Still a benefit to purchasing the company route?

[Steven]

With all the posts on the headaches, issues, etc. on owning property through a company; does it still make sense to go this route in 2016? I ask this as someone who has croatian citizenship as well.

I ask for several reasons:

1) Zagrebačka Banka offers mortgage option for businesses/startups that look promising for property purchase
2) For current taxes, legal reasons, etc.; is there a benefit to owning property for letting as a business?

I guess my point is, do the few benefits outweigh many of the issues that come with ownership as a business?

Thanks.

[Carol]

I suspect that option 1 would have so many conditions attached, that it would end up not do-able. At least that's what happened with every other company mortgage product for the last 10 years.
Option 2: I can't think of a single benefit.

However, i can think of many reasons not to get stuck owning a company.

[Steven]

Thanks Carol. That was the impression I was getting from all the other posts doing to d.o.o. route.

[Carol]

So, have you found a property? And someone suggested the company route - or you just are researching options?

The company route seemed like a good idea a few years ago. There were benefits back then, but one by one the benefits have gone and the hidden downsides have become clear.

Why might someone still buy via the company route? If they wanted to buy something that only Croats are permitted to own (but without an exit that fails the first test of an investment). Or for some reason, their nationality prevents them from taking the personal route. In the back of my mind, I have an idea that this applied to Russians at one point, but I wouldn't bet my life on it and even if it were true then, I am not sure about now.

The only other reason is to receive rental income. This rule seems to change all the time, and I do't know whether it applies at the moment or not.

[Steven]

Yes, I do have a property I want to buy and run as a B&B.

So the issue for me is figuring out whether it makes sense to go the company route in purchasing the house.

For 2016, are there benefits with tax write offs, etc to still doing it this way.

Everything I've seen so far written seem to show that it's only a headache and not worth the trouble.

My goal (naivety?) is to try to get financing set by end of the year to start renovation in the off season with the help of family.

[Carol]

If it were me, I'd consider buying privately and then renting the property to my business. That means you'd have a rental agreement that you'd sign in two places - one as you the private owner and secondly as you, the director of your business.

It sounds like you may have to set up a d.o.o. to receive the income but I'd research like crazy first to see if there any other way. Ask an accountant for advice. Actually ask several - they don't all do advice and often it is conflicting. Probably better make it local accountants who are used to dealing with you tax office.

If you do take the company route, consider buying a company with debts but no trading history. i.e. buy a company that was used to own a property and that's all and the property was sold at a loss. There are plenty of people who own a company just like that and who'd love you to take it off their hands for nothing! The benefit to you is reduced taxes with the loss offsetting your profit.

[usplitu]

May 16, 2016 22:52:19 GMT 1 Carol said:

If you do take the company route, consider buying a company with debts but no trading history. i.e. buy a company that was used to own a property and that's all and the property was sold at a loss. There are plenty of people who own a company just like that and who'd love you to take it off their hands for nothing! The benefit to you is reduced taxes with the loss offsetting your profit.

If you are taking this route, make sure the losses have not 'expired'. A company can only carry it's losses forward against future profit for a limited time (I think it's five years).

[Ribaric]

We still use companies to enable non-HR buyers to own property outside of a building zone although we expect this to be unnecessary beyond 2020. Generally, I don't see any hassles doing it this way. We don't use our d.o.o.s for anything other than to hold the property, no money goes in or out. We pay our accountant 200kn per month (not through the company) to maintain the books (nothing to do) and to prepare and submit our annual tax and FINA returns. That's it. It doesn't feel it's much of a hassle, even the new simplified way of closing a d.o.o. gives a much easier exit strategy.

Am I missing something?

[Carol]

No.. at 200kn a month you aren't missing much.

On the coast, its at least 3x that per month 13 times a year (unless anyone can tell me better?) and then there's the 55kn chamber of commerce monthly fee and about £100 per year to the local authority for the privilege of existing. Plus the forest tax.

Rib - you don't have the HGK cost, the forst tax and that other fixed company tax?

[Ribaric]

Nope, We promise not to give any book keeping or accountancy work and they keep the books straight and make the two annual submissions - all in for 200 kn per month plus 50kn PDV. We even pay the accountant from outside of the company so even their entries don't appear. We have another company on the same deal which "owns" two properties for customers in order to keep their bills down to pennies. They have a legally enforceable easement for sole and exclusive use of their property, we just "HOLD" them.

[Carol]

so what about the fixed taxes? Who arranges payment, or are they only on the coast?

[Ribaric]

Fixed taxes? We pay electric, gas, water, tourist tax, accountant. ourselves and any others and bill our customers monthly. Each customer has an online account showing every penny in/out, the status of all the bills plus the complete inventory. I don't know what you mean by "fixed taxes".

[Carol]

Fixed taxes :-
chamber of commerce fee. It is obligatory - 55kn per month but you can pay annually.
Forest Tax (annual - not a lot of money but I can't recall how much)
Local council company tax - its a fixed tax paid annually by all doos. Usually about 1000kn.


There may be more... these are the ones that I can think of from the top of my head. They seem to come and go but the mindset in parliament (where they presumably get set) seems to be: we need money for x,y or z, but we had better not annoy the people by taking it from them, so let's take it from the companies instead.

[Carol]

There's another one. I've just found... "FINANCIJSKA AGENCIJA" 230kn a time and it seems to be collected at random intervals - sometimes annually, other times twice in three months. I know that's FINA but that's the only details I have about it.

Here's all I've got to tell me what the annual city tax is: Ministarstvo Financija Porezna Uprava, Bra?e Radi?a BB



(I think this demonstrates a good reason why not to own a d.o.o. - you spend your time trying to figure out what the govt wants from you now / why its taking your money. Personally, i find it very hard to keep up as no one tells you that your obligations have changed again. You are just supposed to know, and woe betide you if you make a mistake.)

[Ribaric]

I'll check with my accountant but I've not heard of any company which has 0 turnover paying fees or taxes of any kind.