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A presentation of Croatia\'s general info, it\'s political strucrure, economy,traffic infrastructure, real estates, legislation, tax systems and tourism overview.

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  1. 1. CROATIA
  2. 2. CROATIA CONTENT Content Croatia General Information .................................. 3 Craoatia and European Union............................... 6 Traffic Infrastructure .............................................. 7 Labor Force ........................................................... 17 Economy ................................................................ 18 Real Estate Market................................................ 20 Legislation ............................................................. 24 Foreign Investors ................................................... 25 Taxation System .................................................... 29 Craotian tourism – overview................................... 31 Dubrovnik
  3. 3. CROATIA GENERAL INFORMATIONThe exceptional geographic position, mild Mediterranean climateand culture, finished transitional processes and developedmarkets, together with a clear European commitment andorientation are the main reasons which make the Republic ofCroatia an attractive and wanted country for all types ofinvestments. According to social advancement Croatia is theleading country and the main factor of the political stability in theregion, well-recognized among partners and institutions.Millions of tourists visit Croatia yearly and the numbercontinuously increases, which is the best fact that confirms theattractiveness of Croatian tourism and hospitality business, andthe most construction and sale of real estate. Croatia is a recentlydiscovered heaven for tourists around the world. Due to itsuntouched nature, exceptional beauty of the coastline and pureAdriatic sea, rich cultural heritage and gastronomic delightsCroatia is one of the most wanted destinations for the oneslooking for peace and rest on a mild Mediterranean climate. Split’s Old Town 3
  4. 4. CROATIA GENERAL INFORMATION The past years have marked an increase in the investment of foreign investors who value the quality of life, and many have decided to move to Croatia with their families. Current laws open numerous entrepreneurial and investment opportunities in production, sales and services. The most important fact that makes the investments prospective and fertile is the ongoing market increase, due to positive national politics towards open markets. The state for some time is methodically disburdening the administration and restructuring its judicial system to make it compatible to the legal European system. The future for Croatia is a new stronger judicial system, to attract additional investments and ensure their security and continuity. Croatia is an investment Mecca since it consolidates the attractiveness of a new Mediterranean country which recently reached a democratic exchange of people, goods and services, successful economic transition and a political multi-party transition. The processes which were to bring Croatia into a recognized and a stable state are finished and it is heading alongside with Europe. It is quite a short way within reach. Korcula 4
  5. 5. CROATIA GENERAL INFORMATIONCROATIA GENERAL INFORMATIONLand surface: 56 594 km2Surface of territorial sea and domestic sea: 31 067 km2Population - estimated in mid-2006: 4 400 000Population density (per km2): 78.5Population in City of Zagreb in mid-2006: 784 000Territorial structure as of December 31st 2007:Counties: 21Cities: 127Districts: 429Settlements: 6 749Gross Domestic Product per resident: 11 545.94 USD Map of Croatia 5
  6. 6. CROATIA CROATIA AND THE EUROPEAN UNIONThe Republic of Croatia was proclaimed as independent 2007 proved the political continuity that has kept theand democratic country in 1990. Croatias political structure position of the ruling Democratic Party, in coalition with theis defined as a parliamentary democracy and is a member social liberals. Today the country moves towards fullof the United Nations since the May 22nd 1992, and now is membership in the European Union and is constantlya candidate for full EU membership. Croatia has received working to meet all mandatory requirements to strengthenan invitation for full NATO membership on the 3rd April its democracy, improve its legislation, stabilize the economy2008. and to achieve economic growth. One of the main tasks is the reform of the Croatian judicial system and publicIt is a politically stable country. Parliamentary elections in sectors, such as the fight against corruption. 6
