Croatia is a preferred location for investors due to its advantageous location in Southeast Europe and high standard of infrastructure. The primary factors that make Croatia an appealing country for investors are the structural improvements and the tax incentives supported by the local government. Both domestic and foreign investors are given equal status under Croatia’s Company Act.
What are the advantages of investing in Croatia
The Croatian economic environment has several benefits to offer foreign companies. The primary benefits to consider when planning to launch a business in Croatia are listed below. The following are some of the nation’s advantages:
- Comprehensive economic and legislative changes by the local government to attract international investments.
- Direct assistance with job creation.
- Financial assistance for capital investments.
- Several grants for activities related to research and development.
- Return on investments – more than 15,000 foreign businesses have selected Croatia as a location for operations.
- Reasonably low operating expenses in the European market.
- Enticing tax benefits, 0% customs inside the EU, and several agreements to prevent double taxation with various nations.
- Highly skilled, multilingual workforce.
Main sectors for investing in Croatia
The municipal government of Croatia is dedicated to putting into effect particular steps to enhance the country’s investment climate, and the country is open to foreign investments. The government created a series of tax breaks and employment policies to entice capital to the important areas of the economy. These are the industries in Croatia that offer a possibility for growth and investment if you want to start a business there:
- Tourism.
- ICT industry.
- Pharmaceutical industry.
- Automotive industry.
- Food industry.
- Precision engineering.
- Textile industry.
Investment incentives in Croatia
The Croatian investment environment is governed by several legislations. The Croatian Companies Act, the Act on Investment Promotion, and the Act on Strategic Investment Projects of the Republic of Croatia are a few examples of these. Foreign investors have the same rights, obligations, and legal standing within a firm as domestic investors under the provisions of this legislation. Foreign investors receive certain benefits. One of these is:
- The return of cash and profits upon investment termination.
- Rewards for microbusiness owners.
- Tax benefits, such as a lower corporate income tax rate.
- Government assistance for initiatives in development and innovation.
- Non-refundable financial assistance for the creation of new jobs.
- 20% of the eligible expenditures in non-refundable grants for the purchase of machinery and equipment.
- Labor market incentives.
Tax measures in the investment legislation
Numerous tax incentives are given to foreign investors following the Act on Investment Promotion and Enhancement of the Investment Environment. The following are the most significant tax provisions linked to foreign investments included in Croatian law:
- A 0% business income tax rate reduction if certain criteria are met.
- The implementation of numerous agreements to prevent double taxation.
- If a Croatian corporation or company purchases a property, no real estate transfer tax is due.
- The reinvested profit is tax-exempt.
Foreign beneficiaries of EU dividends who own at least 10% of the capital for 24 months are free from a 12% withholding tax on dividends and shares in profit.
Making investments in Croatia
Croatia benefits from a favorable geographic location that supports economic partnerships with many nations across the world. Croatia is a strong business prospect and destination for international businesses due to its stable economy and abundance of business opportunities. In the eyes of foreign investors, the Croatian government’s tax advantages are a plus for the economic climate in this nation. The majority of foreign investments are focused on well-developed industries such as the food industry, tourism sector, engineering, textile industry, manufacturing, automotive, ICT, and pharmaceutical sectors. The low cost of hiring local labor is another perk available to foreign business owners who want to make use of Croatia’s highly qualified and bilingual workforce.
