Found along the Adriatic Sea, Croatia is a true paradise on Earth. Aside from its natural beauty, the country is quickly gaining a reputation as a growing economic hub.
If you can envision yourself running a business in this picturesque landscape, here is a step-by-step guide on what you can expect and how to get your business off the ground.
Is Croatia An Ideal Place For Startups?
Croatia has an incredibly strong startup scene. According to StartupBlink, the country’s startup ecosystem currently ranks 11th in Eastern Europe and 48th globally. In 2023, the Global Entrepreneurship Monitor reported that one in eight adults in Croatia was already running, or about to start, their own business.
In cities such as Zagreb and Split, you will find plenty of co-working spaces and incubators to support entrepreneurs and their new ventures. There are also low corporate tax rates for small businesses, which can be appealing for their owners.
Why You Should Consider Starting A Business In Croatia
There are plenty of opportunities that could persuade you to start a business in Croatia, and these are the top three reasons why.
Location: From Croatia, you can easily access Central Europe as well as Southeast Europe and the Mediterranean. It’s also close to other major hubs such as Italy and Germany which makes it ideal for trade.
EU Membership: Croatia has been part of the European Union since 2013, offering the opportunity to access more than 450 million people.
Quality of Life: The country is a blend of modern cities and historic coastal towns, both offering a high standard of living. Croatia is also known for its excellent education and healthcare systems, with the added benefit of safety which is appealing to foreign entrepreneurs with families.
Industry Opportunities For Startups
If you are an entrepreneur considering Croatia as your business location, choosing the right industry is critical. These are the top four sectors that tend to do particularly well.
Tourism and Hospitality: Croatia sees millions of tourists each year, drawn in by its history and coastal charm. This is a yea-round opportunity for entrepreneurs, whether it be in luxury accommodation or eco-tourism.
Agriculture: The country is known for its fertile land, which is ideal for organic farming or wine production companies.
Tech and IT: Croatia’s workforce is becoming increasingly skilled in the areas of gaming, cybersecurity and software development, making tech one of the thriving industries.
Renewable Energy: Croatia has an abundance of both sun and wind, which has resulted in renewable energy companies gaining more traction.
Taxes In Croatia
Croatia has competitive tax rates when compared to other European countries, making it an attractive option for business owners.
Corporate Income Tax: Smaller businesses who have an annual revenue of up to €1 million pay 10% while companies who exceed this amount will pay 18%.
Value Added Tax: The VAT rate is 25% currently, while some products and services carry reduced rates of 13% and 5%.
Personal Income Tax: This ranges between 20% and 30%.
Contributions: Both employers and employees will contribute towards health, pensions and unemployment benefits.
Croatia’s Visa Requirements For Foreigners
If you are a citizen of the European Union, you can reside and work in Croatia with no issues. For non-EU citizens, there are specific visa requirements that need to be followed.
Temporary Residence Permit: If you are a foreigner with the intention of staying in Croatia for more than 3 months (90 days), you will need to apply for a temporary residence permit.
Business Visa: Entrepreneurs who want to invest in or start their own company in Croatia can apply for a business visa. For approval, you need to provide evidence of business activities and sufficient funds.
Digital Nomad Visa: Remote workers can apply for a digital nomad visa, allowing them to stay in the country for up to a year.
The Process Of Starting A Business In Croatia
If you have decided to start a business in Croatia, here is a step-by-step guide on the process that you will need to follow to do so effectively.
Step 1: Choose Your Business Structure
There are three to choose from:
Obrt: A sole proprietorship which is suitable for smaller businesses.
d.o.o: A limited liability company, the most popular choice for startups.
j.d.o.o: A simple limited liability company. This is best suited for entrepreneurs who have limited initial capital.
Step 2: Register The Business Name
You will have to check the availability of your desired business name with the Croatian Business Register. If it is available, then you can reserve it.
Step 3: Open A Bank Account
A business bank account will be required for entrepreneurs to deposit the initial capital amount. If you are a limited liability company, the minimum amount is HRK 20,000.
Step 4: Get A Tax Number And Register For VAT
To receive your personal and corporate tax number, you will register with the Croatian Tax Administration. If your annual turnover is more than HRK 300,000, you will be required to register for VAT.
Should You Start A Business In Croatia?
Starting a business in Croatia can be a profitable and rewarding venture due to its startup support and ideal location. With plenty of opportunities in the tech, tourism or agricultural sectors, you can have a relatively good chance of succeeding with your venture.
Best of luck!