  7. 7. CROATIA TRAFFIC INFRASTRUCTURE TRAFFIC INFRASTRUCTURE Traffic in the Republic of Croatia is yet to reach the level of utilization and construction quality that is characteristic of the countries in immediate European environment, but a significant improvement has occurred in this field over the last several years. Infrastructure, which includes traffic as one of its more important elements, is the object of direct government interest, so its development greatly depends on the actions of governing bodies. STRUCTURE OF PASSENGER STRUCTURE OF PASSENGER TRANSFER BASED ON THE TYPE TRANSFER BASED ON THE TYPE OF TRANSPORTATION IN 2007. OF TRANSPORTATION IN 2007. by sea and by sea and coastline coastline 9,1% 25,9% by road by roads 45,1% 53,4% by railroad by railroad 44,2% 12,6% by air 1,6% river 0,3% 7
  8. 8. CROATIA TRAFFIC INFRASTRUCTUREROAD TRAFFICAfter its independence, Republic of Croatia has recognized theprocess of constructing a complete road network as a strategiccondition of its economic development, and due to the fact thatvery little was built between 1990 and 1998, the last decade sawthat process intensify a great deal. These days, Croatiapossesses 28.123 kilometers of public roads, and 6.823kilometers are state roads. As far as main-road corridors areconcerned, 593 kilometers of high-level roads were built from1970 to today – 417 km of highways, 72 km of semi-highwaysand 104 km of fast roads.The overall number of 1147 kilometers of highways and semi-highways are now present in Croatia, while several hundredskilometers are currently in the process of construction.A1 Zagreb-Split-Dubrovnik 571 kmA2 Zagreb-Macelj 60 kmA3 Bregana-Zagreb-Lipovac 305 kmA4 Zagreb-Goričan 97 kmA5 Beli Manastir-Osijek-Svilaj 89 kmA6 Bosiljevo-Rijeka 81 kmA7 Rupa-Rijeka-Ţuta Lokva 108 kmA8 Istrian “Y” Corridor: Kanfanar-Matulji 64 kmA9 Istrian “Y” Corridor: Kaštel-Pula 84 kmA10 Mali Prolog-Ploče; 8kmA11 Zagreb-Sisak; 48 kmOverall: 1514 km 8
  9. 9. CROATIA TRAFFIC INFRASTRUCTURE At the moment, highways are being developed proportionally to the increase of traffic demands – new rest stops and junction points are being built, while some sections are in store for capacity increase by adding another traffic lane. The most important highway is undoubtedly the Zagreb-Split section, which is 380 km long and was finished in June of 2005. Its significance is reflected in the fact that it represents a traffic connection between Croatia and the Northern and Central Europe. The A1 Highway will connect the continental area to Dubrovnik, as it is already built till Šestanovac, while the section towards Ploče is currently in the construction process. Its continuation towards Dubrovnik is still in the projecting phase, but it is expected to be completed by the end of 2009. A1 Highway accros Maslinica Bay 9
  10. 10. CROATIA TRAFFIC INFRASTRUCTURERIVER WATERWAYSTraffic on the continental waterways is still not fully utilized as areliable, profitable and ecologically acceptable traffic method formedium and long distances, but connecting the river-trafficcorridors to the Adriatic harbors remains a strategic goal.Croatia mostly has international waterways, while the overalllength of its river waterways is 804 km. At the moment, Croatiahas four river harbors – Osijek, Sisak, Slavonski Brod andVukovar.Croatian river waterways are connected to Amsterdam,Rotterdam, Duisburg, Brussels, Paris, Strasbourg, Munich,Vienna, Budapest etc.There are several shipping companies in our country, as well asa large number of concession holders in the harbor area.Compared to the EU countries, which transport between 6% and24% of cargo by river waterways, Croatia only manages to reachthe 1,5% figure. There are plans for adaptation and additionalbuilding of continental waterways, which leaves plenty of chancefor improvement and development. Some of the more importantprojects in the field of river waterways include the Vukovar Port on Danube Riverreestablishment of the Danube-Sava canal, as well as theconstruction of a new harbor in Vukovar. 10
  11. 11. CROATIA TRAFFIC INFRASTRUCTURE SEA HARBORS Croatia has six harbors of national importance – Rijeka, Zadar, Šibenik, Split, Ploče and Dubrovnik, but only two of them (Rijeka and Ploče) have the Pan-European traffic support in road and railroad corridors. Thanks to their position on the Adriatic Sea, which is positioned very deeply in the European continent, and thanks to their favorable traffic characteristics, Adriatic harbors have always attracted transitional cargo traffic from the countries of Central and South-Eastern Europe. However, certain changes within the countries that gravitate towards Croatian harbors have led towards the drop of Croatian cargo traffic, although today’s situation indicates constant growth in passenger traffic, and a slightly smaller growth in cargo traffic, in all Croatian harbors. Rijeka Port 11
