Pros for obtaining a property in Croatia Croatia is mature property market with a confirmed growth rate and a steady influx of tourists for around 5 months per year. It will become a part of the Eurozone in 2023 and has recently abolished their work permit quotas. The coastline of Croatia is 1,777.3 km long while its 1,246 islands and islets encompass a further 4,058 kilometres. The Adriatic sea is home to dolphins and just a perfect place for diving. As long as the Europeaners want to hang out during the vacation time - a lot of them mainly from Germany, Austria or Poland will always choose Croatia.
Residence permits on the grounds of owning real estate If you own a property in Croatia and get about the residence paperwork done, you can stay in Croatia for a total of 9 months a year. This kind of residence permit does not lead to and will never get you permanent residence or citizenship.
Residence permits on the grounds of company formation The must-haves to incorporate a company as a non-EU national are: hiring 3 EU citizens or croatians AND yourself full time, and investing 200,000 KUNA (around 30,000 USD) into business as startup capital. The shareholder must actually move to Croatia in the incorporation stage and proof the local address - otherwise the company may not be formed by the court. Additionally paying the state health insurance is necessary, and the relevant taxes must be paid. Company whose main business is renting out the apartment is bound to a state tax of 10% and the locally determined Company Income Tax which varies from place to place (tax paid in Dubrovnik will be different than tax paid in Split). Capital Gains Tax is 25% if you sell your property within 3 years after acquiring it, after the 3 year threshold period it is 0%. Officially there are no residence permits for retirees, but then with a good lawyer this type of residence can also be arranged. Obtaining a permanent residency (after 5 years of holding the qualifying temporary residence types) requires a language test which foreigners do not consider as a particularly hard one.
Other residence types in Croatia General options: "work", "volunteering", "student programs", "property", "scientific research", "other purposes". Another "new" option is to attain the "digital nomad visa". This may give you a certain amount of tax exemption as long as you prove you work remotely for an overseas company. All these options may require you to present the 12 month property lease contracts, proof of wealth on your bank accounts, criminal records and a general proof of your purpose of stay. All documents will have to be translated and apostilled before submitting to the local police station.
Which residence permits offer a path to permanent residency and citizenship? There are only two ways that will lead you to citizenship if you are not an EU national; you can be hired by a Croatian company with a proper labor contract or better - you can become the entrepreneur and form a local company. (You can also marry a local prince/princess).
Restrictions & Challenges The hardship is the citizens from certain countries are restricted to buy properties individually. Setting up a company is necessary to rent the apartment out. Renting out the apartment is bound to state tax of 10% and the locally determined Company Income Tax which varies from place to place (The tax in Dubrovnik will be different than the one in Pula). Capital Gains Tax is 25% if you sell your property within 3 years after acquiring it, after the 3 year threshold period it is 0%. Officially there are no residence permits for retirees, but then with a good lawyer this type of residence can also be arranged. Obtaining a permanent residency (after 5 years of holding the qualifying temporary residence types) requires a language test which foreigners do not consider as a particularly hard one.
Business-oriented environment, an efficient, innovative, highly qualified and multilingual workforce, cost competitiveness, an exceptionally favourable geostrategic position, attractive incentives as well as professional and free services provided to investors are just some of the reasons to invest in Croatia.
