Business and Personal Migration CROATIA

David Jakovljević, Tax & Legal Advisor, CROATIA

Croatia Brief statistical data (source: World bank & CRO and MN statistics bureau)

General Overview Croatia

Croatia Real GDP growth rates in %

General Overview Croatia

General Overview Croatia

Doing business scale - 189 Economies – World bank statisticsCroatia – 65th

Frequent obstacles for foreign investments - CROATIA

• Frequent amendments of legislation and overregulation (general problem of complying with EU directives compared to other World markets)

• Labor costs in terms of gross – net difference• Fear of future State Government policies due to

current situation State budget deficit of 4,1 % of overall GDP-Public debt amounts to 90% of GDP-Country’s external debt 108% of GDP

• Administrative and regulation obstacles are usually successfully bypassed by the investors if they are properly informed

General Overview Croatia

Attractive Investment Factors

• Access to EU funds (especially in agriculture) – from 2014 – 2020 Overall available amount is 10,676 billion € out of which

– - 4,3 bn € for regional l development– - 2 bn € for agriculture

• Renewables – governmental subsidies• EU single market 500 milion consumers + political

stability• Many governmental subsidies for opening new business• Strong historical and business connection with

neighboring countries i.e. Italy, Slovenia, Austria, Hungary and strong export presence in former Yugoslav Republics

• Food, Pharmaceutical and IT industry is very competitive

General Overview Croatia

Attractive Investment Factors - TOURISM

• One of the World’s top tourist destinations (10% growth in 2014)

• Over 13 million tourists and 73,6 million overnight stays• Political stability compared to competitive tourism markets

(Tunis, Morocco, Turkey, Greece etc.) + One of World’s lowest crime rate

• Coastline is excellently preserved compared to France, Spain and Italy as main EU and World competitors

• Coastline is 6278 km in length, (comparison: India has 7,517 km)

• 1244 islands and 8 UNESCO heritage sites• Highly developed infrastructure (Airports, highways)• Huge interest in hotels and land development in general

(golf course, camps, marinas generating high yield percentage

General Overview Croatia

Market entryCroatia

Market entryCroatia

TAX RATES

Market entryCroatia

BRIEF CORPORATE TAX EXEMPTIONS

Market entryCroatia

GENERAL LEGAL OVERVIEW

Labour issuesHiring new staff and work permits

David Jakovljevic, Tax & Legal Advisor, CROATIA

Minimum requirements for employment contract

Labour issuesCroatia

Labour issuesCroatia

Important notes on labour issues

Labour issuesCroatia

Important notes on labour issues

Residency issuesCroatia

• Croatian Foreigners Act is relatively restrictive on non-EU residents. – Depending whether it is within annual quota or outside annual quota

• Croatian government is issuing annual quota for non-EU nationals for work permits. For 2015 – only 215 permits for new hires, out of which in tourism – 106.

• Overal annual quota for exsisting permits is 1.500.• Relatively complicated procedure for work permits outside

annual quota.• Special procedure for highly educated workers - EU

regulation, any non-EU resident can obtain work permit provided that his salary is 1,5 of average salary of same occupation in CRO.

Residency Permits

Residency issuesCroatia

• Permits outside annual quota are available for:– Daily migrants under condition of reciprocity– Foreigners who conduct managing function in

companies, subsidiaries or representative offices*– Foreigners who are self employed in its own company or

craft having business share of 51% or more*– Foreigenrs who conduct business on behalf of foreign

company who does not have right of establishment in EU states

– Teachers who teach language of minorities admited in Cro, artists who work in cultural institutions, profesional sport players, university profesros who teach their native language, scientific reaserches emplyed in scientific workplaces

– Carriers of investment subsidies obtained by the Government (previous slide in tax relief).

Residency issuesCroatia

• *Foreigner who conduct managing function in companies, subsidiaries or representative offices (directors, managers etc.)– Initial share capital of the comapny is above HRK 100.000

(€13.227)– At least 3 Croatian citizens are employed– Gross salary of director amounts to Croatian average salary

(€ 1.271 gross)• *Foreigner who is self employed in his own company

or craft having business share of 51% or more– Investment of min. HRK 200.000 (€26.455)– At least 3 Croatian citizens are employed– Gross salary amounts to Croatian average salary (€ 1.271

gross)– Company is not generating loss.

Residency issuesCroatia

Important note for directors/owners of the companies who do not have work permit:• They can easily manage business from abroad• Bank payments and financial control can easily be done

from abroad• Companies usually appoint domestic person thru special

PoA if necessary for urgent signature of documents/contracts

• A1 certificate is needed in order to be exempted from CRO social security and tax payments.

Few words on Eurofast

Regional business advisory organization employing over 200 people in South East Europe & East Mediterranean.

Our team of professionals is capable of efficiently addressing all client needs in one single meeting, using one single language for all the countries in the Region.

Eurofast Profile

What we are good at…

Our Services

•International Tax•Mergers & Acquisitions and Transactional Advisory•Transfer pricing•Accounting services•Financial services•Outsourced Payroll and Employment solutions•Corporate services•Citizenship & Residency services•HR administration

•Banking and Financial services•Business Restructuring & Insolvency•IT specialized services•Tax Planning & Tax Compliance•Real Estate tax•Shipping Tax•Energy Tax•Intellectual property•market entry services

Bringing value to clients

with our service

Eurofast is Taxand Cyprus

Where can you find usSingle point of Contact, Many Points of View

▪ Lefkosia▪ Athens▪ Thessalonik

i▪ Sofia▪ Bucharest▪ Belgrade▪ Tirana▪ Skopje▪ Pristina▪ Banja Luka/

Sarajevo

▪ Zagreb▪ Cairo/

Alexandria▪ Podgorica▪ Kiev▪ Moscow▪ Tbilisi▪ Beirut▪ Erbil

Eurofast in numbers…

Over

200people across

South East Europe and East Mediterranean

21Offices in SEE

and East Mediterranean

5-35

Team members in every office

1Reference

point; 1 meeting

handles all!

Thank You!

Q & A

David Jakovljević, Tax & Legal Advisor, CROATIA