  12. 12. CROATIA TRAFFIC INFRASTRUCTUREOver the course of the last decade, there has been a significantimprovement of the highway network in Croatia, whichstrengthened the connections with European airway and roadcorridors. These factors, along with the increased pressure onsome of the Italian harbors, transform Croatian harbors intoextremely attractive and permanent destinations in internationaltourism and cruiser traffic.According to our statistical information, Rijeka is the largestharbor in the Adriatic with over 13 million tons of cargo in 2007,and there are plans to bring further improvement andmodernization that would activate other Croatian sea harbors.2007 saw the increase of a number of passengers (12 millionpeople), coastal transportations have been increased for 5,3%,while cargo transportations are 3,2% higher than during the sameperiod in 2006.The completion of the planned projects, which primarily intend tobring quality road and railroad sections near our harbors, wouldsignificantly increase the competitiveness of Croatian harbors. Asan example – Ploče was declared a harbor of specialinternational economic interest, and is now poised to slowlytransform from the traditional cargo transportation harbor to aprolific distribution and logistic platform. 12
  13. 13. CROATIA TRAFFIC INFRASTRUCTURE AIRPORTS IN CROATIA Seven airports in Croatia possess taking off/landing mechanisms that can accept conventional airplanes without practically any limitations, which provides them with the status of international airports. Two of them are located in continental Croatia (Zagreb and Osijek), while five of them can be found on the coast (Pula, Rijeka, Zadar, Split and Dubrovnik). Eleven smaller airports are also registered (for airplanes up to 50 seats or smaller airplanes), the first four of which are international: Brač, Lošinj, Osijek-Čepin, Vrsar, Lučko, Varaţdin, Čakovec, Sinj, Grobnik, Otočac and Ploče. Ten international airports present nearly 1 percent of world infrastructure, while according to passenger transportation, Croatian airports and smaller airports participate with about 0,005%. Croatia Airlines is our national airline company. Major Airports in Croatia 13
  14. 14. CROATIA TRAFFIC INFRASTRUCTUREZAGREB – The Pleso Airport is located about 15 kilometerssouth from Zagreb, in a settlement called Pleso near VelikaGorica. It is the biggest and the most important Croatian airport.During 2007, Pleso Airport registered a 15%-increase ofpassenger transportations compared to the year before. Duringthe Sunday morning of December 16th 2007, the Zagreb Airportachieved the record for passenger transportations in its longhistory – the 1979 record, which featured 1.917.000 passengers,was beaten. By the time this year is over, almost 2 millionpassengers will have passed through the Zagreb Airport.ZADAR – It is located in a settlement called Zemunik Donji,which is about 7 kilometers east from Zadar. This airport is animportant factor in the process of connecting northern Dalmatiaand Lika to the other parts of Croatia and the world. Due to therecently established airlines in early 2007, the building forpassenger terminals was additionally expanded, which enablesthe Zadar Airport to now receive a much larger number ofpassengers. Zadar Airport facilities also include Lufthansa’sInterCockpit school of flying.SPLIT – This airport is located near Kaštela (6km from thecentre), Trogir (6km) and Split (25km). It was opened in 1966,and the number of passengers continually grew until 1988. Theairport was shut down due to the war in 1991, but was soonreopened in April 1992. These days, it stands as one of the moreimportant connections between Dalmatia and the rest of Croatiaand the world. Zagreb and Split Airports 14
