Introduction - TPA Horwath

Introduction 

TPA Horwath is one of the leading international consulting companies 

of expert tax advisors, auditors and management consultants in 

Croatia and Central and Eastern Europe. 

We are a member of Crowe Horwath International, a global organisation 

of independent and legally unaffiliated tax advisors, accountants 

and management consultants. 

Our TPA Horwath office locations in Croatia, Austria, Bulgaria, the 

Czech Republic, Hungary, Poland, Romania, Slovakia, Slovenia and 

Serbia, and our Crowe Horwath International network membership, 

allows us to efficiently serve clients in Central and Eastern Europe 

and throughout the world. Supporting our clients in an international 

context is our standard. 

The group employs a total of around 960 staff. We have been supporting 

our clients in their expansion into the new markets of Central 

and Eastern Europe for more than 20 years. 

We provide top-level consulting services to international groups, 

small and medium-sized enterprises, research facilities, foundations 

and private individuals. 

High quality, ongoing training to keep our know-how up-to-date and 

a special understanding of the individual situation and client needs 

are features of our services. 

German and English speaking partners and staff at all our CEE locations 

are a distinct advantage counselling without language barriers. 

Our portfolio includes an extensive range of services: 

Tax consulting 

International tax consulting 

Auditing 

Management consulting 

Corporate finance consulting / M&A 

Special services 

EU consulting services 

Accounting and payroll services 

HR consulting 

Secretarial services 

TPA Horwath | Real Estate Service 2012 1


Tax Consulting and International tax consulting 

Tax services department provides current tax advisory service that includes 

information on general tax questions, tax aspects of on-going 

business questions, responding to comments of requests of tax administration, 

control of tax solutions assistance during the controls conducted 

by the tax administration. Tax services also include: a review of salary 

contributions, international tax issues, complex issues concerning the 

supporting transfer pricing documents, tax structuring, tax consulting in 

relation to legal issues, restructuring, mergers and acquisition, taxation, 

due diligences and reviews. Quality advice on tax-related issues requires 

precise knowledge of the legal norms, the capacity to analyse the situation 

and the needs of clients accurately. The experts at TPA Horwath are 

not only well acquainted with the legal framework, they are also able to 

recognise and take into account any new legislation and tax options 

for the benefit of our clients early on. Thus, clients and public authorities 

alike turn to TPA Horwath for knowledge and expertise on tax 

issues. 

We offer our clients a comprehensive range of services in tax advisory 

and accounting, and act as representatives in tax-related matters. 

TPA Horwath’s extensive years of work in domestic and foreign 

markets give the company the expert know-how required for tax 

optimization regarding real estate and consulting for staff relocation. 

We are members of working groups and the committees of expert 

organisations in each of the countries, which guarantees timely and 

comprehensive knowledge of any new legislation. 

TPA Horwath’s network is designed to enable cooperation at the regional 

and global level, also to apply the knowledge and experience 

available internationally to support our clients quickly and effectively. 

The range of services of TPA Horwath in the area of tax advisory includes: 

2 

Tax planning and structuring 

Tax administration and accounting 

Representation in taxation matters 

Consulting services on payroll tax, social insurance and pension issues 

Auditing 

Audit services are provided by professionals that are Croatian certified 

auditors or ACCA UK qualified. Audit services include statutory 

audit, group reporting package audit, reviews and special purpose 

TPA Horwath | Real Estate Service 2012

audit (acquisition date audit, increase of the in share capital contributions, 

shareholder resolution, etc.). 

Thanks to TPA Horwath companies in neighbouring countries and 

our being part of the Crowe Horwath International network, enables 

us to offer our globally active clients auditing procedures in accordance 

with the “International Standards on Auditing” (ISA). 

