February 2009 changes in purchase process

[tribe]

Hi-

We are looking to buy a small apartment in Rovinj.

We have been told that from February 2009 EU citizens will not require MOJ approval to purchase real estate (there are messages confirming this in the "MOJ Permission" thread).

However, it is unclear whether from February 2009 EU citizens will still need a company to rent out (legally) an apartment.

This is relevant to us as we would buy as individuals (after February 2009), if we can then let as individuals; while we would buy through a d.o.o. if we still need a company to let the apartment after February 2009.

Does anybody have any information on whether EU citizens will be able to let an apartment without a company after February 2009?

Thanks much!

[Ribaric]

Aug 31, 2008 15:52:03 GMT 1 tribe said:

We have been told that from February 2009 EU citizens will not require MOJ approval to purchase real estate (there are messages confirming this in the "MOJ Permission" thread).

I am advised that after Feb 2009, EU residents will be able to buy property as a private individual and not require MOJ permission. BUT! You can do that now, it just means you can't live in it unless you have a visa (by some other method) to remain in the country. You will not be able to get a number of services (phone, ADSL, gas, electric etc) because these agencies always ask for your MOJ permission before agreeing to connect you. There is no requirement for them to change their practices. Don't ask about raising a mortage on it, getting planning permission to develop it ... selling it? I haven't looked at the problem you may face if you want to rent it out. Frankly, ISTM this new agreement is of little value to anyone.

As always, I'm very happy for people to point out where I've gone wrong with this and, in this case, I hope I have.

[mambo]

If you ask me the safest way (and also financially best way) is to buy via a d.o.o. Yes you have some extra cost (lawyer, court, bookkeeper), but the good part is that you can deduct all the pdv (VAT) on anything that you need for the house.
The company will have no problems getting electricity, phones, water etc. You can get a working visa much easier and if you want to buy additional land (e.g. agricultural) you won't have any problems either and if you want to sell the house.....................you simply sell the wole company. The company will then get new owners and you will not need permission for that either.

[tribe]

Thanks for the tips, mambo and Ribaric.

The company route does sound safest. But is it really also the best way financially?

I have read on other threads that rentals are PDV-neutral (I guess that means that the PDV charged and that deducted generally cancels out), so PDV deduction does not seem a big plus - especially when factoring in the extra complication (and costs) of being PDV-registered -
visitcroatia.proboards21.com/index.cgi?board=property&action=display&thread=5949

On the other hand, the non-application to companies of the three-year rule on capital gain taxes seems a definite minus

I take your points - mambo - on buying agricultural land and work visa; but we only want to buy an apartament and rent it occasionally (when we do not need it). It seems to me that we would be better off if we could do that without the added costs and complications of setting up a company.

Or am I missing something?

[polako]

Even buying a property via the company route, does not necessarily mean that you can rent out your property as it has to have commercial/tourist categorisation. See the other thread- renting out without categorisation.

In addition, I do not know this for definite, but I was under the impression that with the new doo laws- you could no longer have a dormant doo and that there are additional doo requirements which you would have to satisfy if you now bought property via this route. If I am wrong- I am sure that someone will correct me.

[Ribaric]

Not really my field but I am led to believe that all new companies must satisfy a set of criteria which fundamentally rules out using a dormant d.o.o. as a vehicle for home ownership. Such criteria includes providing convincing business plans which show that 100,000 Euros will be invested into the company (new money) over the next three years. There are clear rules regarding who must be employed and the qualifications and bona-fides of the person who will run the business (not necessarily the owner). There are advantages as Mambo points out but I can't make the numbers add up, not even close, unless it will be a real working company with a reasonable turnover.
I believe this is the single most important cause for the sudden dirth of foreign buyers of property this year. Ask any nekretnine agent, times are very tough and they are being compelled to change, diversify or pack it in.

[splitska]

Hi there. Just to let you know I bought an apartment almost four years ago. Still waiting on MA - although the Ministry recently asked for more documentation and they have it all now - so hopefully I will get MA soon. In relation to renting. I have rented to local residents for the past four years. I have paid my taxes and have had no problem setting up phone lines etc in my name ! I know that if I was renting to tourists it would be a different story but renting to the locals seems to be ok. I have a tax consultant in Split and the whole thing is very hassle free. People writing on the web seem to be saying that you cannot rent out the property at all but my experience is quite different and it has gone very well for me. Personally I would not consider going down the doo route because of account submissions and business taxes. Hope this helps.

[polako]

Sorry should have made it clear- tourist lets require the property to be categorised and not long term rentals.

Jul 22, 2008 9:32:28 GMT 1 upthevilla said:

You can rent the property without categorisation if you sign a contract with the tennants at the public notary this is only for long term rent and does NOT cover tourism. Both parties can be individulas or companies . But i repeat this does NOT apply to short term tourism rentals.

