Croatia

CROATIA CONTENT

Content
Croatia General Information .................................. 3
Craoatia and European Union............................... 6
Traffic Infrastructure .............................................. 7
Labor Force ........................................................... 17
Economy ................................................................ 18
Real Estate Market................................................ 20
Legislation ............................................................. 24
Foreign Investors ................................................... 25
Taxation System .................................................... 29
Craotian tourism – overview................................... 31

Dubrovnik

CROATIA GENERAL INFORMATION

The exceptional geographic position, mild Mediterranean climate
and culture, finished transitional processes and developed
markets, together with a clear European commitment and
orientation are the main reasons which make the Republic of
Croatia an attractive and wanted country for all types of
investments. According to social advancement Croatia is the
leading country and the main factor of the political stability in the
region, well-recognized among partners and institutions.

Millions of tourists visit Croatia yearly and the number
continuously increases, which is the best fact that confirms the
attractiveness of Croatian tourism and hospitality business, and
the most construction and sale of real estate. Croatia is a recently
discovered heaven for tourists around the world. Due to its
untouched nature, exceptional beauty of the coastline and pure
Adriatic sea, rich cultural heritage and gastronomic delights
Croatia is one of the most wanted destinations for the ones
looking for peace and rest on a mild Mediterranean climate.

Split’s Old Town

3


The past years have marked an increase in the investment of
foreign investors who value the quality of life, and many have
decided to move to Croatia with their families. Current laws open
numerous entrepreneurial and investment opportunities in
production, sales and services. The most important fact that
makes the investments prospective and fertile is the ongoing
market increase, due to positive national politics towards open
markets. The state for some time is methodically disburdening
the administration and restructuring its judicial system to make it
compatible to the legal European system.

The future for Croatia is a new stronger judicial system, to attract
additional investments and ensure their security and continuity.
Croatia is an investment Mecca since it consolidates the
attractiveness of a new Mediterranean country which recently
reached a democratic exchange of people, goods and services,
successful economic transition and a political multi-party
transition. The processes which were to bring Croatia into a
recognized and a stable state are finished and it is heading
alongside with Europe. It is quite a short way within reach.

Korcula

4



Land surface: 56 594 km2
Surface of territorial sea and domestic sea: 31 067 km2
Population - estimated in mid-2006: 4 400 000
Population density (per km2): 78.5
Population in City of Zagreb in mid-2006: 784 000

Territorial structure as of December 31st 2007:

Counties: 21
Cities: 127
Districts: 429
Settlements: 6 749
Gross Domestic Product per resident: 11 545.94 USD

Map of Croatia

5

CROATIA CROATIA AND THE EUROPEAN UNION

The Republic of Croatia was proclaimed as independent 2007 proved the political continuity that has kept the
and democratic country in 1990. Croatia's political structure position of the ruling Democratic Party, in coalition with the
is defined as a parliamentary democracy and is a member social liberals. Today the country moves towards full
of the United Nations since the May 22nd 1992, and now is membership in the European Union and is constantly
a candidate for full EU membership. Croatia has received working to meet all mandatory requirements to strengthen
an invitation for full NATO membership on the 3rd April its democracy, improve its legislation, stabilize the economy
2008. and to achieve economic growth. One of the main tasks is
the reform of the Croatian judicial system and public
It is a politically stable country. Parliamentary elections in sectors, such as the fight against corruption.

6

CROATIA TRAFFIC INFRASTRUCTURE

TRAFFIC INFRASTRUCTURE

Traffic in the Republic of Croatia is yet to reach the level of
utilization and construction quality that is characteristic of the
countries in immediate European environment, but a significant
improvement has occurred in this field over the last several
years.

Infrastructure, which includes traffic as one of its more important
elements, is the object of direct government interest, so its
development greatly depends on the actions of governing bodies.