>Growth And Business Advantages
Tourism accounted for 25.1% of Croatia’s economy in 2019. The vital industry has been shaken over the past two years, and Croatia now looks to 2021 as a possible recovery – but the recovery is mixed and complex. While tourism for the full year is still drastically lower than in 2019, the peak months of the summer season saw tourism almost fully recover. When compared to the timeline of COVID restrictions and ease of travel, it seems that Croatian tourism will not take permanent damage from the pandemic and that 2022 will see similar numbers to 2019. However, the pandemic reduced overall tourism in 2020 by more than 50%, and in places like Dubrovnik, by over 80%. While the summer season showed that tourists were eager to return, Dubrovnik is a prime example of a city looking to change how it embraces tourists. The city has, following the pandemic, placed new emphasis on addressing over-tourism, local habitability, and sustainable tourism measures. The Unexpected Years of Croatian Tourism 2019 was an amazing year for Croatian tourism. As the year ended, the country recorded a record high of tourist visits and tourist spending. According to Statista, the number of realized tourist arrivals to the country in 2019 was 19.6 million, and the total number of tourist nights stayed was an incredible 91.24 million. Yet the COVID-19 pandemic countered this all-time high with the lowest tourist turnout in 20 years. In 2020, there were only 7.0 million realized tourist arrivals and 40.8 million tourist nights (though the bureau of statistics gives the total number at 54.4 million.) This “was 64.2% less arrivals and 55.3% less nights than in 2019.” Since then, 2021 saw the slow reduction of COVID waves, and a rapid vaccine rollout. While travel has become easier, there remain international travel restrictions, COVID passports and safe capacity limits. As of September 2021, only 9.0 million tourist arrivals have occurred. Data from the Croatian eVisitor system suggests that 55.3 million tourist nights had been realized as of August. Just these 8 months of 2021 have already exceeded the tourist nights from 2020 by several million. However, this is still drastically lower than the numbers from 2019. Total tourist arrivals are still under half their former total, while tourist nights are just over half theirs. Croatia is a modern economy, able to quickly adapt to all current challenges, with a focus on the future. Croatia is not only popular due to its natural beauty, world-famous inventors and some of the best athletes of today, it is also popular on account of its ease of doing business, excellent investment incentives, well-prepared institutional infrastructure, competitive workforce and excellent quality of life. Numerous foreign companies have recognized Croatia’s advantages. Some of these companies are globally recognized multinational corporations such as IBM, Microsoft, Oracle, Coca-Cola, Teva, Siemens and Ericsson. In addition to a booming traditional industry, services and trade, new business activities in the fields of digitalization, automation and artificial intelligence have also become very active. Young fast-growing companies in the field of Industry 4.0 have found their home in Croatia where they feel more than welcome. Strong institutional support for sustainable development and new technologies, membership in the European Union, low taxes, secure property rights and progressive regulatory policies make Croatia one of the most desirable destinations for any foreign investor. The Ministry of Economy and Sustainable Development is at your disposal for all questions regarding investing in Croatia. Pursuant to the Companies Act, domestic and foreign companies operate under equal conditions. A foreign investor may establish or participate in establishing a company and may acquire rights and/or obligations under the same conditions as any domestic investor. Foreign investors, with their registered head office or residence in a country that is not a member of the WTO, should satisfy condition of reciprocity. The Constitution of the Republic of Croatia stipulates several guarantees for foreign investors. In particular, it stipulates that all rights acquired by investing capital will not be limited by law or other legal act, and that foreign investors are guaranteed free transfer and repatriation of profits and invested capital. A foreign person who wishes to acquire ownership of real estate in Croatia has the right to do so only if there is a mutual possibility for Croatian persons to do the same in the foreign person’s country. This restriction does not relate to citizens and legal entities from EU Member States. Such persons acquire right of ownership of real estate under preconditions valid for exercising property rights by citizens of the Republic of Croatia and legal entities with their seat in the Republic of Croatia, except on exempted properties, i.e., on agricultural land determined by special law and protected areas according to special law. A foreign investor may establish a company in Croatia which, as a domestic legal entity, may acquire property without restrictions.
REAL ESTATE TRENDS
It's better not to wait to buy real estate in Croatia. - Croatia is getting ready to adopt the EUR. It joined the ERM2 mode for at least two years. During this time, the Croatian government will not be able to devaluate the Croatian kuna. We expect a significant appreciation against minor currecies Polish zloty and the euro, which in turn will make not only holidays in this popular destination relatively more expensive, but also real estate - says David Katrenčík, marketing manager and real estate broker at Rellox. - For example, Slovakia during the transition to the euro strengthened in 2005-2009 against the euro by more than 20 percent. Therefore, investors should not hesitate to buy relatively cheap real estate in Croatia now - he advises. How much do you need to buy a property on the Adriatic Sea now? - The prices of the real estate offered vary, of course, depending on the location, type, area or services offered. Overall, however, it can be said that the vast majority of properties in our offer are in the range from 2,000 to 5,000 euro/m2, says David Katrenčík.