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Post by croatia2013 on Nov 24, 2012 12:16:04 GMT 1
I bought a house in Croatia as a private individual 8 years ago. I decided to avoid the company route because of the set up and running costs. Back then foreigners could not receive Croatian income unless they channelled it through a Croatian Company. I also knew that this meant I would not be able to apply for a rental licence but I was not interested in renting out at that point. Over the years I have seen that businesses have started that will set up a rental licence on behalf of private owners, that involve tenancy agreements. I decided to wait for EU membership as at that point I would no longer be a “foreigner” but a fellow EU member. (I know this may be a little premature as the accession is not yet fully ratified: www.delhrv.ec.europa.eu/?lang=en&content=3935 but if I am to rent my property for next summer I need to understand the new rules as soon as possible.) I searched the internet and the UK Home Office has recently published a document regarding rules for Croats coming to the UK : www.homeoffice.gov.uk/publications/immigration/croatia-eu-accession/statement-of-intent?view=Binary but I cannot find the corresponding paperwork from the Croatian government. From July 1st 2013 Croatia will have to change a lot of rules regarding work visa and permits and presumably at the same time make ex-foreigners have the same ability to receive Croatian income and apply directly for a rental licence without the need of a company. The only law gaining publicity currently seems to be the new Croatian Property Tax , which if successfully passed will certainly impact on my “vacant” property. Yet I cannot find the laws that will come into place in 8 months’ time that will allow me to apply for the reliefs that I need to mitigate the expense of this imminent tax. I have lurked on this site over the years and this is my first thread so I hope that someone here can tell me the answer (or when we can expect one) or correct my logic. Thanks in advance.
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Post by crojoe on Nov 24, 2012 12:35:11 GMT 1
I bought a house in Croatia as a private individual 8 years ago. I decided to avoid the company route because of the set up and running costs. Back then foreigners could not receive Croatian income unless they channelled it through a Croatian Company. I also knew that this meant I would not be able to apply for a rental licence but I was not interested in renting out at that point. Over the years I have seen that businesses have started that will set up a rental licence on behalf of private owners, that involve tenancy agreements. I decided to wait for EU membership as at that point I would no longer be a “foreigner” but a fellow EU member. (I know this may be a little premature as the accession is not yet fully ratified: www.delhrv.ec.europa.eu/?lang=en&content=3935 but if I am to rent my property for next summer I need to understand the new rules as soon as possible.) I searched the internet and the UK Home Office has recently published a document regarding rules for Croats coming to the UK : www.homeoffice.gov.uk/publications/immigration/croatia-eu-accession/statement-of-intent?view=Binary but I cannot find the corresponding paperwork from the Croatian government. From July 1st 2013 Croatia will have to change a lot of rules regarding work visa and permits and presumably at the same time make ex-foreigners have the same ability to receive Croatian income and apply directly for a rental licence without the need of a company. The only law gaining publicity currently seems to be the new Croatian Property Tax , which if successfully passed will certainly impact on my “vacant” property. Yet I cannot find the laws that will come into place in 8 months’ time that will allow me to apply for the reliefs that I need to mitigate the expense of this imminent tax. I have lurked on this site over the years and this is my first thread so I hope that someone here can tell me the answer (or when we can expect one) or correct my logic. Thanks in advance. If we are to understand the law right then if you stay in that property at any time in the year then you are exempt from the high council tax fee, as that property would not be "unused". In a way it will be a like a weekend house. Once Croatia is in the EU it can still retain certain local laws on matters as long as they don't contravene EU law, such as freedom of movement within EU for all EU citizens and such. I see this happen quite often in EU countries where they pass a law then it gets challenged in the EU courts and over turned. But regarding local taxes, a country can so choose what amount that will be, plus we'll have to pay EU tax. We're just heading back to the dark ages, kings and peasants, we the peasants who get taxed to the hilt by greedy kings and lords of the realm.
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Post by upthevilla on Nov 24, 2012 19:33:13 GMT 1
The main thing is is the house in a residential zone, commercial zone or touristic zone or built before 1968 ? if it is in a residential zone then you can NOT get the licence if you are a foreign citizen. even a Croatian company cannot get the licence for you. if it is residential then ONLY a private Croatian citizen can apply for and get the licence. If it is a commercial building then a Croatian company could get the licence. Worst mistake is to let a 3rd party company apply for the licence for you. It is the company theat gets the licence, not you, they own the licence, all money and bookings must go via the comapny. in other words, you have to get the money from the company and if its not your company ... good luck.
A Croatian company , owned by you, or a third party, can only get the licence if the property is built before 1968 or its a commercial building This is the law as it stands now. What happens in the future is pure speculation.