We offer our clients the following: 

Statutory and voluntary audit of financial reports 

Audit of consolidated financial statements in line with IFRS or US 

GAAP 

Audit of banks and financial services companies 

Auditing of non-profit sector 

Public sector audit 

Audit related to restructuring 

Prospectus audit 

Efficiency analysis and operational audit 

Due diligence reviews 

Auditing of internal control systems 

Company valuations 

Management Consulting services 

Management consulting offers following services: 

Activities related to consultancy in the field of information technology 

(information risk management, consulting activities in designing 

software solutions, etc.) 

Assistance in designing accounting policies and procedures 

Analysis and business process improvement (BPI) 

Strategic consulting 

Advisory in monitoring operations 

Consulting in the field of risk management 

Corporate Finance Consulting / M&A 

We provide our clients with support in developing acquisition and 

divestment strategies; in creating documentation to meet the needs 

of investors; in valuations, negotiations, pricing and in preparing contracts. 

A clear strategy, comprehensive analyses and efficient negotiating 

are indispensable. 

Our services 

Securing venture capital 

Advice on the acquisition and sale of companies 



4 

Preparation and advice on flotation 

Advice on equity financing 

Special services: 

Financial advisory services 

We provide various financial advices and assistance in managing 

complex financial situation. Our financial department provides following 

services: 

M&A advice 

Valuations 

Investor assistance 

Pre-deal evaluation & advice 

Transaction evaluation (due diligence) 

Vendor assistance and vendor due diligence 

Contract assistance 

Transaction structuring 

Regulatory services 

The department provides services in: 

Commercial issues 

Labour issues 

Mergers and Acquisitions 

Real estate 

In addition, the department offers services of professional translation 

to English and German and to Croatian. 

EU consulting services 

TPA Horwath offers EU consulting, EU subsidies and technology consulting 

for high-tech and industrial companies, as well as for municipalities, 

ministries, funding agencies and associations. The consulting 

portfolio covers the full range of services from project evaluation to 

full services project management and financial contribution. 

Accounting and payroll services 

Accounting services provide daily accounting services to clients 

including payment transactions, tax computations, calculation of 


salaries and the preparation of orders for payment and related documentation 

such as the RS and ID forms, salaries statistics. In addition, 

we offer various financial and operational reporting, including preparation 

of reporting packages, a cost analysis, ad-hoc reporting, assistance 

in tax audit, preparation of the financial statements, etc. 

HR Consulting 

The hiring decision you make for your business is one of the most 

important business decisions you will make. As the right talent is 

crucial for success, human resources management is one of the key 

elements and a strategic function of each organization. Our team of 

professionals is dedicated to understand client’s needs and finding 

the right match between the position and the person. 

An extensive range of our services includes: 

Recruitment & selection 

Talent acquisition and management 

HR audit and due dilligence 

Evaluation of potentials 

Reward program development (bonus system) 

Outsourcing 

Psyhological tests 

Secretarial services 

Corporate secretarial services are time-consuming and expensive, 

particularly in the early days of company operations. Outsourcing 

these services enables companies to focus on their business operations, 

confident in the knowledge that they are conducting business 

in accordance with local legislation. 

Our expertise assists new companies in the Croatian market to organise 

themselves with greater ease in their early days of doing business 

so that they can enjoy unobstructed growth. 

Special expertise in real estate 

Working for customers in Croatia and internationally, TPA Horwath 

has accumulated many years of technical knowledge and experience 

in real estate. TPA Horwath advises international open and 

closed property funds on their real estate investments in Croatia, and 

Croatian and international investors on their real estate investments 

in Central and Eastern Europe. 



Real estate continues to be a very desirable form of investment. It offers 

tax advantages and the prospect of long-term capital appreciation, 

and is also an attractive form of retirement saving. TPA Horwath’s 

real estate experts have analysed and summarised the most important 

tax provisions for you here. 