STRUCTURE OF PASSENGER STRUCTURE OF PASSENGER
TRANSFER BASED ON THE TYPE TRANSFER BASED ON THE TYPE
OF TRANSPORTATION IN 2007. OF TRANSPORTATION IN 2007.

by sea and by sea and
coastline coastline
9,1% 25,9%
by road by roads
45,1% 53,4%

by railroad by railroad
44,2% 12,6%

by air 1,6% river 0,3%

7


ROAD TRAFFIC

After its independence, Republic of Croatia has recognized the
process of constructing a complete road network as a strategic
condition of its economic development, and due to the fact that
very little was built between 1990 and 1998, the last decade saw
that process intensify a great deal. These days, Croatia
possesses 28.123 kilometers of public roads, and 6.823
kilometers are state roads. As far as main-road corridors are
concerned, 593 kilometers of high-level roads were built from
1970 to today – 417 km of highways, 72 km of semi-highways
and 104 km of fast roads.

The overall number of 1147 kilometers of highways and semi-
highways are now present in Croatia, while several hundreds
kilometers are currently in the process of construction.

A1 Zagreb-Split-Dubrovnik 571 km
A2 Zagreb-Macelj 60 km
A3 Bregana-Zagreb-Lipovac 305 km
A4 Zagreb-Goričan 97 km
A5 Beli Manastir-Osijek-Svilaj 89 km
A6 Bosiljevo-Rijeka 81 km
A7 Rupa-Rijeka-Ţuta Lokva 108 km
A8 Istrian “Y” Corridor: Kanfanar-Matulji 64 km
A9 Istrian “Y” Corridor: Kaštel-Pula 84 km
A10 Mali Prolog-Ploče; 8km
A11 Zagreb-Sisak; 48 km
Overall: 1514 km

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At the moment, highways are being developed proportionally to
the increase of traffic demands – new rest stops and junction
points are being built, while some sections are in store for
capacity increase by adding another traffic lane.

The most important highway is undoubtedly the Zagreb-Split
section, which is 380 km long and was finished in June of 2005.
Its significance is reflected in the fact that it represents a traffic
connection between Croatia and the Northern and Central
Europe. The A1 Highway will connect the continental area to
Dubrovnik, as it is already built till Šestanovac, while the section
towards Ploče is currently in the construction process. Its
continuation towards Dubrovnik is still in the projecting phase, but
it is expected to be completed by the end of 2009.

A1 Highway accros Maslinica Bay

9


RIVER WATERWAYS

Traffic on the continental waterways is still not fully utilized as a
reliable, profitable and ecologically acceptable traffic method for
medium and long distances, but connecting the river-traffic
corridors to the Adriatic harbors remains a strategic goal.

Croatia mostly has international waterways, while the overall
length of its river waterways is 804 km. At the moment, Croatia
has four river harbors – Osijek, Sisak, Slavonski Brod and
Vukovar.

Croatian river waterways are connected to Amsterdam,
Rotterdam, Duisburg, Brussels, Paris, Strasbourg, Munich,
Vienna, Budapest etc.
There are several shipping companies in our country, as well as
a large number of concession holders in the harbor area.
Compared to the EU countries, which transport between 6% and
24% of cargo by river waterways, Croatia only manages to reach
the 1,5% figure. There are plans for adaptation and additional
building of continental waterways, which leaves plenty of chance
for improvement and development. Some of the more important
projects in the field of river waterways include the Vukovar Port on Danube River
reestablishment of the Danube-Sava canal, as well as the
construction of a new harbor in Vukovar.

10


SEA HARBORS

Croatia has six harbors of national importance – Rijeka, Zadar,
Šibenik, Split, Ploče and Dubrovnik, but only two of them (Rijeka
and Ploče) have the Pan-European traffic support in road and
railroad corridors.

Thanks to their position on the Adriatic Sea, which is positioned
very deeply in the European continent, and thanks to their
favorable traffic characteristics, Adriatic harbors have always
attracted transitional cargo traffic from the countries of Central
and South-Eastern Europe.

