Company formation in brief
Croatian legislation provides for the possibility of establishing enterprises of various organizational and legal forms in this country, however, a number of restrictions apply to a foreign investor. For example, foreigners do not have the right to establish their own business in Croatia as private entrepreneurs, and they also do not have the right to establish partnerships (although this restriction does not have a significant limitation in terms of tax planning, since partnerships in Croatia are subject to taxation on an equal basis with ordinary companies).
The practical interest of a foreign investor in Croatia may be aroused by the establishment of a closed limited liability company or open joint stock company, which have the following features:
- one person has the right to establish a company, and the maximum number of members is not limited;
- the subscribed capital is paid at the time of registration;
- the legislation allows the company to have only one director (resident or non-residents of Croatia), and the memorandum of association determines the maximum number of directors of the company;
- the only director of an open joint-stock company must combine his position with the position of president of the company for holding meetings and other administration of economic activities;
- all companies are required to maintain accounting records and submit periodic reports, which for an open joint stock company must be certified by a local auditor.
There is a variety of federal and municipal taxes imposed on Croatian enterprises.
Payment for services related to intellectual property, marketing, audit, tax and legal advice in Croatia is subject to withholding tax.
Property sales tax in Croatia is 5%.
Dividends received and paid by Croatian companies are exempt from taxation.
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