  15. 15. CROATIA TRAFFIC INFRASTRUCTURE DUBROVNK – This airport is one of nine Croatia’s airports. It was built in 1936 in a little town called Gruda in Konavli. It was shut down during the Second World War. In 1960, the airport was transferred to today’s location, which is in Čilipe. During the Serbian aggression on Croatia, the airport was completely demolished and its entire property was robbed. The reconstruction works have only just been completed in 2006. These days, it stands as the second most important airport in Croatia, right behind Zagreb. RIJEKA – This airport is actually dislocated from the city itself and can be found on the island of Krk, which is 17km from the centre of Rijeka. OSIJEK – This airport is one of the nine bigger airports in Croatia. It is located alongside the regional Osijek-Vukovar road, while being 20 kilometers from the centre of Osijek. Besides its primary purpose of receiving and transferring passengers, goods, mail and things, the Osijek Airport also provides shopping, restaurant and medical services, as well as the airplane-taxi etc. PULA – this is one of nine Croatia’s airports. It existed in the form of an airport on grass even prior to World War II, while becoming a civil airport in 1967. The largest number of passengers came through this airport in 1990, and expectations reach up to 720 000 passengers by 2010. Dubrovnik and Pula Airports 15
  16. 16. CROATIA TRAFFIC INFRASTRUCTURESome of the operators and companies that land to the majority ofCroatian airports are: Air One, Aer Lingus, Austrian Airlines,Airways, Centralwings, Clickair, Croatia Airlines, Darwin Airline,Dubrovnik Airline, Estonian Air, Flybe, Flyglobespan, Flylal,Germanwings, Iberia, Jetairfly, Lufthansa, Norwegian Air Shuttle,SkyEurope, Thompsonfly, TUIfly, and others.Because the program of European Union members puts a greatdeal of emphasis on traffic infrastructure, it is only logical that thedevelopment of essential traffic infrastructure like highways,railroad corridors, harbors, airports and waterways isundisputable and of primary importance. Observing all thesesegments individually would be incorrect, as the contextdemands for them to be viewed as one common picture. Thecurrent priority is to activate the river waterways, which are veryappreciated and represented in Europe, and that is bound toresult in further improvements within the economic sector. “Croatia Airlines” – Croatian National Airliner 16
  17. 17. CROATIA LABOR FORCELABOR FORCEAs far as the labor force’s scale of quality and education goes,Croatia occupies one of the leading positions in South-EasternEurope. According to the statistics, only one of 25 unemployedpeople has a college degree. According to the income statistics,Croatia is also near the top of its region.In comparison to Europe, the competition on the Croatian laborforce market remains relatively flexible, as numerousorganizations some positive results in their efforts to attractforeign investors that secure competition on the market. It isexpected that the situation on the job market will get better asCroatia enters the EU. New building of Economics College in Split 17
  18. 18. CROATIA ECONOMY ECONOMY Croatia’s largest export partners are Italy, Bosnia and Herzegovina, and Germany, while the biggest import partners are Italy, Germany and Russia. The state of the economy is typical of a country that has been through a transition from communism. Although the process of privatization has occurred, main problems appear in the form of large unemployment and inadequate economic reforms. Around 230 000 people were unemployed in Croatia during May of 2008, which represents about 13,2% of the overall labor force. Another big problem lies in the differences of standard and development of individual parts of Croatia. This is demonstrated by the fact that the GDP of a Zagreb resident is about three times bigger than the average GDP in the entire country. Tourism is an extremely important economic branch for Croatia. According to statistical results, tourism was responsible for about 20% of Croatia’s GDP. Industry creates about one-fifth of the GDP, while providing jobs for every fourth working resident of Croatia. Agriculture, forestry and fisheries contribute with around 7,2% of the GDP. Over the last several years, the construction business creates around 5,7% of the GDP. Distributive trade provides jobs for about 15% of working Croatian citizens while creating around 37% of overall income and 17% of overall investments. 18
  19. 19. CROATIA ECONOMY Croatia’s path depends on the correlation of two important factors – growing involvement in European ways and integration processes of the world, which enable positive improvements in the private sector. After achieving a significant economic growth of 5.8% during 2007, statisticians are predicting the stabilization of that growth to the satisfying 4.9% in 2008, as well as in following years. Some of the main reasons for this stabilization are the post-election period, which normally provides political safety and stability, as well as the anticipated 2%-downfall of consumption. Further reasons for the stabilization of economic activities in Croatia are revealed in the slower pace of development in other countries of the region, especially those in Europe, as well as in the reduction of buying power all over the world – which is caused by stronger inflations and reduced overall credit activities. Monetary politics and demands from the European Union are bound to also leave a trace. 19