However, certain changes within the countries that gravitate
towards Croatian harbors have led towards the drop of Croatian
cargo traffic, although today’s situation indicates constant growth
in passenger traffic, and a slightly smaller growth in cargo traffic,
in all Croatian harbors.

Rijeka Port

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Over the course of the last decade, there has been a significant
improvement of the highway network in Croatia, which
strengthened the connections with European airway and road
corridors. These factors, along with the increased pressure on
some of the Italian harbors, transform Croatian harbors into
extremely attractive and permanent destinations in international
tourism and cruiser traffic.

According to our statistical information, Rijeka is the largest
harbor in the Adriatic with over 13 million tons of cargo in 2007,
and there are plans to bring further improvement and
modernization that would activate other Croatian sea harbors.
2007 saw the increase of a number of passengers (12 million
people), coastal transportations have been increased for 5,3%,
while cargo transportations are 3,2% higher than during the same
period in 2006.

The completion of the planned projects, which primarily intend to
bring quality road and railroad sections near our harbors, would
significantly increase the competitiveness of Croatian harbors. As
an example – Ploče was declared a harbor of special
international economic interest, and is now poised to slowly
transform from the traditional cargo transportation harbor to a
prolific distribution and logistic platform.

12


AIRPORTS IN CROATIA

Seven airports in Croatia possess taking off/landing mechanisms
that can accept conventional airplanes without practically any
limitations, which provides them with the status of international
airports. Two of them are located in continental Croatia (Zagreb
and Osijek), while five of them can be found on the coast (Pula,
Rijeka, Zadar, Split and Dubrovnik).

Eleven smaller airports are also registered (for airplanes up to 50
seats or smaller airplanes), the first four of which are
international: Brač, Lošinj, Osijek-Čepin, Vrsar, Lučko, Varaţdin,
Čakovec, Sinj, Grobnik, Otočac and Ploče.

Ten international airports present nearly 1 percent of world
infrastructure, while according to passenger transportation,
Croatian airports and smaller airports participate with about
0,005%.

Croatia Airlines is our national airline company.

Major Airports in Croatia

13


ZAGREB – The Pleso Airport is located about 15 kilometers
south from Zagreb, in a settlement called Pleso near Velika
Gorica. It is the biggest and the most important Croatian airport.
During 2007, Pleso Airport registered a 15%-increase of
passenger transportations compared to the year before. During
the Sunday morning of December 16th 2007, the Zagreb Airport
achieved the record for passenger transportations in its long
history – the 1979 record, which featured 1.917.000 passengers,
was beaten. By the time this year is over, almost 2 million
passengers will have passed through the Zagreb Airport.

ZADAR – It is located in a settlement called Zemunik Donji,
which is about 7 kilometers east from Zadar. This airport is an
important factor in the process of connecting northern Dalmatia
and Lika to the other parts of Croatia and the world. Due to the
recently established airlines in early 2007, the building for
passenger terminals was additionally expanded, which enables
the Zadar Airport to now receive a much larger number of
passengers. Zadar Airport facilities also include Lufthansa’s
InterCockpit school of flying.

SPLIT – This airport is located near Kaštela (6km from the
centre), Trogir (6km) and Split (25km). It was opened in 1966,
and the number of passengers continually grew until 1988. The
airport was shut down due to the war in 1991, but was soon
reopened in April 1992. These days, it stands as one of the more
important connections between Dalmatia and the rest of Croatia
and the world.
Zagreb and Split Airports

14


DUBROVNK – This airport is one of nine Croatia’s airports. It was
built in 1936 in a little town called Gruda in Konavli. It was shut
down during the Second World War. In 1960, the airport was
transferred to today’s location, which is in Čilipe. During the
Serbian aggression on Croatia, the airport was completely
demolished and its entire property was robbed. The
reconstruction works have only just been completed in 2006.
These days, it stands as the second most important airport in
Croatia, right behind Zagreb.

RIJEKA – This airport is actually dislocated from the city itself
and can be found on the island of Krk, which is 17km from the
centre of Rijeka.

