulates on condition of reciprocity,
and international organisations, - people acquiring real property during the process of the giving
back of confiscated property, and the land consolidation of real
property, - displaced persons and refugees who acquire real property
through exchanging real property abroad, - citizens who purchase a residential building or a flat (including
land) to which they had tenants' rights or with the consent of the
person owning the tenants' rights according to the regulations
through which the sale of flats with tenants' rights is governed. The
same thing goes for protected tenants who buy a residential building
or flat in which they are living on the basis of a lease, - persons who acquire real property in line with the regulations
that govern the transformation of public ownership into other forms
of ownership, - persons who acquire real property according to a contract for
lifelong maintenance, the heirs being in the first line of descent with
respect to the giver of the real property, - persons who acquire certain special parts of a building by the
breaking up of joint ownership or the division of common ownership
of property, up to the value of their joint property, or the common
property before the split.
If real property is put into a company as a founding stake or for
the sake of increasing the founding capital in line with the
Companies Law, real property transaction tax is not paid. Nor is tax
paid if real property is acquired in the procedure of merging or
taking over companies or splitting them up into several companies.
Individuals and companies can enjoy considerable advantages and tax savings by intelligently structuring their acquisition and holding of real estate. We provide professional advice essential to the purchase, structuring, sale and rent of real estate in Croatia.
Croatia also offers important tax advantages to boat owners. As it is not as yet an EU member, Value Added Tax can be avoided if resident in Croatia.
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