13 Benefits of Setting Up Business in Croatia
3 Top Reasons To Start Business in Croatia
- Croatia adapts EU currency
- Croatia joins Schengen Area
- Croatians have no visa requirement to enter USA
1. Adapting EU currencyCroatia became the 20th country to join and become a part of the eurozone on January 1, 2023. The local currency, the kuna, has been replaced by the euro. With a single currency, the country hopes to strengthen and stabilize its economy and raise the standard of living for its citizens.
2. Joining the Schengen AreaThe biggest reason for opening up a company in Croatia is its admission to the Schengen Area from January 1, 2023. The Schengen Area is a grouping of 27 European countries that have officially abolished all forms of border control at their mutual borders. This opens up a lot of aspects for business in Croatia now.
3. Croatians have no visa requirement to enter USAAs of 2021., Croatia has become one of the 40 countries in the world that have no visa requirement for their citizens to enter the USA, so visa is also not required for US residents to enter Croatia, which has strengthened the partnership and preconditions for greater economic cooperation and investments. Among Germany, Switzerland and Great Britain Croatia is now 4th European country that entered “Global Entry”.
Quick Look at Incorporation Procedure In Croatia
First, the name must be unique and verified by the Croatian Financial Agency. If the name is good enough, the founder members should notarize the association letter or organizational agreements, the court registration application, and the director’s statement of acceptance. All of these documents must be submitted with an official Croatian translation. The next step should be to open a bank account and deposit the initial investment which is now 2500 EUR for limited liability company (d.o.o.). After submitting all required documents, the company is registered as a Croatian Chamber of Commerce member.
Tax registration is also required for the administration of VAT and income taxes. This application should be submitted to Croatian Tax office to obtain a one-of-a-kind tax identification number. The final step is to register the company with the Croatian Institute of Health Insurance and the Croatian Pension Insurance Institute within 15 days of the incorporation date.
More reasons for doing business in CroatiaIf you need more reasons to invest in Croatia, you should know that the country offers plenty of possibilities. Discover in this article some of the solid reasons why Croatia should be on the list of foreign investors looking for safe destinations for business development.
4. The economic stability, a strong point of CroatiaA foreign investor will primarily seek economic stability before starting a business in a constantly changing climate. Croatia offers such security and is one of the safest countries in the world. An appropriate balance is also offered by the political stability of this country, an important factor in the decision to do business. In 2022, Croatia joined the club of 15 countries (Belgium, Estonia, France, Greece, Germany, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Portugal, Slovakia, Slovenia, Spain), which are simultaneously members of the main integrations on the continent – the EU -, the eurozone, the Schengen area, NATO.
5. A young, active, and experienced workforce is another asset of Croatia.Another reason why Croatia is preferred among foreign entrepreneurs is the experienced workforce. According to figures for 2020, the workforce represents about 62% of the total active population. In addition, the labor costs are affordable for local and foreign business people.
6. Investment reports reveal the confidence in doing business in Croatia.Croatia has experienced many periods of economic development, and experts in the field have highlighted the qualities and attributes for which this country deserves to be on the list of those with high potential for return on investment. Here are some figures and statistics:
- The Netherlands, Italy, Austria and Germany are the major investors in Croatia
- The 2020 Doing Business report issued each year by the World Bank ranked Croatia 63rd out of 190 worldwide economies in matters of simplified business and more.
- The European Commission estimates the Croatian economy will grow 3.0 percent in 2023.
- Moody’s Agency raised Croatia’s rating by two levels, to ‘Baa2’, Standard & Poor’s agency increased Croatia’s long-term and short-term ratings to ‘BBB+/A-2’, Fitch Ratings in an extraordinary assessment raised Croatia’s credit rating by one level, to “BBB+.
- In 2022 – In this year’s report of the IMD World Competitiveness Center, Croatia ranked 46th out of 63 world economies, which is an increase of 13 places compared to last year (the highest growth of all countries measured).
- The corporate tax rate is 18%. A reduced corporate tax rate of 10% applies for small businesses with annual revenue up to approx. 100 000 EUR.
- Quality of life
7. The geographical position of Croatia, an important business benefitCroatia offers easy access to important markets in Asia, Western, and Eastern Europe on well-known channels: land, sea, and air. For example, there are no issues or restrictions on market access in America or Australia. In addition, the multiple sports exits to the Adriatic Sea simplify things for business people interested in import and export activities.
8. Profitable business in strong industriesTourism is an extremely important sector for Croatian economy due to the multiple possibilities and profits generated each year. Prediction for 2022. Say the income will cross 11 billion, which shows significant growth after 8 billion in the highest measured year 2019. so investment in this sector is highly recommended. The pharmaceutical, food, manufacturing, IT and agriculture, and automotive industries are among the most attractive areas in terms of foreign investment.
9. The taxation regime is appreciated in Croatia.Another reason why Croatia is the ideal business destination is due to the favorable tax regime. Companies can pay corporate tax of 12% or 18%, depending on the income. However, for new businesses, it is possible to have an even lower tax than 12%. The standard VAT in Croatia is 25%, but there are also lower rates, up to 5%, for various products and services.
10. Incentives for foreign investors are attractive.International investors need to benefit from incentives and various aids. The Croatian government supports entrepreneurs in developing a business in optimal conditions. Financial incentives or tax breaks are offered for those who create jobs in Croatia.
11. Croatia has signed a large number of treaties to prevent tax evasion.The importance of double taxation treaties offers confidence and support for foreign companies in Croatia. This avoids double taxation of profits but also tax evasion.
12. Businesses can be registered very easily.The ease with which a company can be set up in Croatia is another strong point offered to foreigners who want to develop their business in this country. Simplifying a company’s registration procedures is essential and encourages foreign business people to choose this country for various investments and activities.
13. Croatia offers excellent standards of living.Croatia is one of the countries with an excellent climate, a history, and a culture appreciated worldwide, respected traditions, and high quality of life. In this context, it is natural for Croatia to be part of the list of countries with great potential for business development and a simple, calm way of living.
Additional Helpful Information To Give You a Headstart
What Kinds Of Business Entities Can I Open In Croatia?
- Limited liability company (d.o.o.),
- Simple limited liability company (j.d.o.o.),
- Joint-stock company (d.d.),
- Economic interest grouping (g.i.u.)
- General partnership (j.t.d.)
- Limited partnership (k.d.)