Tax

[shamrock]

Bog,

What is the best way to buy a property in Croatia and avoid getting hit with a Huge tax bill.I'm a non national of Croatia so I may pay extra tax(not sure).
I read about the starting a Company option and would like to know is this the way to go ?

1)Buy as a Non National?

2)Set up a Company and buy that way?

3)What rate of tax do Croatians pay when buying?

Help needed

Regards

Shamrock

[Ines]

Hi there,
Regarding your enquire:

1)When acquiring a property in Croatia, foreign citizens need to obtain the approval of the Ministry of Foreign Affairs of the Republic of Croatia. This is a formality that requires 12 to 18 months to complete. Applications are not refused unless the individual has an adverse history with relation to Croatia.

2) The advantages of the corporate buyer route are as follows:
• Approval by The Ministry of Foreign Affairs is not required and you have full ownership of the property as soon as the final payment is made.
• If you plan to sell your property within the first three years, the profit realised (appreciation) from the sale is not subject to Capital Gains tax (35%). However, company (profit) tax is payable and is currently 20%. There are provisions in the Croatian tax law to account for amounts invested in the real estate, as well as depreciation of buildings. Our legal staffs advise our clients on this issue, case by case.
• When selling the property purchased under the corporate buyers route, depending on the date the property was built, there are additional tax benefits to the seller. The sale of a Croatian company that owns real estate may the most tax efficient exit strategy for a foreign person looking to invest in Croatia.
Typically during the time the company is being formed (1-2 weeks) our client may review properties and by the time they are ready to proceed, the company has been finally formed. From this point, completion and exchange of contracts can occur anywhere between 3 days to 1 month depending on the location of the client, for document execution purposes.

3) The Tax to pay to the government for purchasing a property is 5% of the agreed price. Both Croatian and foreign citizens have to pay this amount and for foreign it can be paid when receiving the approval of the Ministry of Foreign Affairs. For Croatian nationals it is much sooner.

In conclusion, the route you take depends of your needs and expectations. We usually recommend clients accordingly.


Regards

Ines
Croatia Properties
www.croatiaproperties.biz