Wife owning Croatia house alone?

[hravathouse]

Hello
My wife and I are US citizens and are planning to buy a vacation house in Croatia, probably this Spring. I just came across the Croatian definition of tax residency as being tied to house ownership, and the associated taxation of worldwide income. But almost all of our US income is in my name, not my wife's, so one solution might be to title the house in her name only. I want to confirm some things:

Can a married woman own property in Croatia without her husband's name on the deed if they are married at the time the property is purchased?

Is it only the person whose name is on the deed that is tax resident and thus subject to worldwide income taxation, regardless of his/her marital status?

Does any concept like the US "married filing jointly" tax filing status exist in Croatia, or at least is it possible for each member of a married couple to file taxes individually, independently of how they may have filed for US income taxes?

US Social Security retirement income would qualify as "pension income" under the Croatian tax system and thus not be taxible in Croatia?

I realize I could duck this issue by buying through a Croatian company started for the purpose, but my wife is in the process of obtaining Croatian citizenship, and using her citizenship seems to offer both an easy path through the purchase process and lower costs (through not starting and supporting a Croatian company) if we can work this taxation issue. I understand it will also facilitate our letting the property in the future if that makes sense.
Thanks in advance,
Frank and Maria

[3lions]

Your wife can buy a property there and you don't have to be on the deeds, for the other questions I think you need a good accountant (to state the obvious).

[Cam W]

I did this all 4 years ago. Send me a msg if you have questions or need help...

[Carol]

it seems a bit strange that the cro govt could tax foreign owners on their non cro earnings. For a start it doesn't seem fair and for second I have never heard of it happening.
Double taxation where there is confusion on the issue of domicile yes.. possibly, but not on property ownership!

There are such things as double taxation agreements between countries which deal with this issue and Croatia certainly has them with a large number of other countries. The US is a funny one because the rest of the world thinks of it as a single country but I have a feeling that it is a union of states when it comes to things like international treaties. So why not google the words "Croatia <your state> double taxation treaty" and "Croatia USA double taxation treaty" and see what the internet comes up with. Then read the treaty and you may well find that you can only be taxed once on each source of your earnings.

[Cam W]

Generally, both Federally ans State governments require the tax payer to report "foreign worldwide income". Many Countries do this, including Canada. They generally give you a tax credit equivalent to the taxes paid in the foreign country and then add the income to your other income and tax you accordingly, in a higher bracket usually. In Canada, this is Crazy because the taxes are about 10-25% higher than in the states. One can "sever ties" which will usually change your tax status. Me thinks the taxes are lower in the US, especially if you live in a tax free state. I would speak with an acct in both Cro and the US...

[hravathouse]

I'm not worried about taxation of any Cro income in the US. I'm assuming that the only Cro income I might have would be from letting our house which would be taxed in Croatia, and that a tax reciprocation agreement would allow me to deduct my Croatian taxes from my US tax liability. But if that doesn't happen and I get taxed both places it won't be the end of the world, since I don't expect that to amount to all that much income.

The one which scares me is taxation of US income in Croatia, where my income would be taxed at a high rate in Croatia (relative to my US tax rate). Now even a suitable double-taxation agreement really doesn't solve the problem.

On how Croatia gets away with this, I don't have a clue. All I'm doing is reading the words (actually, in your book, Carol), which seem to say that if I own a house in Croatia I am tax resident, regardless of how long I stay in the house, and that Croatia taxes worldwide income. If there is some other way to interpret that or the reality is different, that would be great.
Frank

[Carol]

ok.. my understanding is that Croatia will tax your Croatian income and the Us will tax your US income. The caveats are that i did that research a long time ago and the memory fades and that things might have changed in the interim. My usggestion would be that you do the same research that i did for that book... start with the croatian tax pages and then read the freely available tax guides that the big accountancy houses publish. I mean KPMG and PW.
I can't see the cro govt successfully taxing you on your us income somehow

[gmh]

Every time i had my residency renewed here I had to provide proof of income. Most of mine was in the form of contracts for work I had done in other countries. Nobody ever asked me to pay tax here on it.

[capio]

You should be paying tax on it in Croatian Gavin. That's how the tax system works. It's based on residency, I had to pay tax on money I earned outside of Croatia, until I started getting paid into a Swiss bank every month. You'd have to be pretty stupid to declare money they have no way of tracking.

[crojoe]

Foreign taxpayers will be subjected to taxation on the following forms of income:
-income from employment that is paid out inland
-income from an inland business unit
-income from inland employed agency work
-income from inland real estate and appertaining personal items and rights
-income from property rights that are used inland for a fee
-income from wholly owned or chartered ships or planes that are used for forwarding from inland ports
-income from self-employed work (the delivery of goods and services) carried out inland or abroad and serving for the performance of some economic activity inland

In other words you don't pay taxes on money earned abroad.

[Madgolfer]

-income from employment that is paid out inland
-income from an inland business unit
-income from inland employed agency work
-income from inland real estate and appertaining personal items and rights
-income from property rights that are used inland for a fee
-income from wholly owned or chartered ships or planes that are used for forwarding from inland ports
-income from self-employed work (the delivery of goods and services) carried out inland or abroad and serving for the performance of some economic activity inland

I am so pleased I called my business Inland Croatia.com ;D

Now I know why I pay so much tax, it's because all you buggers at the coast dont pay any!

[MartinM]

MG - hee hee lol!

[claude]

I looked into this two years ago because I was planning a move to CRO (Balkan boyfriend moved to Chicago instead). I never got as far as talking with an accountant, but I read the IRS codes around int'l taxation pretty thoroughly. Since there's no double-tax treaty between the US and CRO, you're technically responsible for paying taxes on the income from both places in the US - if it's claimed on your personal taxes anyway. Not sure that would be an issue if you formed a company. There is some sort of allowance amount that's nontaxable if you are actually residing outside the United States in the country where you earned the income, from what I remember.

The codes may be different now than when I did my research.

[hravathouse]

crojoe
You quoted some categories of income subject to taxation. Can you tell me where you got the list? I looked at www.pu.mfin.hr, which is the Rep. of Croatia, Ministry of Finance site, and it seems to say all worldwide income. Actually your list is titled "foreign taxpayers", but my understanding is that by owning a house (irrespective of what time we spend there) we are Croatian tax residents, so I assume "foreign" doen't apply? In any case I didn't see the list you quoted, so I would like to look at the site where you got it.
Thanks
Frank and Maria