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Post by croatia2013 on Nov 25, 2012 13:45:39 GMT 1
Thanks for the input so far. If your interpretation is correct Crojo- that me visiting my house for 2 weeks every year will be enough for my council to decide that the house is not vacant -then that is fantastic news. A niggling doubt if that is the case then the governments ambitions to get people like me to pay more tax -wont work. Our house "Up the Villa" is pre 1968 so there are no problems there. (BTW does any one know an online source that clarifies where the official touritic zones are?) I have no intention of getting a third party to run my company so your confirmation against that route is appreciated. As I initially said my hope would be that I would from July 2013 be able to rent as an individual. I get the sense that you all think that the chances of that being in place in 8 months is a long shot. In which case I will buy a company that is set up to rent, sort out the inspectors to get categorised and apply for a licence.So far so good. My knowledge then gets cloudy. Obviously my newly appointed accountant will keep the books on my behalf. It looks like the lower the figure you can put through the books for your private rent between you and your company the better.Is this because that is a cheaper tax rate than the 20% company tax? Also if that figure is obviously way below the market rate will the authorities refuse it? From what I have read I know that my net renting income will be around half of my gross income after taxes but I think that is a price worth paying to be legal. It should also ensure I dont get hit with an excessive new property tax. But I want to maximise the set up in the company as cost effectively as possible. Thanks again in advance for any input. I am happy to pay for expert advice but what I have found is that this forum is much more authoratative than any other source I have found.
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Post by anton on Nov 25, 2012 18:36:19 GMT 1
As far as VAT is concerned I believe the threshhold is being raised at the end of this year to over £20K income per year so this probably won't affect you.
I think you can set up a company of your own and then sign a contract with yourself to allow your company to rent out your personally owned property on your behalf.
You will then have to pay company taxes and personal income tax on any profits but I think this is probably the easiest way to do it.
Ask your local office. I certainly found mine very helpful when setting up our rental licence.
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Post by upthevilla on Nov 25, 2012 19:47:26 GMT 1
Anton is correct the pdv threshold is going up to around just above 20 k euro. i do not have the link as this is old news.
Where in Croatia is the property
Private person ( owner ) rents long term to Croatian Company (owners company ). Croatian company gets the licence. All bookings go via the Croatian company. All money recieved goes via the Croatian company.
Discuss with your accountant and make a long term rental contract . ( its better (less ) to pay more tax personally than company tax ). You cant just put any amount on your rental agrement, they are often checked and challenged and you have to place an acceptable amount. Whatever the going rate for your area , for your size property for long term rent should be applied. discuss in detail with your accountant who can check for you.
pre 1968, then you will 99.99% get a licence. regardless of which zone you are in.
Under current laws you will need a company to rent. personally i think this will be the case for along time to come. ( Imagine how much income will be lost if all the accountants were not needed ).
You do not need to buy a company, its easier to open your own, its takes 3 days. That way when the company is formed you can make sure that the doument is correctly worded so that you can get the licence, again the exact wording often changes so best get the latest. By the time you have done your due dilligence on the company that you are buying and paid over 2,000 kuna for the name change, you could have been up and running with your own company.
You will need to give punmoc (permission) to a Croatian citizen to apply for the licence.
You will need all documentation of the property not older than 3 months
You will need all documentation of the Croatian company not older than 3 months. You will need to get a safety company to come to the property to check. They will then certify or deny. You will be issued with fire exstinguishers and medical kit and evacuations stickers.
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Post by crojoe on Nov 25, 2012 20:15:40 GMT 1
As far as VAT is concerned I believe the threshhold is being raised at the end of this year to over £20K income per year so this probably won't affect you. I think you can set up a company of your own and then sign a contract with yourself to allow your company to rent out your personally owned property on your behalf. You will then have to pay company taxes and personal income tax on any profits but I think this is probably the easiest way to do it. Ask your local office. I certainly found mine very helpful when setting up our rental licence. Don't forget health insurance, which will be about 1300 Kuna per month. Croatian business association tax is about 56 Kuna per month, 500+ Kuna for an accountant per month, bank charge for an account around 35 Kuna per month and then there is personal income on profit. The upside is tax (PDV) on tourist rentals is coming down to like 10%.
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Post by sandybear124 on Nov 27, 2012 9:14:50 GMT 1
Hi croatia2012 - have sent you a private message.
