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Post by allenbt on Jan 13, 2013 9:34:37 GMT 1
Hi, can we transfer the land we own on Hvar through a croatian company to personal ownership without incurring a capital gain This would save accoutanty fees and taxes, etc.
Ps Does anyone know an honest, hardworking and pro active lawyer based in split or hvar?
kind regards
Ben
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Post by mh on Jan 17, 2013 1:20:08 GMT 1
Hi Ben,
I hope you will agree with me that any transfer of company ownership without paying tax is simply out of question and contradicts not only Croatian laws, but also laws in your own country. I hope you will indeed pay all taxes as you would do in your own country. Such thoughts are really showing dispecable greed of so called foreign investors, shared by growing number of Croats.
Please contact reepresentatives of your embassy in Croatia for list of lawyers that can help you. As they are laywers, sorry, but they are oblidged to act wirhin the law, same as in your country and in some circumstances can refer you to answer the questions of The Public Prosecution, same as in your own country.
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Post by Carol on Jan 17, 2013 16:56:06 GMT 1
Ben - sorry but I doubt it. Well actually, the technical answer is yes, but only because you misnamed the tax... you should have called it corporation profit tax (which is charged at 20%).
You will also have a 5% real estate transfer tax to pay on the whole value (as decided by the tax officer who would deal with your case).
The same tax officer would also decide how much you really sold the land for and use that to calculate how much profit your company made from owning the land (and then charge your company the 20%).
So the only way that theoretically your company could not be liable for the profit tax would be if you didn't make a profit on the sale, however it would be up to the tax officer to decide that, not down to whatever the sale contract would say.
This is the sort of question that you should ask your accountant because their personal relationship with the tax office is what would make the difference here.
Also, I am taking it for granted that you have a right to personally own the land because if you aren't, then the whole thing falls at the first hurdle.
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Post by allenbt on Jan 19, 2013 0:13:37 GMT 1
Thank you both for your replies, to say I show no respect for Croatian Law or feeling is wrong and is missing my point. We purchased the land in 2006 when you could not do so as an individual so the Company was the only route. For 6 years we have paid taxes, legal and accountancy fees and not missed a payment or complained. In the UK we would have bought this land as an individual so a comparison is unfair! I was merely asking if we could own the land as individuals now the laws changed regarding foreign ownership and if we could change this ownership would there be taxation implications?
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Post by mh on Jan 19, 2013 11:27:24 GMT 1
Thanks, that is now reasonable.
Yes, you can own the land if building lot only. The fact you "was forced to buy and transfer the ownership to a Croatian company" is irrelevant, as that were the laws of the land. You have also enjoyed tax benefits. I would not argue this time a simple fact you registered a business without intention to trade, but you should have that intention (according to many documents you have signed as a company director) and you need to pay all taxed in Croatia and your home country.
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Post by Ribaric on Jan 19, 2013 14:03:02 GMT 1
I was merely asking if we could own the land as individuals now the laws changed... Hot from the accession negotiations... foreigners will not be able to purchase land designated as either agricultural, forestry or national park for a minimum of seven years after the date of accession to the EU. This has been pushed by the Croatian side and now accepted by the EU accession negotiations team. I'll find a link and post it if I can. |
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Post by Ribaric on Jan 19, 2013 15:11:54 GMT 1
Update, Mrs Ribaric just saw an item on HRT1 which confirms the agreement is a freeze on foreign ownership for seven years from the date of accession plus, at the end of that time, Croatia has the right to extend this by a further three years if so minded.
I guess that if you "own" such designated land through a d.o.o. then don't look to buy it from yourself for about 10 years. This agreement refers only to EU citizens, those from outside the EU have no way of ever buying such land as personal property.
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Post by swordfish on Feb 12, 2013 8:06:30 GMT 1
Allenbt, I take it that your company that bought the land was non profit making. Has the government shut your company down. Is this the reason for the transfer of ownership or was there a clause for your company because of foreign ownership.
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Post by propertymanagement on Feb 13, 2013 0:06:31 GMT 1
Speaking about corporation profit tax... why do you think he will need to pay this tax? He can declare any price in the sales contract, and there is a pretty big chance he won't be paying any profit tax (or maybe just a small amount of profit tax). I think you should contact your accountant service and ask them what sales price they recommend... so that you don't need to pay a high profit tax at the end... I hope you have a good accountant service, because this is where you can save a lot of money.
But rett (real estate transfer tax) is something you can't avoid.
Apart from the rett, you will need to pay some fees for closing down a company... and it's a process that takes 18 months i think.
Hope it helps...
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Post by mh on Feb 13, 2013 22:37:10 GMT 1
What is the user profile on this forum? Or so called foreign investors are so stupid? They also add some advertising for their businesses, or just a coverup for their anti-Croatian activities?
No, you cant just put "any price" on a contract between you and any company related to you. "Any price" is nothing else but a tax fraud or money laundering. Thanks God for heroic Croatian tax officers and such foreign investors will be sent home and their properties returned to Croatian people. Then, let the foreign investors do their business in their own countries and learn what could, should and can be done in business. Shame!
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Post by propertymanagement on Feb 13, 2013 23:50:57 GMT 1
No, you are not right... "any price" on a contract is not a fraud or money laundering.
Why should I sell the property to myself for more then what I (company) paid for? Is there any good reason to do so? I don' think so.
Why it is not a fraud... well, am I making any profit when selling a property to myself... actually I don't... so why should I be paying any profit tax? What you are writing just doesn't make any sense.
Maybe you were talking about rett... if that's the case, then you are right... but the law says rett is 5% of the value of the property - so the tax inspectors will determine what's the actual value of the property and ask you to pay 5% on top of that, not on top of the sales price (if they think the sales price is lower then its real market price).
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Post by crojoe on Feb 14, 2013 0:06:31 GMT 1
Don't worry to much about MH, he's a nationalistic Croat nutter, always ranting and raving that all foreigners are robbing him of his country. He also has no idea what foreigners face in legal matters, what it takes us to stay legally in Croatia or buying property with hard earned cash. Of course he is blind to the facts on the ground of how many big business and government Croats rob their own people, over tax people and pass laws to restrict peoples freedoms.
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Post by Ribaric on Feb 14, 2013 8:40:12 GMT 1
Good post Joe. BTW, mh is a she and has been chucking spears here for years.
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Post by mh on Feb 14, 2013 13:47:12 GMT 1
Sorry guys, I understand your frustration, but I am here to help more then annoy anybody. Any price is illegal on number of grounds in all countries on a basis of tax fraud and money laundering. In fact, any transaction between parties related to each other (husband to wife, parent to child - these transactions are often tax free - but in particular company director to himself) automatically trigger mechanisms to legally make transaction invalid. Any price is only the market price. So do not be surprised if you are asked to justify transfer price by the independent valuators report, for instance.
Croatian authorities are here to deliver balanced outcome. I understand being foreign investor is not easy, but that is no excuse.
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Post by gmh on Feb 14, 2013 18:41:59 GMT 1
Croatian authorities are here to deliver balanced outcome. From someone who received a completely biased and unbalanced judgement from Croatian authority, I have to say that what you just said is one of the funniest things I have ever read ! You should count yourself lucky that you don't actually live in Croatia, because you'd probably die of shock. |
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