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Quick summary: time
line for purchasing
1) Estate
Agent
Find yourself an area you like, then properties
you can afford (after allowing for all additional
costs - see below). We have produced a property
search.
We recommend people not to buy the first property
they see and to inspect all suitable properties
before making final decisions. Vendors on the
Adriatic coast will probably be more prepared
to deal with English purchasers when the main
tourist season is over in September, October and
November.
Please note that normally in Croatia, even the
purchasers pay about 2-3% of the purchase price
to agents. (The seller also pays a similar amount.)
2) Try
to obtain a written survey (and pay to
have it translated if need be)
3) Pre-contract
stage
At this stage you are expected to make a down-payment
of 10% of the sales price or different if so agreed
between the contractual parties. If the vendor
pulls out it should be a condition that they pay
you 10%
4) Application
to Foreign Ministry for permission to purchase.
When acquiring real estate other than by inheritance,
U.K. citizens need to obtain the approval of the
Ministry of Foreign Affairs (MFA) of the Republic
of Croatia. Prior to reaching a decision the MFA
will seek an opinion from the Ministry of Justice,
Administration and Local Self - Government, thus
the whole process might take a number of months.
In Croatia the ultimate proof of ownership is
entry of the owners name in the local Land Books
(Zemljisne Knjige) for that specific property.
The local courts will not allow a foreign citizen
to be entered in the Land Books without the MFA
approval. The approval is issued if there is reciprocity,
i.e. if Croatian persons can purchase real estate
in the country of the purchaser. U.K. citizens
may, under condition of reciprocity, acquire real
property in Croatia either as inheritance or by
other legal transactions such as purchases, deeds,
trusts etc. Reciprocity is presumed to exist unless
proof to the contrary becomes evident. Inheritance
- U.K. citizens may inherit property in Croatia.
No additional approvals are necessary.
While such an approval can take up to 12 months,
it can easily be avoided if the property is bought
by a domestic company, which can be entirely owned
and controlled by a foreign person. In that way,
the transfer tax on real estate of 5% can also
be avoided during each subsequent sale of the
property.
Ownership of real property by foreign citizens
in Croatia is regulated by Articles 354-358 of
the Croatian Property Law (Zakon o vlasnistvu
i drugim stvarnim pravima). The law was published
in the Official Gazette No. 91 in 1996 (Narodne
Novine 91/96).
According to the Law of Property and Other Real
Estate Rights - Article 356 paragraph 2 (Official
Gazette of the Republic of Croatia Nos. 91/96,
68/98, 13 7/99, 22/00 and 73/00), foreign citizens
and enterprises, who want to become owners of
real estate in the Republic of Croatia, need to
obtain previous consent from the Minister of Foreign
Affairs of the Republic of Croatia. In order to
apply for consent, applicants must submit a request
written in Croatian, either personally or through
an attorney, to the Ministry of Foreign Affairs,
Consular Department, Meduli-eva 34, 10000 Zagreb,
Croatia.
In addition, applicants
must enclose the following with the application:
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A- |
Basis on
which the property is acquired (contract of
purchasing the property, gift contract etc.),
- original or duly legalised copy.
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B- |
Proof of title
(land registry certificate etc.) - original
not older than six months; an excerpt from
the land books for the particular property
(in Croatian ZK izvadak) This document is
usually obtained in each municipality (Opcina)
at the local municipal court (Opcinski Sud);
it's land book division (Gruntovni Odjel)
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C- |
Certificate
issued by authorised authorities for urban
planning which proves that the particular
real estate is located within the zone in
which construction is allowed, according to
the zoning plan, - original not older than
six months; a document from the local municipality
(Opcina), from the following department: "Ured
za prostorno planiranje". The document
is called "Uvjerenje o namjeni",
for the particular property;
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D- |
Proof of
buyer's citizenship (legalized copy of passport,
for instance), - original or duly legalised
copy; any photocopies have to be notarized
by a Croatian Notary Public
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E- |
Power of
attorney for the attorney - original or duly
legalised copy
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F- |
Copy of each document
filed with the request. The request with accompanying
paperwork is to be sent to:
Ministry of Foreign Affairs of the Republic
of Croatia
Trg N. S. Zrinskog 7-8
10000 Zagreb
Croatia
Phone 4569 964
Fax. 4551 795
4920 149
Email: mvp@mvp.hr
The applicant shall deliver other necessary
documents on request. The fees for the application
includes HRK 20.00 application fee pursuant
to Article 1 of the Croatian Law on Administrative
Fees (Official Gazette of the Republic of
Croatia Nos. 8/96, 77/96-Decree, 131/97, 68/98,
66/99-Decree, 145/99-Decree, 30/00-Constitutional
Court Decision, 23/02 and 91/02); plus, pursuant
to Article 2 of the above mentioned law, HRK
50.00 per applicant for the Decision.
If the fee exceeds HRK 100.00, it shall be
payable directly to the national budget of
the Republic of Croatia (account No. 100 1005-1863000160,
reference No. 24, first adjacent field No.
5002, plus first and last names and address
of the applicant, pursuant to Article 13 of
the above-mentioned law. If the fee is paid
from abroad, according to Article 15 of the
above-mentioned law, the payment shall be
effected in foreign currency at the mean exchange
rate determined by the Central Bank of Croatia.
After the application has been completed and
submitted, it shall be referred for regular
procedure to the Ministry of Foreign Affairs
that shall decide on each application individually.