OSIJEK – This airport is one of the nine bigger airports in
Croatia. It is located alongside the regional Osijek-Vukovar road,
while being 20 kilometers from the centre of Osijek. Besides its
primary purpose of receiving and transferring passengers, goods,
mail and things, the Osijek Airport also provides shopping,
restaurant and medical services, as well as the airplane-taxi etc.

PULA – this is one of nine Croatia’s airports. It existed in the form
of an airport on grass even prior to World War II, while becoming
a civil airport in 1967. The largest number of passengers came
through this airport in 1990, and expectations reach up to 720
000 passengers by 2010.

Dubrovnik and Pula Airports

15


Some of the operators and companies that land to the majority of
Croatian airports are: Air One, Aer Lingus, Austrian Airlines,
Airways, Centralwings, Clickair, Croatia Airlines, Darwin Airline,
Dubrovnik Airline, Estonian Air, Flybe, Flyglobespan, Flylal,
Germanwings, Iberia, Jetairfly, Lufthansa, Norwegian Air Shuttle,
SkyEurope, Thompsonfly, TUIfly, and others.

Because the program of European Union members puts a great
deal of emphasis on traffic infrastructure, it is only logical that the
development of essential traffic infrastructure like highways,
railroad corridors, harbors, airports and waterways is
undisputable and of primary importance. Observing all these
segments individually would be incorrect, as the context
demands for them to be viewed as one common picture. The
current priority is to activate the river waterways, which are very
appreciated and represented in Europe, and that is bound to
result in further improvements within the economic sector.

“Croatia Airlines” – Croatian National Airliner

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CROATIA LABOR FORCE

LABOR FORCE

As far as the labor force’s scale of quality and education goes,
Croatia occupies one of the leading positions in South-Eastern
Europe. According to the statistics, only one of 25 unemployed
people has a college degree. According to the income statistics,
Croatia is also near the top of its region.

In comparison to Europe, the competition on the Croatian labor
force market remains relatively flexible, as numerous
organizations some positive results in their efforts to attract
foreign investors that secure competition on the market. It is
expected that the situation on the job market will get better as
Croatia enters the EU.

New building of Economics College in Split

17

CROATIA ECONOMY

ECONOMY

Croatia’s largest export partners are Italy, Bosnia and
Herzegovina, and Germany, while the biggest import partners are
Italy, Germany and Russia.

The state of the economy is typical of a country that has been
through a transition from communism. Although the process of
privatization has occurred, main problems appear in the form of
large unemployment and inadequate economic reforms. Around
230 000 people were unemployed in Croatia during May of 2008,
which represents about 13,2% of the overall labor force. Another
big problem lies in the differences of standard and development of
individual parts of Croatia. This is demonstrated by the fact that
the GDP of a Zagreb resident is about three times bigger than the
average GDP in the entire country.

Tourism is an extremely important economic branch for Croatia.
According to statistical results, tourism was responsible for about
20% of Croatia’s GDP. Industry creates about one-fifth of the
GDP, while providing jobs for every fourth working resident of
Croatia. Agriculture, forestry and fisheries contribute with around
7,2% of the GDP. Over the last several years, the construction
business creates around 5,7% of the GDP. Distributive trade
provides jobs for about 15% of working Croatian citizens while
creating around 37% of overall income and 17% of overall
investments.

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CROATIA ECONOMY

Croatia’s path depends on the correlation of two important
factors – growing involvement in European ways and integration
processes of the world, which enable positive improvements in
the private sector.

After achieving a significant economic growth of 5.8% during
2007, statisticians are predicting the stabilization of that growth to
the satisfying 4.9% in 2008, as well as in following years. Some
of the main reasons for this stabilization are the post-election
period, which normally provides political safety and stability, as
well as the anticipated 2%-downfall of consumption.