The 3 page contract is a standard form.
ie name ,address, purpose of use, defining who is tennant and who is landord, rights of both parties, who pays services etc
The form is
*Ugovor o najmu (sa slobodno ugovorenom najamninom )
and is based on the law for renting, article 91/ 96 ( Narodne Novine )

Sorry do not know about what will happen in 2009 re individuals and rental and whether they will need categorisation or not etc because I can't find anything to that effect in the SAA although it has been mentioned by a number of people. But I would be interested where everyone says it is in the SAA. The croatian gov can't discriminate between EU nationals who are self-employed/established in Cro and its own nationals from feb 2009- Articles 48+49.

[tribe]

Everybody, thank you very much for your help!!

Given the new d.o.o. laws, we decided to buy as individuals. We also decided to wait for February, to avoid having to go through the MOJ permission process.

I'll let you know how that works out.

[polako]

Tribe- Just like splitska I got my utilities connected before I got my MOJ permission which took nearly 2 years- you really need to talk to your estate agent about that if you find your dream property before Feb. My estate agent helped with the electrics change over and the other bills were changed over by the really nice previous owner. No problems- everyone was really nice about things.

[vanetta]

Maybe of interest out today.



www.opp.org.uk/news_article.asp?id=2690

CROATIAN GOVERNMENT TO REMOVE RESTRICTIONS ON EUROPEAN BUYERS
Croatia, foreign ownership

OPP has learnt that the Croatian government is removing all of its restrictions on citizens from the European Union buying property in the country as of February 1, 2009.

As Croatia works towards joining the EU, perhaps as early as next year, its government is hurriedly introducing new legislation to harmonise its processes with that of the 27-strong nation bloc.

According to Article 60 of the Stabilisation Agreement with the European Community, Croatia “shall progressively adjust its legislation concerning the acquisition of real estate in Croatia by nationals of the member states of the European Union to ensure the same treatment as compared to Croatian nationals”, according to information provided by the International Law Partnership.

Although numerous, currently, only nationals of countries holding reciprocity agreements with Croatia regarding property ownership are allowed to acquire residential real estate in the country. Once purchased, the buyer then has to form a company and register this with the land department – a process that can take over a year to complete.

As of February 1, 2009, buyers from EU member stated will have the same right to purchase property as Croatian nationals, with the exception of certain agricultural holdings and environmentally protected land.

“Naturally this will open the market to quite a number of Europeans as their banks will now be able to provide loans for a Croatian property whose title is clean and a building permit exists,” said Adria Mare Nekretnine, MD of Zadar-based Adria Mare Real Estate. “The smart long term investor will purchase land on the fringes of towns and cities, while the short term investor will probably focus on properties where the paperwork can be cleared up, either homes or land, hire a decent lawyer/architects to push things through and get a 50% return in 2 years.”

Despite the February date for next year, property professionals talking to OPP explained that the Croatian government is already streamlining some aspects of the process and agents should make buyers aware of this to avoid a situation where potential investors hold-off until the legislation is enforced.

Nick van den Bichelaer, head of sales for the Benelux buyer group at the Dutch-based estate agency Middelland Croatia, said that although this is positive, prices will rise after EU accession and now is the time to convince Europeans to invest.

“People that want to buy as a private individual, or through a company can do so now, as the approval process at the land registry is dropping steadily from the one to two years it took last year to just months. This is just one more conformation that Croatia is set to join the EU, however after that happens prices will rise and negotiating sales will become more difficult,” he suggested.

[grane]

Sept 9, 2008 13:56:47 GMT 1 vanetta said:

Maybe of interest out today.



www.opp.org.uk/news_article.asp?id=2690

CROATIAN GOVERNMENT TO REMOVE RESTRICTIONS ON EUROPEAN BUYERS
[...], however after that happens prices will rise ...

rise?!?
If that will happen maybe only Abramovich and Berlusconi will be able to buy properties in Croatia.

and negotiating sales will become more difficult,” he suggested.

.....now, negotiating sales is very easy in Croatia.......

[keepsmiling]

50% in 2 years ;D ;D ;D Ha Ha ha...more like minus - get real OPP.

[Katy]

Hello,

Sorry if this has already been asked, but does anyone know whether this means that in February 2009, people who've already applied for permission will still have to wait for it, or will we automatically become the property owner?

Thanks!

[Katy]

Sept 10, 2008 21:29:10 GMT 1 Katy said:

Hello,

Sorry if this has already been asked, but does anyone know whether this means that in February 2009, people who've already applied for permission will still have to wait for it, or will we automatically become the property owner?

Thanks!

Bump!

Anyone know the answer to this?!

Thanks!