Croatia Info
Joined: 20 Apr 2007
Posts: 16
Home Country: croatia
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 Posted: Thu May 17, 2007 8:07 am Post subject: DOING BUSINESS IN CROATIA / CROATIA BUSINESS GUIDE |
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DOING BUSINESS IN CROATIA
STARTING A BUSINESS
STANDARDIZED COMPANY
Legal Form: Limited Liability Company
Minimum Capital Requirement: 20,000
City: Zagreb
Registration Requirements:
Procedure 1. Visit the single access point (HITRO) at FINA (Financial Agency)
Time to complete: 1 day
Cost to complete: No charge for FINA services; other costs listed under relevant procedure
Comment:
1. A founder decides upon the name of the prospective company. The employees of FINA check whether the name is available.
2. The employees of FINA provide the prospective founder with the required information, forms and payment slips.
3. The founder deposits the founding capital (min HRK 20,000), and pays court fees (HRK 400), publication fee (HRK 810), State Office for Statistics (Drzavni zavod za statistiku) fees (HRK 55).
4. The founder provides the employees of FINA with information as to the main business activity for the purpose of registering the company with the State Office for Statistics (Drzavni zavod za statistiku)
Procedure 2. Notarise memorandum of association
Time to complete: 1 day
Cost to complete: HRK 4000
Comment: Cost depends on the number of founders and founding capital. The Notary Public drafts the Deed of Incorporation/ Articles of Association of the prospective company, the Application for the Court Registry and Statement on Acceptance of the Appointment as the Director. On other documents the Notary Public verifies the signatures.
Procedure 3. Deposit incorporation documents at FINA for registration at the Commercial Court
Time to complete: 16 days (1 day for filing, 15 days for processing at the Commercial Court)
Cost to complete: HRK 400 (court fee) + HRK 810 (publication fee)
Comment: All required incorporation documents are submitted to employees of FINA who then submits them to the competent Commercial Court. This procedure can also be done directly at the Commercial Court. The Commercial Court registers the company with the court register in accordance with the Companies Act (Zakon o trgovackim drustvima). Registration is done based on the application form and documents required by law to be submitted. If all the conditions prescribed by law are fulfilled, the Court is obliged to register a company. Before the company is entered into the register, it may operate as "provisional company", upon adoption of the memorandum of association. The company automatically becomes a member of the Chamber of Commerce at registration. In April 2005, by amending the Court Register Act, the documentation requirements were reduced. Three different documents are not longer required; namely, the founder/s of the company do(es) not have to give a statement related to previous unsettled debts. It is also not necessary to submit a certificate of the Tax Office and Health and Pensions Insurance Funds with that respect.
The court forwards the registration data to the Official Gazette (Narodne Novine) of the Republic of Croatia and the daily newspaper (Vjesnik). According to the changes of Company law (effective as of 01 January 2004), it's obligatory only to have the registration data published in the Official Gazette, but the company can choose to publish the incorporation of company on the Vjesnik with a fee of HRK450.
In April 2005, by amending the Court Register Act (Zakon o izmjenama i dopunama Zakona o sudskom registru, Official Gazette 54/05), the statutory term of 15 days for deciding on any company registration, including registration of incorporation in the Court Register, has been introduced. No statutory term has been provided until that time. Further, the amended Act also introduced statutory term of eight days for amending and completing documents, after the court invites to execute such amendment or completion. The intention was to expedite registration of any kind in the Court Register.
Procedure 4. Have official seal made
Time to complete: 1 day
Cost to complete: HRK 150
Comment: Official seals are readily available throughout Croatia at special seal-making shops. A copy of the court decision on registration of incorporation should be presented in order to have the seal made. The seal itself contains the name of the company and the address of the official seat. The seal should be used on all official documents (including invoices, receipts and so on) issued by the company.
Procedure 5. Register with Statistical Office for activity code and matriculation number
Time to complete: 1 day
Cost to complete: HRK 55
Comment: The Company has to obtain Statistical File Number with the State Office for Statistics (Drzavni zavod za statistiku), in a form of "Information on classification of the business entity pursuant to the National Classification of Activities". The Statistical File Number can be obtained personally (in which case the procedure is completed on the same day) or by mail (in which case the procedure takes 2 weeks) or at the HITRO.HR centres. If given the appropriate Special Power of Attorney, FINA registers the company with the State Office for Statistics (Drzavni zavod za statistiku) and obtains the Statistical File Number in a form of "Information on classification of the business entity pursuant to the National Classification of Activities".
Procedure 6. Open a bank account
Time to complete: 2 days
Cost to complete: HRK 175
Comment: The Company has to open the Croatian Kuna (HRK) account with a bank operating in Croatia. One bank enables opening an account at HITRO.HR centres. Whether any fee is charged depends on the particular bank's business policy.
Procedure 7. Obtain Municipal certificate that environment and workplace safety laws are observed (Zupanijski Ured)
Time to complete: 20 days
Cost to complete: HRK 70 (revenue stamp) + HRK 200-300 (cost of each report depending on type of company's business activity)
Comment: Local authorities are entitled to levy a business names tax of HRK180-520 (with a maximum up to HRK 2,000). Zagreb local tax is 18%.