Further reasons for the stabilization of economic activities in
Croatia are revealed in the slower pace of development in other
countries of the region, especially those in Europe, as well as in
the reduction of buying power all over the world – which is
caused by stronger inflations and reduced overall credit activities.
Monetary politics and demands from the European Union are
bound to also leave a trace.

19

CROATIA REAL ESTATE MARKET

SUPPLY

As the capital of Croatia, Zagreb is our biggest and most
prosperous city and the fastest growing and most developed real
estate market in the country.

Over the last several years, prices of residential units have gone
up and down which is mostly caused by the constantly small
supply. The city is still interesting to local and foreign investors,
but the demand for residential capacities shows signs of a
downfall. The market is mostly dominated by large companies
serving as investors, so now the market is filled with large
residential projects on the city outskirts and alongside important
traffic roads, while still being fairly close to all the city traffic and
other infrastructure.

The problem on the market can be identified in the lack of high-
quality residential units, because the market rapidly grew and
became more sophisticated so that now it sets higher standards.
That is the reason why future projects will likely be directed
towards achieving quality.

20

CROATIA REAL ESTATE MARKET – EU & CROATIA

At this point, the European market does not have a high especially if we take into account the increase of foreign
percentage of residents who are owners of residential interest in Croatia, expected Croatian membership in the
units, rental housing is a common occurrence. However, in European Union, and the "migration" of the population to
Croatia the number of owners of residential units is larger cities and regional centers.
surprisingly high - as much as 85% of residents are also the
owners of units, which has a lot to do with the lifestyle of Over the years, strong demand was partly met by building
local residents. the so-called government apartments, which provided
opportunity for young families to solve their housing needs
Over the past few years, it has become very noticeable that with subsidized prices and soft housing loans. But this
the demand outstrips supply in the housing market. It is helped only a fraction of the population like the ones with
assumed that such situation is caused by the growth of lower standard, so that now we expect supply and demand
opportunities that are provided to customers such as the for real estate to stabilize. According to some surveys,
relatively easy access to credit lines. It is therefore very about 7% of people in larger cities plan to solve their
likely for the market to stabilize and increase prices again, housing issue in the near future.

21

CROATIA REAL ESTATE MARKET – DALMATIA

Housing market has reached a maturity level that now The whole of Croatia, along with most buyers and investors
requires quality housing units, as well as more detailed in this market segment, relies on the local population.
approach to the market and the process of planning and However, in the 2009 by regulation of the bureaucracy and
construction. This led to a more stable market situation legal issues for foreign investors and customers we
which is more favorable for buyers than investors, and this achieved much more in demand from the foreign countries
resulted in a slowdown of growth and stabilization of prices. and further positive effect is expected when Croatia
Construction of new housing is still very active, and becomes an EU member, which is expected in 2012.
dominant housing markets are still developing, including
cities such as Zadar, Split and Dubrovnik.

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CROATIA REAL ESTATES PROGNOSIS

PROGNOSIS  With a catchment area of 600 million people within a three hour
flight of Croatia, the growth of low cost airlines flying to airports
A slight further growth of a number of construction projects is located on the coast is expected to boost the demand for holiday
homes in Croatia.
expected over the next several years, while the stabilization of
 Holiday home demand will likely remain dominated by Germany
the economic situation will contribute to the improvement on the
and Austria. As another trend, we can expect to see a growing share
real estate market, while also creating a favorable set of
of British buyers.
circumstances for investments
 The Croatia homes market is expected to stabilize with
implemented General Urbanistic Plans and establishment of
The growth of real estate prices is expected, however that will planned building zones
mostly relate to units and objects of top quality. We will witness  With the acceleration of the planning process and definition of
the continuation of high demand for quality real estates and zones for holiday homes development, both local and foreign
complete projects. developers will have the opportunity to develop projects that meet
the requirements of current and future demand.
 Demand and absorption rate is expected to pick up
 With the increasing demand of holiday home buyers in Europe
and the specific interest in Croatia, the availability of large and
medium scale projects for sale will lead to a steep increase in the
number of acquisitions.
 Property prices are expected to appreciate due to EU accession
and the development of high quality homes, but at more reasonable
prices.
 The residential inventory will continue to grow in the coming years,
as the stable economic situation and the developing market present
favorable conditions for real estate developers