  20. 20. CROATIA REAL ESTATE MARKET SUPPLY As the capital of Croatia, Zagreb is our biggest and most prosperous city and the fastest growing and most developed real estate market in the country. Over the last several years, prices of residential units have gone up and down which is mostly caused by the constantly small supply. The city is still interesting to local and foreign investors, but the demand for residential capacities shows signs of a downfall. The market is mostly dominated by large companies serving as investors, so now the market is filled with large residential projects on the city outskirts and alongside important traffic roads, while still being fairly close to all the city traffic and other infrastructure. The problem on the market can be identified in the lack of high- quality residential units, because the market rapidly grew and became more sophisticated so that now it sets higher standards. That is the reason why future projects will likely be directed towards achieving quality. 20
  21. 21. CROATIA REAL ESTATE MARKET – EU & CROATIAAt this point, the European market does not have a high especially if we take into account the increase of foreignpercentage of residents who are owners of residential interest in Croatia, expected Croatian membership in theunits, rental housing is a common occurrence. However, in European Union, and the "migration" of the population toCroatia the number of owners of residential units is larger cities and regional centers.surprisingly high - as much as 85% of residents are also theowners of units, which has a lot to do with the lifestyle of Over the years, strong demand was partly met by buildinglocal residents. the so-called government apartments, which provided opportunity for young families to solve their housing needsOver the past few years, it has become very noticeable that with subsidized prices and soft housing loans. But thisthe demand outstrips supply in the housing market. It is helped only a fraction of the population like the ones withassumed that such situation is caused by the growth of lower standard, so that now we expect supply and demandopportunities that are provided to customers such as the for real estate to stabilize. According to some surveys,relatively easy access to credit lines. It is therefore very about 7% of people in larger cities plan to solve theirlikely for the market to stabilize and increase prices again, housing issue in the near future. 21
  22. 22. CROATIA REAL ESTATE MARKET – DALMATIAHousing market has reached a maturity level that now The whole of Croatia, along with most buyers and investorsrequires quality housing units, as well as more detailed in this market segment, relies on the local population.approach to the market and the process of planning and However, in the 2009 by regulation of the bureaucracy andconstruction. This led to a more stable market situation legal issues for foreign investors and customers wewhich is more favorable for buyers than investors, and this achieved much more in demand from the foreign countriesresulted in a slowdown of growth and stabilization of prices. and further positive effect is expected when CroatiaConstruction of new housing is still very active, and becomes an EU member, which is expected in 2012.dominant housing markets are still developing, includingcities such as Zadar, Split and Dubrovnik. 22
  23. 23. CROATIA REAL ESTATES PROGNOSISPROGNOSIS  With a catchment area of 600 million people within a three hour flight of Croatia, the growth of low cost airlines flying to airportsA slight further growth of a number of construction projects is located on the coast is expected to boost the demand for holiday homes in Croatia.expected over the next several years, while the stabilization of  Holiday home demand will likely remain dominated by Germanythe economic situation will contribute to the improvement on the and Austria. As another trend, we can expect to see a growing sharereal estate market, while also creating a favorable set of of British buyers.circumstances for investments  The Croatia homes market is expected to stabilize with implemented General Urbanistic Plans and establishment ofThe growth of real estate prices is expected, however that will planned building zonesmostly relate to units and objects of top quality. We will witness  With the acceleration of the planning process and definition ofthe continuation of high demand for quality real estates and zones for holiday homes development, both local and foreigncomplete projects. developers will have the opportunity to develop projects that meet the requirements of current and future demand.  