TPA Horwath Croatia team: 

Financial Advisory Service 

Reno Budic, Managing Partner 

reno.budic@tpa-horwath.hr 

Sonja Hecker-Tafra, Executive Director 

sonja.hecker@tpa-horwath.hr 

Regulatory Services 

Kresimir Lipovscak, Partner 

kresimir.lipovscak@tpa-horwath.hr 

Tax Services 

Edo Tuk, Partner 

edo.tuk@tpa-horwath.hr 

Management Consulting Services 

Barisa Primorac, Executive Director 

barisa.primorac@tpa-horwath.hr 

An adviser is a partner. 

This is what shapes our relationships with our customers. 

Contact: 

TPA Horwath d.o.o. 

Grand Centar, VIII floor 

Petra Hektorovica 2 

HR-10 000 Zagreb 

Croatia 

Tel: +385 / 1 / 48 82 555 

Fax: +385 / 1 / 48 22 220 

E-mail: tpa-horwath@tpa-horwath.hr 

www.tpa-horwath.com 

6 


Content 

I. Real estate in private ownership ...............................................9 

1. Tax depreciation of rental properties ..........................................................10 

2. Accelerated depreciation ...................................................................................10 

3. Grants ..............................................................................................................................11 

4. Business expenses ...................................................................................................11 

5. Personal use ................................................................................................................11 

6. Sale of properties .....................................................................................................12 

7. Gifts of properties ....................................................................................................14 

8. Incentives on selling apartments ..................................................................15 

II. VAT ................................................................................................ 17 

1. Small businesses ......................................................................................................17 

2. Applicable tax rates ................................................................................................17 

3. Taxation of receivables, actual receipts 

and payments in advance ..................................................................................19 

4. Input VAT on services supplied in advance .............................................19 

5. Partial private use ....................................................................................................19 

6. Sales, gifts and cessation .....................................................................................20 

7. Transfer because of death ..................................................................................20 

8. Retention of records ..............................................................................................20 

9. Construction services ............................................................................................20 

10. Landlords and agents ...........................................................................................21 

11. Property transfer tax, inheritance tax and gifts tax .............................22 

III. Real estate forming part of business assets ......................... 24 

1. Preparation of financial statements .............................................................24 

2. Calculation of profits .............................................................................................25 

3. Renovation and renewals ...................................................................................25 

4. Standard depreciation ..........................................................................................25 

5. Demolition costs ......................................................................................................26 

6. Hidden reserves ........................................................................................................26 

7. Cessation of business ............................................................................................26 

8. Liquidation of company ......................................................................................27 

9. Real estate and business reorganisations .................................................27 

10. Losses in commercial letting and tax schemes ....................................27 

IV. Property and private foundations .......................................... 29 

1. Fundamental principles of taxation .............................................................29 

2. Transfers out of foundations .............................................................................29 

V. Properties and local authorities.............................................. 30 

1. Public Private Partnerships .................................................................................30 


Content 

VI. Property funds: tax considerations ........................................ 32 

1. Key features of property funds ........................................................................32 

2. Investment regulations ........................................................................................32 

3. Distribution of profits and taxation ..............................................................33 

4. Marketability ...............................................................................................................33 

VII. Property investment abroad ................................................... 34 

1. Regular income .........................................................................................................34 

2. Profits on disposal ...................................................................................................34 

3. Tax liability of foreign business investors ..................................................36 

VIII. TPA Horwath offices ................................................................... 37 

All the offices at a glance ...............................................................................................37 

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I. Real estate in private ownership 

Natural person (e.g. owner of real estate) who earns income from 

rent can be taxed with personal income tax at flat rate or as a selfemployed 

person. If natural person is not a VAT payer, income from 

rent is taxed with personal income tax at the flat rate of 12%. The 

tax base is equal to 70% of the monthly rent. Personal income tax is 

payable until the end of a current month. In addition, city tax is payable 

according to the place of residence. Natural person becomes 

VAT payer if taxable income from rent exceeds HRK 230,000 or app. 

31,000 in one year. 

Natural person who earns income from rent and is registered as a 

VAT payer, is taxed according to the provisions for self-employed persons. 