23

CROATIA LEGISLATION

LEGISLATION

A new law on mediation in real estate transactions was adopted
in October 2007, and it is expected to deliver additional protective
measures to the real estate market. The law itself brings a lot of
new things, such as obligatory education for real estate agents
who now must officially enter the registry. The law also
prescribes obligatory ways of damage insurance, states integral
contract elements, determines obligations for parties and
mediators, and much more.

The construction law was also changed and adapted, as the
increased level of decentralization simplified and quickened the
process of gaining necessary construction licenses, and changes
were made that require construction performers to apply for valid
registration, all with the purpose of increasing the quality of
construction and bringing more order in the way business is
conducted on the construction market.

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CROATIA FOREIGN INVESTORS

REASONS TO BUY IN CROATIA Untouched coastal area that spreads across 1100 miles
alongside the Adriatic coast, as well as the 260 sunny days per
year, define Croatia as a wonderful tourism destination and a
true vacation paradise. Considering the standard in Western
Europe, the real estate prices are still very accessible.

A large amount of interest from foreign investors creates a very
dynamic market. Although the market is rapidly developing, there
is the chance that it will keep getting bigger compared to Spain
and France.

The quality of real estates is very high!

Past few years demonstrated that Croatia is becoming much
more accessible by air, while the airplane tickets are becoming
less expensive. Croatia is not far from Great Britain or Ireland (2
Despite of the increased number of tourists over the last several ½ - 3 hours by plane). Airline companies that have more
years, prognosis until 2011 says that Croatia will remain to be an
accessible prices are in negotiations regarding the permission to
attractive destination – due to the successful preservation of its
land their airplanes in Croatia.
environment.

Croatia resembles Spain or Portugal 20 years ago – it is Real estate transactions can be greatly simplified if you choose
an adequate associate in Croatia.
undiscovered, fresh, attractive and desirable – it attracts
experienced travelers that are looking for a place that is
simultaneously different and fascinatingly interesting because of Macroeconomic circumstances and political relations are stable
the surprises it offers. Large urban centers and the Western and safe due to the probable admission of Croatia into the EU.
culture are nowhere in sight.

25

CROATIA FOREGNEIRS AS REAL ESTATE OWNERS IN CROATIA

In past several years we have witnessed a growing purchases, but the situation on the coast (where in every
interest of foreign nationals for properties in Croatia, small village people know exactly who owns each house
especially for those on the Adriatic coast. Although we first and whom it is sold to) is saying that the official statement is
saw it with a touch of sympathy, an unstoppable interest of far less than reality.
foreigners for all our properties was a pleasant surprise. On the foreign property markets and tourism fairs, real
Stabilization and Association Agreements defined that estate agencies advertise buying a house on the Croatian
when buying a property for all EU citizens have the same coast as "investment that van be returned fully in ten years
options as Croatian citizens. through rent“, which suggest the real estate business at first
However, there are some different conditions for the place.
acquisition of property for foreigners in general and foreign
legal entities. Foreign companies will acquire a property The largest number of properties that foreigners are buying
more easy since it is sufficient to establish a branch office in or looking to buy is located in Istria and Dalmatia. This fact
Croatia and automatically they are allowed to acquire all was expected because many foreigners coming from
properties that are available to Croatian citizens. countries that do not have access to the sea or from
countries with a cold and unattractive sea coast. By
At this moment, no one knows how many foreign owners improving the quality of roads to Croatia and more rapid
have a second home in Croatia because the official figures construction of the roads the warm Adriatic Sea has
differ from those in reality. According to data from 2006 the become more accessible to them.
Ministry of Foreign Affairs registered only about 15 000