Demand and absorption rate is expected to pick up  With the increasing demand of holiday home buyers in Europe and the specific interest in Croatia, the availability of large and medium scale projects for sale will lead to a steep increase in the number of acquisitions.  Property prices are expected to appreciate due to EU accession and the development of high quality homes, but at more reasonable prices.  The residential inventory will continue to grow in the coming years, as the stable economic situation and the developing market present favorable conditions for real estate developers 23
  24. 24. CROATIA LEGISLATION LEGISLATION A new law on mediation in real estate transactions was adopted in October 2007, and it is expected to deliver additional protective measures to the real estate market. The law itself brings a lot of new things, such as obligatory education for real estate agents who now must officially enter the registry. The law also prescribes obligatory ways of damage insurance, states integral contract elements, determines obligations for parties and mediators, and much more. The construction law was also changed and adapted, as the increased level of decentralization simplified and quickened the process of gaining necessary construction licenses, and changes were made that require construction performers to apply for valid registration, all with the purpose of increasing the quality of construction and bringing more order in the way business is conducted on the construction market. 24
  25. 25. CROATIA FOREIGN INVESTORSREASONS TO BUY IN CROATIA Untouched coastal area that spreads across 1100 miles alongside the Adriatic coast, as well as the 260 sunny days per year, define Croatia as a wonderful tourism destination and a true vacation paradise. Considering the standard in Western Europe, the real estate prices are still very accessible. A large amount of interest from foreign investors creates a very dynamic market. Although the market is rapidly developing, there is the chance that it will keep getting bigger compared to Spain and France. The quality of real estates is very high! Past few years demonstrated that Croatia is becoming much more accessible by air, while the airplane tickets are becoming less expensive. Croatia is not far from Great Britain or Ireland (2Despite of the increased number of tourists over the last several ½ - 3 hours by plane). Airline companies that have moreyears, prognosis until 2011 says that Croatia will remain to be an accessible prices are in negotiations regarding the permission toattractive destination – due to the successful preservation of its land their airplanes in Croatia.environment.Croatia resembles Spain or Portugal 20 years ago – it is Real estate transactions can be greatly simplified if you choose an adequate associate in Croatia.undiscovered, fresh, attractive and desirable – it attractsexperienced travelers that are looking for a place that issimultaneously different and fascinatingly interesting because of Macroeconomic circumstances and political relations are stablethe surprises it offers. Large urban centers and the Western and safe due to the probable admission of Croatia into the EU.culture are nowhere in sight. 25
  26. 26. CROATIA FOREGNEIRS AS REAL ESTATE OWNERS IN CROATIAIn past several years we have witnessed a growing purchases, but the situation on the coast (where in everyinterest of foreign nationals for properties in Croatia, small village people know exactly who owns each houseespecially for those on the Adriatic coast. Although we first and whom it is sold to) is saying that the official statement issaw it with a touch of sympathy, an unstoppable interest of far less than reality.foreigners for all our properties was a pleasant surprise. On the foreign property markets and tourism fairs, realStabilization and Association Agreements defined that estate agencies advertise buying a house on the Croatianwhen buying a property for all EU citizens have the same coast as "investment that van be returned fully in ten yearsoptions as Croatian citizens. through rent“, which suggest the real estate business at firstHowever, there are some different conditions for the place.acquisition of property for foreigners in general and foreignlegal entities. Foreign companies will acquire a property The largest number of properties that foreigners are buyingmore easy since it is sufficient to establish a branch office in or looking to buy is located in Istria and Dalmatia. This factCroatia and automatically they are allowed to acquire all was expected because many foreigners coming fromproperties that are available to Croatian citizens. countries that do not have access to the sea or from countries with a cold and unattractive sea coast. ByAt this moment, no one knows how many foreign owners improving the quality of roads to Croatia and more rapidhave a second home in Croatia because the official figures construction of the roads the warm Adriatic Sea hasdiffer from those in reality. According to data from 2006 the become more accessible to them.Ministry of Foreign Affairs registered only about 15 000 26
