Taxation FAQ
TAXATION FAQ
- How much is the real estate transfer tax
rate in Croatia?
- How much is the real estate transfer tax
rate when trading the properties?
- Does the seller have to pay transfer tax
when selling the property?
- When must the transfer tax be paid and to
whom?
- Can transfer tax be paid from abroad in foreign
currency?
- Are there any other taxes to pay concerning
the purchased property?
- How much is the VAT rate in Croatia?
- How can a company claim the VAT refund for
the property purchased?
- How can a company benefit from VAT refunds
when investing in the purchased property ?
- How much is the income tax rate in Croatia?
- Does Croatia offer a tax free residence
to foreign yacht owners?
- Does Croatia have double taxation treaties
signed with other countries?
- Does the agency provide assistance with
taxes and accounting services?
TAXATION FAQ
1. How much is the real estate transfer tax
rate in Croatia?
The Republic of Croatia has a tax rate of 5% for all types
of real estate transactions. The tax is defined as a percentage
of the property sales price in the sales/purchase contract.
The local tax authorities conduct their own evaluation of
the property after they receive the notification of the property
sale. It is on their entire discretion whether they will accept
the amount defined in the contract or conduct their own evaluation.
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2. How much is the real estate transfer tax
rate when trading the properties?
When trading the properties both parties are considered
as buyers and they both pay tax at the rate of 5%.
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3. Does the seller have to pay transfer
tax when selling the property?
According to Croatian regulations, the buyer pays the
tax, unless stipulated differently in the sales/purchase contract.
The contractual parties may agree, that the seller pay the
tax on behalf of the buyer.
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4. When must the transfer tax be paid
and to whom?
After conclusion of the sales contract, the customer is
obliged to register the purchase with the Local tax authority,
within 30 days of the conclusion of the contract. Notary public
submits one copy of the sales contract to the tax authorities.
The customer is obliged to pay respective transfer tax within
15 days after he received the exact tax amount notification.
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5. Can the transfer tax be paid from abroad
in foreign currency?
The tax can be paid by bank or post office money transfer.
The amount is converted into HRK at the middle exchange rate
by the National bank of Croatia at the day of payment. We
provide our clients with full support concerning all kind
of payments towards individuals and government agencies.
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6. Are there any other taxes to pay concerning
the purchased property?
In case that the seller decides to sell the property within 3 years from the purchase date, s/he might be liable to capital gains tax of 35%, that is charged on price difference between the purchase and sales price. Local communes and cities charge a Holiday House Tax. This tax is paid by every individual (including the foreign citizens) or legal entity that is the owner of a holiday home. The base for taxation is a square meter of useful space in the holiday house. The annual amount of taxation varies from 5 to 15 HRK (0,65 - 2,20 EUR) per square meter of useful area
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7. How much is the VAT
rate in Croatia?
The Croatian Value Added Tax rate is 22% with exception of
0% rate for organized tourist arrivals when a foreign agency/tour
operator pays for the services in advance.
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8. How can a company claim the VAT refund
for the property purchased?
In case that the property was purchased from the Croatian corporation for commercial use, a VAT can be deducted from the company's next VAT obligation. Since the VAT was already paid within the total purchase price of the property, the next VAT statement will show the overpay of 22%. The company can then decide if it wants to withdraw the amount overpaid or use it for the future VAT payments. In case that company decides to withdraw the overpaid VAT, local Tax authority will conduct a brief inspection and finally credit the company's bank account with the overpaid VAT amount. The VAT can not be recycled for properties purchased for residential use.
.
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9. How can a company benefit from VAT refunds
when investing in the purchased property?
The new company is not required to declare itself as a VAT
taxpayer unless its total revenue exceeds 80.000 HRK (app.
11.000 EUR). However, it is convenient for a company to become
a VAT taxpayer immediately after the incorporation procedure
has been completed, since they can deduct 22% from any expenses
for goods purchased or services provided, while renovating
or redecorating the purchased property. The only limiting
factor is that the supplier must also be a VAT taxpayer and
his invoice must show the VAT entry clearly stated. The company
will then get the refund of the overpaid amount when it files
for next VAT statement.
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10. How much is the income tax rate in Croatia?
Croatian corporate income tax rate is 20%.
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11. Does Croatia offer a tax free
residence to foreign yacht owners?
Croatia is not a member of the European Union and thank to
that fact, foreign yacht owners can avoid
VAT on the purchase price of their yachts if they are residents
in Croatia. Yacht owned by a foreign citizen or foreign corporation
can be kept in Croatian marina indefinitely without paying
Croatian VAT. Spare parts and additional equipment are tax
and customs duty-free if the yacht is under a foreign flag.
A yacht owners with Croatian residence permit can enter EU
waters for up to 18 months in any 24 months period without
paying the VAT. (Some EU members have different regulations).
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12. Does Croatia have double taxation
treaties signed with other countries?
After gaining independence the Republic of Croatia has assumed
the obligation to apply all international agreements concluded
by the former state. Procedures were initiated to conclude
new agreements, and currently 21 of these are being applied.
All Agreements concluded by the Republic of Croatia are based
on the Croatian Draft Agreement on the Avoidance of Double
Taxation, in compliance with the model provided by the Organization
for Economic Cooperation and Development (OECD).
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13. Does the agency provide taxation
assistance and accounting services?
Our agency does not directly offer the tax consulting and
accounting, but can recommend other members of the group as
well as partners who provide these services.
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Links to Croatian Tax Authorities:
Croatian
Ministry of Finances
Croatian
tax system
Double
Taxation Treaties