Pursuant to Article 357 paragraph 2 of the
above-mentioned law, the administrative procedure
requires previous opinion from the Ministry
of Justice of the Republic of Croatia, particularly
focusing on the following:
* Foreign citizens and enterprises cannot
acquire ownership of agricultural land, pursuant
to Article 1 paragraph 3 of the Law on Agricultural
Land (Official Gazette of the Republic of
Croatia Nos. 66/01 and 87/02);
* Foreign citizens and enterprises cannot
acquire ownership of forests and forest land,
pursuant to Article 1 paragraph 32 of the
Law on Forests (Official Gazette of the Republic
of Croatia Nos. 54/83, 32/87, 47/89, 41/90,
52/90 - final version, 51/91, 61/91, 26/93,
76/93, 29/94, 8/00 and 13/02);
* If the object of acquisition is a protected
cultural monument, it shall be offered to
the authorities first (Republic of Croatia,
Municipality, City, County), and only if they
decline to exercise their pre-emptive right
may the property be offered to foreign citizens
and enterprises, pursuant to Article 37 paragraph
1 of the Law on Protecting and Preserving
Cultural Monuments (Official Gazette of the
Republic of Croatia No. 66/99)
In deciding on each individual application,
the Ministry of Foreign Affairs shall determine
whether there is reciprocity between the Republic
of Croatia and the applicant's state in real
property matters. The Ministry of Foreign
Affairs collects and examines foreign laws
concerning reciprocity with respect to foreign
nationals. Interested parties can contact
the Ministry of Foreign Affairs for information
on reciprocity between the Republic of Croatia
and other states. For any additional information
regarding reciprocity between the Republic
of Croatia and other states please contact
the Ministry of Foreign Affairs, Consular
Department, (Meduli-eva 34, 10000 Zagreb,
Croatia. |
5) Certification
of contracts by a notary
The notary's fees are very low since the notary
only certifies the signatures
6) Submission of documentation
to Land Registrar where the property is
registered at the Court
The estate agent or lawyer requests the registration
of the property on behalf of the buyer.
7) Payment Real Estate Purchase
Tax within 30-day deadline
A unified tax rate of 5% of purchase price for
all types of real estate based on the price of
the real estate in the sales contract and the
value estimate by the authorised tax authority
in charge for the local area.
It is possible to pay this tax in pounds. The
tax is to be paid by bank or post office money
transfer. The amount is converted into Kuna at
the middle exchange rate by the National bank
of Croatia at the day of payment.
The tax is paid after conclusion of the sales
contract. The customer is obliged to register
the purchase at the authorized tax authority within
30 days from the day of conclusion of the contract.
Public notaries do also submit one copy of the
sales contract to the tax authorities. The customer
is obliged to pay respective real estate purchase
tax within 15 days from the day of reception of
the decision received from the tax authorities
on the exact tax amount. If this tax is not paid
within this term, interest on arrears is charged
for every day of delayed payment.
DOES THE SELLER HAVE TO PAY
TAXES WHEN SELLING HIS REAL ESTATE?
No. Only in case
the real estate is sold prior to the expiration
of three years after it has been purchased and
if sold at higher price than originally purchased.
In such a case the seller has to pay a 35% income
tax on the difference in value of the real estate
(purchase and sales price) increased for local
taxes, different in every municipality.
You are also exempt if you sell it to your spouse
or members of your immediate family.
Income Tax
Croatia has a generally high taxation system,
but its tax laws offer unique advantages for persons
who receive certain foreign income or a foreign
pension. Croatia also offers important tax advantages
to yacht owners. As it is not as yet an EU member,
Value Added Tax can be avoided if resident in
Croatia. VAT of 22% was introduced in 1998 and
applies for most goods and services. However,
if you do not receive a salary, consultancy fees
or similar income in Croatia, the tax situation
is very favourable and the following income is
tax-free:
* Pensions received from abroad
* Interest payments on loans, investments, deposits
with financial institutions, public loans and
securities and similar income.
There are no controlled foreign corporation rules,
anti-avoidance provisions or similar regulations
in Croatia so that the use of offshore structures
is possible for tax planning and financial privacy
8) Visa Requirements
and residency
A visa is not required for UK citizens to visit
Croatia. See full listing of visa requirements.
A foreign national can stay up to three months
in Croatia without any complications. Following
this, it is necessary to obtain a residence permit.
Having a yacht moored in a Croatian marina, renting
or owning a property in Croatia is sufficient
to obtain a residence permit. This does not mean
that one is automatically deemed a tax resident.
A person is resident based on physical presence
in Croatia if he stays during a period of at least
183 days. Short absences are not considered as
breaking this period of stay. The period can include
two calendar years. One would not be considered
resident if the stay is exclusively for the purpose
of a visit, vacation, therapy or for the purpose
of satisfying similar personal needs, providing
it does not last longer than one year.
A person is a resident based on maintaining a
home in Croatia if he has accommodation at his
exclusive and continuous disposal for 183 days
and if it can be concluded from his circumstances
that he will keep and use that accommodation.
The length of stay in the accommodation is not
important nor whether the accommodation is owned
or rented. This provision of deemed residence
is very attractive for foreigners who wish to
maintain legal residence in Croatia without having
to physically be there for any minimum length
of time.
If a foreign national wishes to be a tax resident
based on maintaining a home in Croatia, he needs
to have accommodation at his exclusive and continuous
disposal for at least 183 days. If he wishes to
be a tax resident based on physical presence in
Croatia, he must stay continuously during a period
of at least 183 days for business, or more than
one year for the purpose of tourism, health or
similar personal needs.
9) Summary
As you can see this is a complicated and time-consuming
process.
If you are a non-Croatian speaking foreigner,
the easiest route might be to go through an agency,
as they are more than likely to have staff that
speak foreign languages, who know local lawyers,
who have probably had foreign clients in the past
and who will look after your application.
10) Free
Tax Guide, produced by KPMG based in Zagreb. Click
here to download.
You will need the Adobe Acrobat Reader to view
the tax guide. If you do not have it installed on your computer, please follow this link to
download and install this software.
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