26

CROATIA LAWS LIMITING FOREIGN OWNERSHIP, AND EUROPEAN DEMAND

All foreign nationals from EU and outside it can not buy the islands of Krk, Pag and Cres.
property in the excluded areas, namely: As we move southern Slovenes buy less and less. The
British, like Italians, are mostly choosing Istria, although
* Agricultural land, defined by a separate law there are interested in Dalmatia, especially in Dubrovnik.
* Protected nature areas, also under special legislation Hungarians and the Russians do not choose the location,
but will very carefully selected the property, while the
Austrians, Germans, Britons, Italians, Russians, Austrians and Germans are buying what they please
Hungarians, Czechs, Slovaks, and even the Scandinavians regardless of location because the distance is irrelevant for
are buying real estate on the Adriatic coast and its them.
hinterland.
An online record of 40% of international visits regarding real
Some precise number of statistics are not available, but the estate is showed, mostly from Germany, followed by Austria
fact is that the Slovenes are the biggest buyers, and Italy.
concentrated on the region of Istria: Pula, Crikvenica, and

27

CROATIA FOREIGN INVESTORS

The acquisition process:

1. A written offer for the real estate is issued by the vendor. If
the conditions are convenient, the buyer should return a
written confirmation.

2. Pre-contract agreement between the buyer and vendor. The
buyer in most occasions is expected to pay a down payment
equivalent to approx. 10% of the total selling price.

3. The buyer then should apply for the consent from the Ministry
of Foreign Affairs (MOFA). Necessary documents include:
- The purchase agreement
- The seller’s proof of title
- Certificate confirming that the property is within the
construction zone
- Proof of citizenship for the buyer
- Power of attorney, if an attorney is involved.

4. A binding contract is then prepared by a lawyer and signed by
the notary. An official note of the contract should be made in
the Land Registry. Once MOFA consent is granted, the
contract needs to be registered in the Municipal Cadastral
Department’s Land Books, and the purchase tax needs to be
paid.

At pre-contract stage, the down payment is not returned if the
buyer fails to fulfill the terms of the contract. In cases where the
seller fails to fulfill his part of the contract, he is expected to
compensate the buyer by paying double the sum of the deposit.

28

CROATIA TAXATION SYSTEM

TAXATION SYSTEM

Croatian taxes are proportional to taxes of other countries in the
region, although they are still relatively high – for example, VAT is
as high as 23%. The Croatian Government has the ambition to
lower the taxes, but is currently prevented by some of the needs
of the government budget.

If you buy a real estate in Croatia that was built prior to
December 31st 1997, you pay a real estate tax that is 5% of the
contract value.

If you buy a new building that was built after December 31st
1997, you pay 23% of VAT, which is calculated by the price of
real estate construction, as well as a 5%-real estate tax that is
determined by the value of the part of the property on which the
object was built.

If you buy a used real estate built after December 31st 1997, you
only pay a real estate tax that is 5% of the contract value.

The process of real estate transaction also includes some legal
fees, which usually reach about 1.5% of the buying price + VAT.
If you’re buying the object in the name of the company that is
registered in Croatia, there are some additional legal and notary
fees that end up around 2.300 USD.

29

CROATIA TAXATION SYSTEM

The real estate tax is 5%, but it isn’t paid if the person is buying
its first real estate (if the person resides in Croatia). The tax is not
paid if 50 m2 are bought for one person, 65 m2 for a two-person
household, 83 m2 for a three-person household, and 94 m2 for a
four-person household.

