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Post by Carol on Sept 26, 2006 12:05:22 GMT 1
In late July 2006, under EU pressure to make Croatian property more accessible to non-Croats, Croatia simplified the number of departments through which the paperwork has to pass in order for foreigners to get permission to buy property in Croatia. Part of this improvement was to remove the responsibilty from the MFA and give the it to the Minstry of Justice instead.
Two questions:
1. Has anyone tried yet to get MJ permission to buy yet?
2. What has happened to all the cases outstanding at the MFA?
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Post by Frederick on Oct 17, 2006 14:59:28 GMT 1
Hi,
we applied 3 years ago. We have just been told by our lawyer that the ministry of justice told him not to call back till next year ! I guess they are processing all the new applications that come in and have the old applications in a pile on the floor somewhere.
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Post by jill on Oct 17, 2006 15:18:41 GMT 1
I 'bought' in November 2005, coming up to a year now...do you think my application for permission would be in the old pile or the new?
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Post by Carol on Oct 17, 2006 15:25:24 GMT 1
3 years!!! I'd understood that 20 months was the longest it was taking, unless there was a complication. Are you sure your lawyer actually submitted your application?
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Post by jill on Oct 17, 2006 16:41:04 GMT 1
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Post by Frederick on Oct 18, 2006 9:20:53 GMT 1
We had regular contact with the Ministry through calling them on Wednesday morning between 10 and 11 (I think) so we have have had a status on our application. The latest saga was that we had to offer our propery for purchase to Hvar, Split and Zagreb. Apparently our house is of special cultural interest or something. Our lawyer even had to send photographs of the property. Everyone has turned down the offer to purchase except Split who have not even bothered to reply, 3 times now over the 60 day deadline period (so 180 day delay there alone). Our lawyer sent off all the replies to the Ministry of Justice or FA together with the registed mail receipts for Split. We thought we were over the last hurdle when we were told not to contact them again till next year. We have friends who have been waiting longer than us, all on Hvar so maybe is is a regional issue.
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Post by jill on Oct 18, 2006 11:28:36 GMT 1
We had the same delays as we had to offer our apartment to 3 or 4 different bodies in case they wanted to exercise their pre-emptive rights but all this was done BEFORE the final document was signed and the money handed over. Luckily there were no takers, just delayed us about 4 months waiting for replies. Hopefully all this documentation has gone off with our application for permission.
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Post by Carol on Oct 18, 2006 13:05:41 GMT 1
we always do it before the final contract too. Almost all the old stone houses we sell fall into this category. You have to send a pre-contract but that is all. The city, county and state all have the right of last refusal where they can match the price however I've only once seen the state even try to exercise the right, and then their bid was only 3/8 of the sale price.
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Post by AndyPandy on Oct 20, 2006 14:39:25 GMT 1
I've been waiting for over 4 years only to have found the Interior Ministry have lost the papers. What a joke.
Waiting now until the MoJ formerly takes over. See how they fare!
Fortunately I don't have to sell fast but if I was I would be livid.
The "trackning sevice" is simply a rip-ff; it can't accelarate the process. (unless its another form of corruption)
A friends investment all went wrong in Milna; effectivley the local gov and central Gov were bribed by Russians and his granted permission was strangely "withdrawn".
No wonder the Krajina Serbs didn't want Cro government
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Post by Carol on Oct 20, 2006 17:48:15 GMT 1
but you still preferred to buy privately, rather than set up a company and everything is done immediately?
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Post by Ribaric on Oct 20, 2006 22:54:54 GMT 1
Hmmm! This is not something I took into account when I decided to purchase by via the private route. Why would I? I still hold the belief that things are mostly straight forward but I have to admit that it feels like the sand is beginning to shift.
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Post by Carol on Oct 21, 2006 9:19:46 GMT 1
The downside is you have to run your company. Mainly this means regular company filings for which you need a book keeper. Plus various "taxes" adding up to €100 pa. Book-keeper for a dormant company is €200pa.
The second downside is profit tax. If you you own your property privately, you can sell it without 35% capital gains tax after 3 years of "legally" owning it (meaning three years after MoJ permission has been granted. If you own it via a company and you sell it then 20% profit tax is payable without a time limit. However this does not apply if you sell your company and property together.
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Post by Carol on Oct 21, 2006 9:22:16 GMT 1
Ribaric - if you have not signed your final contract yet, there might be a way to switch to the company route. It depends on the flexibility of your seller and whether or not your pre-contract has been deposited at the land registry.
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Post by jill on Oct 21, 2006 10:09:20 GMT 1
This morning the Croatia holiday and Home newsletter carried this 'news' it doesn't really tell us anything we don't know but..I thought that at least if they start January 2007 that's quite hopeful!:
Changes in the way Foreign Nationals are granted permission to own property in Croatia.
Until recently when a foreign national purchased a property in Croatia (as a private individual), then they had to apply to the Ministry of Foreign Affairs for permission to own that property. The Ministry of Foreign Affairs processed the applications and passed the applicants details to the Ministry of Justice for ratification, before finalising the application and granting permission. This process has never been very quick with an application back log as far as 2003. With the Capital Gains tax laws on property, this has meant that some purchasers have had to wait as long as 4 or 5 years before they can sell their property investment free of capital gains tax. Thankfully though this process is about to change with the Ministry of Justice now taking the lead role in processing the applications. The Ministry of Justice is committed to working through the current backlog of approx 6,000 (!) applications and putting in place processes that drastically reduce the timescales for an application to be approved. The one problem is that the Ministry of Justice has to enter the existing backlog into the new system before it can start reviewing the applications. This means that new reference numbers will be issued to existing applications and more importantly, that the process of entering the existing applications will take them until January or February of 2007!
What this means is that none of the existing applications will be reviewed until Jan 07 at the earliest. More importantly, the Ministry of Justice has stated it will then work through the backlog of existing applications before reviewing any new applications that are submitted. While it is good news that the Croatian Government has recognised a need to improve the process application, it appears that foreign nationals will have to wait a little while longer before being given approval to own a property in Croatia. For those purchasers that are buying in Croatia as a long-term investment, this change will have little impact, but for those investors looking for a quicker exit, it might be worth reviewing the benefits of buying through a company:
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Post by Ribaric on Oct 21, 2006 23:23:23 GMT 1
Thanks Carol but I disagreeessement of the two options still makes the 'private' route much more attractive to my specific plans. I'm not doing this as an investment per se, it's more about my life. I clearly need to be concerned about my financial health so the investment element is important but I don't plan to go anywhere for a while and, when that times comes, I don't want to be hamstrung by trying to sell a company at the same time.
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