Procedure 8. Register with Porezna uprava (Tax Authority) for VAT and employee income tax withdrawals
Time to complete: 1 day
Cost to complete: no charge
Comment: Upon registration of the company with the Commercial Court Register and fulfilling the obligations with the State Bureau of Statistics, the company needs to register with the competent Tax Authority according to the registered seat of the company. Information is inserted directly into the computer system along with the entry into the register of corporate profit taxpayers. This procedure includes submitting the documents obtained from the Court Register and the State Bureau of Statistics.
The company whose total annual income exceeds HRK 85,000 must register itself as the entity within the VAT system of taxation to the competent Tax Authority, based on the Company's registered seat.
Procedure 9. Register with Croatian Pension Insurance Fund (Hrvatski zavod za mirovinsko osiguranjem, HZMO) or FINA
Time to complete: 1 day
Cost to complete: no charge
Comment: The company needs to register with the Croation Pension Insurance Fund within 15 days of incorporation. Companies must also register its employees within 15 days from the date of employment agreements. This procedure requires submitting certain documents regarding the Company (Decision on the entry of the company in the Commercial Court Register) and filling in official forms. No fees are required. If all the required documents are submitted, this procedure is completed on the same day. It can be done by mail, but first the company must collect the necessary forms from the authority. The procedure may be completed before the competent HZMO office or at the HITRO.HR centres.
Procedure 10. Register with Croatian Health Insurance Fund (Hrvatski zavod za zdravstveno osiguranje, HZZO) or FINA
Time to complete: 1 day
Cost to complete: no charge
Comment: The company needs to register itself with HZZO. The companies also needs to register its employees within 15 days as of the date of the execution of the Employment Agreements. Together with the registration of the company's first employee a company must register itself as a compulsory contributions payer. This procedure also requires submitting certain documents regarding the Company (i.e. Decision on the inscription) and filling in official forms. No fees are required. It can be completed within one day, if all the required documents are submitted. It can be done by mail, but first the company must collect the necessary forms from the authority. The procedure may be completed before the competent HZZO office or with HITRO.HR centres.
FORMS OF BUSINESS ORGANISATION
1. Public limited liability company
2. Partnership
3. Joint stock company
Foreign entities are allowed to establish the following types of companies, either alone or with domestic legal entities: public limited liability companies, limited partnerships, joint stock companies and silent partnerships. Foreign persons may acquire shares and ownership stakes in existing joint stock and limited liability companies.
TAXATION
Corporate tax
Profit tax rate: 20%
Resident companies pay tax on worldwide income, with a credit for foreign tax paid; non-resident companies pay tax only on Croatian-source income. An entity is resident for tax purposes if its legal seat or place of effective management and control is in Croatia. Profit tax is imposed at a flat rate of 20%. Dividends received by resident shareholders are exempt from profit tax.
Individual tax
Progressive rates rising to 45%
Resident individuals pay tax on worldwide income; non-resident individuals pay tax only on Croatian-source income. Income tax is payable at progressive rates rising to 45%, increased by surcharges imposed by the local governments. Dividends received by individuals are exempt from personal income tax. Individual entrepreneurs are subject to the profit tax if total revenue exceeds HRK 2m or if certain other conditions are satisfied.
Capital gains
Not subject to taxation
Capital gains derived by an individual are not subject to taxation in Croatia. However, capital gains derived by a legal entity are subject to profit tax. Gains derived by individuals from the sale of immovable property are subject to a 25% flat rate tax unless the property was owned for more than three years or the taxpayer lived in the property before the sale. Gains on intellectual property rights are also subject to the 25% flat rate tax.
Indirect tax
Standard rate: 22%
Value-added tax (VAT) applies to most transactions. Exports, basic foodstuffs, and certain agricultural and fishing products are zero-rated. Exemptions include housing rents and financial, insurance and medical services.
Registration is compulsory for businesses with an annual turnover above HRK 85,000, and voluntary registration is possible below this amount.
Tax administration and compliance
Tax year: Corporations: accounting year ; Individuals: calendar year
Companies make monthly advance payments of tax, based on the previous year’s tax return. The tax return must be filed within four months of the end of the period. Employment income is taxed by monthly payments. Individuals that receive non-employment income must file a tax return by February 28th following the tax year.
Additional tax information
Withholding taxes: Dividends 0%, Interest 15%, Royalties 15%. Rates may be reduced by double tax treaties.
Tax treaties: Croatia has signed more than 25 double tax treaties, and also applies nine treaties concluded by the former Yugoslavia.
Dividends: Not taxable.
Revenue protection: There are transfer-pricing and thin-capitalisation rules.
Groups: There is no provision for group treatment.
Incentives: Investment incentives; free zones; areas of special national concern; entities carrying out research and development activities; international shipping activities; mountainous areas of Croatia.
Other taxes: Inheritance and gift tax, Firm tax, Advertising tax, Local surcharges, Consumption tax, Public utilities tax, Excise taxes, Tax on transfer of immovable property, Taxes on luxury goods. |
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