 The price of a residential tax for those people that don’t have a
registered place of residence in Croatia is 2 USD/m2 of the
object’s size per year.
 The yearly tax on land is 0,38 USD/m2
 The saving is 0.52% of the real estate’s market value per year
 Garbage disposal expenses are about 77 USD per year
 Electricity expenses – price of 1KW in 2008 is around 0.15 USD
 Water expenses – 1.54 USD per cubic meter in 2008
 Insurance for the house and household depends on the size of
the house; the price for a 160 m2 house is around 770 USD per
year
 You pay a 35% tax on income in case you sell the house before
three years of owning it
 You pay a 5% tax in case you inherit a real estate
 Car taxes are from 60 to 310 USD per year
 Taxes on marine vessels are from 45 to 1000 USD per year
 Income taxes depend on the amount of profit and the number of
employees, and they move in the 15%-45% range
Tax on a vacation house is 1.5-4.6 USD/m2 per year
 Agriculture taxes, which amount to 60-77 USD per hectare, are
paid for uncultivated agricultural land
Taxes on construction parcels are rarely applied, and they cost
0.15-1.54 USD/m2 per year

30

CROATIA CROATIAN TOURISM - OVERVIEW

Croatia is a leader in establishing political stability in the tourists from all over the world. Because of its untouched
region, and millions of tourists visit it yearly and that number nature, extraordinary beauty of its coastline, alluring Adriatic
continues to increase, what confirms the attractiveness of sea, rich cultural heritage and cuisine, Croatia is considered
Croatian tourism and hospitality. to be one of the most desirable destination for people
seeking peace and quiet in the mild Mediterranean climate.
It is believed to be the newly discovered paradise for

31

CROATIA DALMATIAN TOURISM - OVERVIEW

Dalmatia is the greatest Croatian tourist region. also to the cultural heritage which shaped generations and
generations of its habitants.
There are three large cities in Dalmatia: three thousand
years old Zadar, Split – home of the Roman Emperor The Adriatic is one of the most beautiful seas in the world
Diocletian, and at the extreme south Dubrovnik a city on whose cleanliness is one of the world's best. Contribute to
UNESCO World Heritage List. its attractiveness is the color and transparency of water
which increases towards the south and offshore. An
Split is the seat of Split-Dalmatia County and makes an indicator of water purity is the average transparency of the
important traffic intersection as well as largest ferry-port on Adriatic Sea is 20-33 m, and the highest transparency was
the Adriatic coast of Croatia. Its International Airport is the measured in the oversea area and is 56 m, and endemic
second largest and has a large importance in transport in species that inhabit the sea - Adriatic Bračić (Fucus
Croatia, while the airport on the island Brac is built for virsoides) and bottlenose dolphins.
smaller aircrafts, mainly for tourism purposes. The richness
of Middle Dalmatia is really diverse, and does not apply
only to the sun, natural resources, turbulent history, the
beauty of the Mediterranean and continental dishes, but

32

CROATIA DALMATIAN TOURISM - OVERVIEW

Croatia is receptive country, in a large extent it accept More special forms of tourism are formed, major being
the tourists from the earliest beginnings of the tourism. yachting, sports, cultural and rural tourism. It is known that
Until the first half of the 20th century it was the destination the most sought after tourist destinations in Croatia are
of mass tourism. According to statistical data in the 1938, situated on the coast. So-called business tourism prevails in
the highest tourist traffic is shown in entire Croatia, even in cities like Zagreb, Osijek and other major cities, and various
the parts under the Italian administration. Specifically, there spas. Croatia places a lot of attention towards nautical
were 500 000 tourists who have made 3 million overnight tourism and all the accompanying facilities, so it becomes
stays, of which 61% related to foreign tourist traffic. Most the desired destination for a large number of foreign visitors
visited tourist destinations are Opatija, Crikvenica and Rab. who all appreciate the untouched nature and relax in
Mass tourism has spurred economic development all across solitude and silence.
regions. In the period from 1991 Croatia is among the
medium developed touristic countries. The development of
tourism more attention is devoted to the individual needs of
tourists and a clean and preserved environment as well.

33

References: Republic of Croatia - Central bureau of statistics, Croatian motorways ltd. - Major transport infrastructure in Croatia, Regional Development Fund of the Republic of
Croatia, www.hr – Croatian homepage, Croatian auto club, Colliers international, Croatia, King Sturge, Croatia, www.timesonline.co.uk , www.guardian.co.uk

Croatia

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