  27. 27. CROATIA LAWS LIMITING FOREIGN OWNERSHIP, AND EUROPEAN DEMANDAll foreign nationals from EU and outside it can not buy the islands of Krk, Pag and in the excluded areas, namely: As we move southern Slovenes buy less and less. The British, like Italians, are mostly choosing Istria, although * Agricultural land, defined by a separate law there are interested in Dalmatia, especially in Dubrovnik. * Protected nature areas, also under special legislation Hungarians and the Russians do not choose the location, but will very carefully selected the property, while theAustrians, Germans, Britons, Italians, Russians, Austrians and Germans are buying what they pleaseHungarians, Czechs, Slovaks, and even the Scandinavians regardless of location because the distance is irrelevant forare buying real estate on the Adriatic coast and its them.hinterland. An online record of 40% of international visits regarding realSome precise number of statistics are not available, but the estate is showed, mostly from Germany, followed by Austriafact is that the Slovenes are the biggest buyers, and Italy.concentrated on the region of Istria: Pula, Crikvenica, and 27
  28. 28. CROATIA FOREIGN INVESTORSThe acquisition process:1. A written offer for the real estate is issued by the vendor. If the conditions are convenient, the buyer should return a written confirmation.2. Pre-contract agreement between the buyer and vendor. The buyer in most occasions is expected to pay a down payment equivalent to approx. 10% of the total selling price.3. The buyer then should apply for the consent from the Ministry of Foreign Affairs (MOFA). Necessary documents include: - The purchase agreement - The seller’s proof of title - Certificate confirming that the property is within the construction zone - Proof of citizenship for the buyer - Power of attorney, if an attorney is involved.4. A binding contract is then prepared by a lawyer and signed by the notary. An official note of the contract should be made in the Land Registry. Once MOFA consent is granted, the contract needs to be registered in the Municipal Cadastral Department’s Land Books, and the purchase tax needs to be paid.At pre-contract stage, the down payment is not returned if thebuyer fails to fulfill the terms of the contract. In cases where theseller fails to fulfill his part of the contract, he is expected tocompensate the buyer by paying double the sum of the deposit. 28
  29. 29. CROATIA TAXATION SYSTEM TAXATION SYSTEM Croatian taxes are proportional to taxes of other countries in the region, although they are still relatively high – for example, VAT is as high as 23%. The Croatian Government has the ambition to lower the taxes, but is currently prevented by some of the needs of the government budget. If you buy a real estate in Croatia that was built prior to December 31st 1997, you pay a real estate tax that is 5% of the contract value. If you buy a new building that was built after December 31st 1997, you pay 23% of VAT, which is calculated by the price of real estate construction, as well as a 5%-real estate tax that is determined by the value of the part of the property on which the object was built. If you buy a used real estate built after December 31st 1997, you only pay a real estate tax that is 5% of the contract value. The process of real estate transaction also includes some legal fees, which usually reach about 1.5% of the buying price + VAT. If you’re buying the object in the name of the company that is registered in Croatia, there are some additional legal and notary fees that end up around 2.300 USD. 29