The tax base is equal to all receipts decreased by all outlays with 

respect to the rent of real estate. Natural person who pays personal 

income tax as a self-employed person is obliged to file annual tax 

return. Income realised from self-employed activities is taxable at the 

prescribed personal income tax rates of 12%, 25% and 40% depending 

on the amount of total earned income. Based on the annual tax 

return, the tax authorities issue a resolution that determines monthly 

advance payments of personal income tax and city tax which are due 

until the end of the month for previous month. 

Natural person taxed at flat rate can file the request to the tax authorities 

for transfer to taxation as self-employed person until the end 

of a current year for the next year. Otherwise, if taxable rent income 

exceeds HRK 230,000 in one year, as of 1 January of the following 

year natural person becomes VAT payer and subject to taxation as 

self-employed person by law. 

Individuals performing self-employed activities will become subject 

to corporate profit tax if they meet the following conditions: 

if total revenue realised in previous period is higher than HRK 

2,000,000 or app. EUR 270,000, 

if total income earned in previous period is higher than HRK 

400,000 or app. EUR 53,000, 

if total value of tangible asset is higher than HRK 2,000,000 or app. 

EUR 270,000, and 

if they had employed more than 15 employees in the previous period. 

However, individuals performing self-employed activities can become 

subject to corporate profit tax on their own request irrespective 

of whether the above mentioned conditions are met. Corporate 

profit tax payers are required to use double-entry bookkeeping. 



1. Tax depreciation of rental properties 

A natural person who earns income from rent and is taxed as selfemployed 

person is entitled to depreciate the respective rental property 

in line with provisions of corporate profit tax legislation. Depreciable 

amount should be allocated over the asset’s useful life. Annual 

depreciation is tax deductible up to the rate of 5%. 

2. Accelerated depreciation 

2.1. Costs of construction 

Depreciation can be doubled if the same rate is used for accounting 

purposes also. For example, a building can be depreciated with the 

depreciation rate of 10% per annum calculated by using the straight 

line method. Such depreciation expense would be tax deductible if 

such rate is used also for accounting purposes. 

2.2 Repair and maintenance expense 

Repair and maintenance expenses are considered to be expenses 

where only minor parts of the building are replaced, and there is no 

significant increase in rentable value or expected useful life. Such expenses 

typically include: 

Regular service and maintenance, 

Painting the exterior, 

Painting the stairwell, 

Repairing the plastering, 

Repairing damage by natural forces. 

2.3 Renovation and renewal 

Renovation and renewal expenses that increase the rentable value of 

the building or prolong its expected useful life should be capitalised. 

Renovation and renewal expenses typically include the replacement 

of: 

Windows and doors, 

Roofing and roof timbers, 

Stairs and interior walls and intermediate floors, 

Underfloors, 

Elevators, heating plants and furnaces, 

Electricity, gas, water and heating fittings, 

10 TPA Horwath | Real Estate Service 2012

Plumbing, 

Renewal of external plastering and thermal insulation. 

3. Grants 

Grants are recognised as income over the period necessary to match 

them with the related costs and should not be credited to equity. A 

grant relating to assets may be presented as deferred income or by 

deducting the grant from the asset as carrying amount. Grants paid 

to self-employed persons are treated as taxable income with exception 

for the grants received by artists up to HRK 20,000 (EUR 2,700) 

per year. 

4. Business expenses 

The following list provides an overview of the most common forms 

of allowable business expenses for real estate. Expenses which are 

allowable in the year in which they are incurred include: 

Costs of alienation or liquidation of business, 

Interest on borrowings used to finance the property (but not capital 

repayments), 

Depreciation of long term assets, 

Operating costs (e.g. chimney sweeping, water, rubbish collection, 

janitor, property tax, property management fees), 

Agents’ fees (e.g. lease), 

Payments in advance for the costs of consultancy services, finance, 

guarantees, rentals, agency and brokerage services, marketing and 

administration services must be spread over the period to which 

they relate unless they relate only to the current year. 