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Post by mh on Nov 28, 2012 22:33:21 GMT 1
Just a quick clarification regarding the "vacant home status". For a house not to be vacant, you require a registered residency (lodged to police and recorded in your ID card). I admit that registered residency and residency for taxation purposes are different in Croatia at this moment. However, the "vacant home status" is the result of residency registration. (BTW, there was always a "tax" for vacant homes in Croatia, but it was not uniformly applied ...
Play fair, pay tax - that is the message from the courageous Croatian government willing to tackle tax avoidance by the greedy property investors and make sure the national wealth is shared with Croats primarily. I would not like to mention individual applying for the Rental License while true Croats are struggling to fill up their accommodation vacancies.
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Post by Madgolfer on Nov 29, 2012 11:19:22 GMT 1
Croatians "playing fair" and paying their taxes..... LOL :-)
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Post by indianalindsay on Nov 29, 2012 15:40:48 GMT 1
Just a quick clarification regarding the "vacant home status". For a house not to be vacant, you require a registered residency (lodged to police and recorded in your ID card). I admit that registered residency and residency for taxation purposes are different in Croatia at this moment. However, the "vacant home status" is the result of residency registration. (BTW, there was always a "tax" for vacant homes in Croatia, but it was not uniformly applied ... Play fair, pay tax - that is the message from the courageous Croatian government willing to tackle tax avoidance by the greedy property investors and make sure the national wealth is shared with Croats primarily. I would not like to mention individual applying for the Rental License while true Croats are struggling to fill up their accommodation vacancies. You are priceless most of the so called greedy property investors that I have met are Croatian. You need to have more of these apartmani and conversions of older properties if you are going to attract tourists to Croatia. The more obstacles that you put in the way of potentail investors the more you will strangle Croatia. Apart from tourism what have you got as a revenue generator. I have a nice flat in Croatia that is empty for 6 months of the year and I would like some Croats to be able to rent it from me, it will never make me a fortune but that does not worry me, I would just like some Croats to enjoy the appartment as well. But there are so many restrictions that I cannot rent it. A lot of your restrictions/ laws are working against Croatia moving forward. That is a shame.
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Post by Carol on Nov 29, 2012 17:55:08 GMT 1
Don't think mh is a Croatian national, unless there has been a huge plate shift and California has broken off from North America and drifted around the world to rest in the Eastern Adriatic!
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Post by mh on Nov 30, 2012 7:12:27 GMT 1
Just a quick clarification regarding the "vacant home status". For a house not to be vacant, you require a registered residency (lodged to police and recorded in your ID card). I admit that registered residency and residency for taxation purposes are different in Croatia at this moment. However, the "vacant home status" is the result of residency registration. (BTW, there was always a "tax" for vacant homes in Croatia, but it was not uniformly applied ... Play fair, pay tax - that is the message from the courageous Croatian government willing to tackle tax avoidance by the greedy property investors and make sure the national wealth is shared with Croats primarily. I would not like to mention individual applying for the Rental License while true Croats are struggling to fill up their accommodation vacancies. You are priceless most of the so called greedy property investors that I have met are Croatian. You need to have more of these apartmani and conversions of older properties if you are going to attract tourists to Croatia. The more obstacles that you put in the way of potentail investors the more you will strangle Croatia. Apart from tourism what have you got as a revenue generator. I have a nice flat in Croatia that is empty for 6 months of the year and I would like some Croats to be able to rent it from me, it will never make me a fortune but that does not worry me, I would just like some Croats to enjoy the appartment as well. But there are so many restrictions that I cannot rent it. A lot of your restrictions/ laws are working against Croatia moving forward. That is a shame. I am sorry to hear you have difficulties renting your place and I agree in the perfect world you should do it. Croatian population is slowing if not dropping, and it makes perfect sense to reduce housing stock by preventing foreigners from using it, while still keep the numbers. Renting to the tourists - lets make it clear - it is a no go zone for foreigners. To help you understand, just consider it as a Truck Driver Union - you need to be member of the Union to get the job and to get the job you need to be member of the Union.
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Post by gmh on Nov 30, 2012 9:13:28 GMT 1
What a ridiculous attitude you have mh. So I suppose we should get rid of the Sheraton Hotel and the Hilton, and all the other foreign owned hotels as well right ? Doesn't matter that they provide employment to Croatians and tax income for the government ? Croatia should in fact forbid any foreign owned company from operating in Croatia and stealing business away from locals.
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Post by justapixel on Nov 30, 2012 9:53:16 GMT 1
Croatia should in fact forbid any foreign owned company from operating in Croatia and stealing business away from locals. I believe Croatia has been doing quite well in that regard. That's why we have 350 thousand unemployed... I don't believe, though, that the bureaucracy is as xenphobic as MH, they are just corrupt and unbelievably inefficient. .
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