  30. 30. CROATIA TAXATION SYSTEMThe real estate tax is 5%, but it isn’t paid if the person is buyingits first real estate (if the person resides in Croatia). The tax is notpaid if 50 m2 are bought for one person, 65 m2 for a two-personhousehold, 83 m2 for a three-person household, and 94 m2 for afour-person household. The price of a residential tax for those people that don’t have aregistered place of residence in Croatia is 2 USD/m2 of theobject’s size per year. The yearly tax on land is 0,38 USD/m2 The saving is 0.52% of the real estate’s market value per year Garbage disposal expenses are about 77 USD per year Electricity expenses – price of 1KW in 2008 is around 0.15 USD Water expenses – 1.54 USD per cubic meter in 2008 Insurance for the house and household depends on the size ofthe house; the price for a 160 m2 house is around 770 USD peryear You pay a 35% tax on income in case you sell the house beforethree years of owning it You pay a 5% tax in case you inherit a real estate Car taxes are from 60 to 310 USD per year Taxes on marine vessels are from 45 to 1000 USD per year Income taxes depend on the amount of profit and the number ofemployees, and they move in the 15%-45% rangeTax on a vacation house is 1.5-4.6 USD/m2 per year Agriculture taxes, which amount to 60-77 USD per hectare, arepaid for uncultivated agricultural landTaxes on construction parcels are rarely applied, and they cost0.15-1.54 USD/m2 per year 30
  31. 31. CROATIA CROATIAN TOURISM - OVERVIEWCroatia is a leader in establishing political stability in the tourists from all over the world. Because of its untouchedregion, and millions of tourists visit it yearly and that number nature, extraordinary beauty of its coastline, alluring Adriaticcontinues to increase, what confirms the attractiveness of sea, rich cultural heritage and cuisine, Croatia is consideredCroatian tourism and hospitality. to be one of the most desirable destination for people seeking peace and quiet in the mild Mediterranean climate.It is believed to be the newly discovered paradise for 31
  32. 32. CROATIA DALMATIAN TOURISM - OVERVIEWDalmatia is the greatest Croatian tourist region. also to the cultural heritage which shaped generations and generations of its habitants.There are three large cities in Dalmatia: three thousandyears old Zadar, Split – home of the Roman Emperor The Adriatic is one of the most beautiful seas in the worldDiocletian, and at the extreme south Dubrovnik a city on whose cleanliness is one of the worlds best. Contribute toUNESCO World Heritage List. its attractiveness is the color and transparency of water which increases towards the south and offshore. AnSplit is the seat of Split-Dalmatia County and makes an indicator of water purity is the average transparency of theimportant traffic intersection as well as largest ferry-port on Adriatic Sea is 20-33 m, and the highest transparency wasthe Adriatic coast of Croatia. Its International Airport is the measured in the oversea area and is 56 m, and endemicsecond largest and has a large importance in transport in species that inhabit the sea - Adriatic Bračić (FucusCroatia, while the airport on the island Brac is built for virsoides) and bottlenose dolphins.smaller aircrafts, mainly for tourism purposes. The richnessof Middle Dalmatia is really diverse, and does not applyonly to the sun, natural resources, turbulent history, thebeauty of the Mediterranean and continental dishes, but 32
  33. 33. CROATIA DALMATIAN TOURISM - OVERVIEWCroatia is receptive country, in a large extent it accept More special forms of tourism are formed, major beingthe tourists from the earliest beginnings of the tourism. yachting, sports, cultural and rural tourism. It is known thatUntil the first half of the 20th century it was the destination the most sought after tourist destinations in Croatia areof mass tourism. According to statistical data in the 1938, situated on the coast. So-called business tourism prevails inthe highest tourist traffic is shown in entire Croatia, even in cities like Zagreb, Osijek and other major cities, and variousthe parts under the Italian administration. Specifically, there spas. Croatia places a lot of attention towards nauticalwere 500 000 tourists who have made 3 million overnight tourism and all the accompanying facilities, so it becomesstays, of which 61% related to foreign tourist traffic. Most the desired destination for a large number of foreign visitorsvisited tourist destinations are Opatija, Crikvenica and Rab. who all appreciate the untouched nature and relax inMass tourism has spurred economic development all across solitude and silence.regions. In the period from 1991 Croatia is among themedium developed touristic countries. The development oftourism more attention is devoted to the individual needs oftourists and a clean and preserved environment as well. 33
  34. 34. References: Republic of Croatia - Central bureau of statistics, Croatian motorways ltd. - Major transport infrastructure in Croatia, Regional Development Fund of the Republic ofCroatia, – Croatian homepage, Croatian auto club, Colliers international, Croatia, King Sturge, Croatia, ,