5. Personal use 

If a rental property is partly used for private purposes and partly for 

renting purposes then expenses incurred for private purposes are 

considered as withdrawal, and are taxed as income from capital if 

they are incurred by the owner/shareholder. Depreciation can only 

be taken on the parts that are used for renting purposes and only 

proportion of the running costs relating to renting purpose is deductible. 

If natural person earning income from rent is registered as VAT payer 

and a property is used for private purposes, VAT liability should be adjusted. 

This means that an adequate proportion of input VAT should 

not be treated as tax deductible. 



6. Sale of properties 

Real estate transfer tax at a rate of 5% is paid on transfer of all kinds 

of land (agricultural, construction and other land). Transfer of land 

is never subject to VAT. 

In general, buildings (dwelling houses, office houses and all other 

types of buildings and parts of these buildings) are subject to real 

estate transfer tax if they are built, delivered or paid before VAT law 

came into force (i.e. before 1 January 1998). 

All buildings built, delivered or paid after 1 January 1998 are subject 

to 25% of VAT. As an exemption to the general rule, if the acquirer of 

the building subject to VAT is not able to deduct VAT, this building 

is in further transfers subject to real estate transfer tax. 

Therefore, in case of a newly-built real estate the building is subject 

to VAT or real estate transfer tax and the land (increased by utility 

contribution) is subject to real estate transfer tax. 

The tax base of real estate transfer tax is the market value. This market 

value is estimated on basis of the documents of the acquisition 

(buying contract, invoices, etc.). If the tax authorities take the position 

that the market value according to the documents of the acquisition 

is not applied, then the tax authorities estimate the value 

of the real estate in order to apply the correct tax base for the real 

estate transfer tax. 

Real estate transfer tax exemptions are available for the transfer 

of land or qualifying buildings located in special state care areas 

to individuals, if certain conditions are met. In addition, real estate 

transfer tax is not payable in case when real estate is registered 

as part of the share capital or as an increase of the share capital. 

Also, transfer of real estate in merger and acquisition proceedings is 

exempt from taxation. In all other cases of real estate contribution 

to or taking out from companies and disposals to another person 

(including the person, who has brought the real estate into the 

company) there are no real estate transfer tax exemptions. 

Real estate transfer tax must be paid by purchaser. Natural person 

selling real estate can be liable to VAT if the person is registered as 

VAT payer and to personal income tax under certain circumstances 

explained in the next paragraph. 

Tip: Transfer of economic unit is not subject to VAT provided all administrative 

procedures are respected. 


6.1 Property earnings 

Natural persons selling real estate within three years from the acquisition 

are subject to personal income tax on property with the rate of 

25% increased for respective city tax. 

The tax base is equal to the difference between purchase price adjusted 

for the increase of the producer’s index of industrial products 

and market price of the real estate at the time of the transaction. 

Following exemptions are available: 

Principal place of residence: owner occupied houses and apartments 

can be disposed tax free provided they have been the seller’s 

place of residence, 

Alienation of the real estate after three years of the day of acquisition, 

Alienation between married couples and relations by linear descent 

and other closer relatives, 

Alienation between divorced couples if the alienation is associated 

directly with the divorce. 

6.2 Earnings from self-employment 

Natural persons selling more than three pieces of real estate within 5 

years are subject to taxation. Income realised from the sale of real estate 

would be subject to personal income tax from self-employment. 

This means that the income would be subject to progressive taxation 

with rates from 12% up to 40% increased for city tax according 

to the residence of the taxpayer. 

Above described personal income tax is not payable for following 

exemptions: 

Alienation between married couples, parents and descendants by 

linear descent and other closer relatives according to Article 36 

item 7 of the Croatian personal income tax law, 

Alienation between divorced couples provided that the alienation 

is associated directly with the divorce, 

Acquisition by donation if the real estate is not transferred within 5 

years after the date of the acquisition by the donor, 

Expropriation on the basis of a particular law, 

In case of persons who already paid personal income tax of 25%, 

this amount will be deducted from their total tax liability. 



7. Donations of properties 

In the cases of donations of real estate, the real estate transfer tax 

shall not be paid by the following natural persons: 

the spouse, descendents, ancestors and adopted children of the 

deceased or donor, 

legal and natural persons to whom the Republic of Croatia or units 

of local self-management and administration bestow or cede real 

estate without charge for compensation or for other reasons pertaining 

to the Croatian War of Independence, 

former spouses when they settle their property relations in connection 

with divorce proceedings. 

7.1 Tax Exemptions regarding Registration of Real Estate with 

Companies 

If real estate is registered in the share capital of a company or as 

an increase of share capital pursuant to the Companies Law, real 

estate transfer tax shall not be paid. 

Real estate transfer tax is not paid when the real estate is procured 

in merger and acquisition procedures between companies pursuant 

to the Companies Law, and in process of de-merger of a company 

into several companies. 

7.2 Consequences for donor 

If donor is a natural person taxed as a self-employed person, the 

real estate provided without consideration is treated as withdrawal 

at market prices and as such the difference between net book 

value and market price is subject to personal income tax with progressive 

rates. 

7.3 Consequences for donee 

Real estate transfer tax of 5 % has to be paid on the market value of 

the real estate if no exemption can be applied. 

The tax base for assessment is the market value which under certain 

circumstances is determined by the tax authorities. 

7.4 Tax benefits of donations 

The donations (gifts) are considered to be donations in kind or in 

cash made in Croatia for cultural, scientific, educational, health, hu- 


manitarian, sports, religious, environmental or other socially beneficial 

purposes to associations and other persons engaged in the 

above mentioned activities pursuant to special regulations. 

Natural persons subject to personal income tax can provide donation 

in Croatia in cash or in kind, up to 2% of their income for which 

annual tax return has been submitted and income was assessed. 

If donations exceed 2% of the revenue realised in the previous year 

they would not be tax deductible. Exceptionally, the amount of gifts 

in kind or in cash may exceed 2% of the revenue realised in the previous 

year, provided that it is granted pursuant to the decisions on the 

financing of special programs and activities, brought by the competent 

authorities (ministries). 

The donations (gifts) also include covered health care costs for an 

individual (such as surgeries, medical treatment, purchase of medication 

and orthopaedic aids, etc.), which are not covered by the basic, 

supplementary or private health insurance. Reimbursement of costs 

borne by an individual provided that payment is made to the account 

of the gift recipient, i.e. the health care institution, is also considered 

to be a gift (donation). Where the gift is a medicine, an orthopaedic 

or other medical aid, it should be reimbursed on the basis of 

an authentic document (invoice). Sponsorships are not considered 

to be donations provided that the recipient has certain obligations 

such as promotion of the donor. 

8. Incentives for selling apartments 

Law on subventions and residential sovereign loan guarantee 

(came into force on 24 March 2011) regulates subventions for the 

loans which citizens obtain from the commercial banks for purchase 

of apartments and residential sovereign loan guarantees from the 

Republic of Croatia. The citizens should apply for the loan subventions 

until 31 December 2012. 

Agency for legal transactions and mediation in real estate (hereinafter: 

the “Agency”) is assigned to approve subventions for the 

loans which are financed from the state budget and is appointed for 

concluding of the loan agreements. 



User Citizens with residence in the Republic of Croatia 

Terms 

Apartment 

Subvention 

amount 

Loan amount 

Repayment 

interest 

Agreement for 

loan subventions 

16 TPA Horwath | Real Estate Service 2012 

o Not older than 45 years old 

o Terms required by the commercial banks 

o If the user / marriage partner does not own 

other apartment or house for purpose of living 

or 

If the user owns only one apartment which is to 

be sold due to purchasing of a larger apartment 

for the purpose of living 

o New apartment in apartment building with 

usage permit 

o Selling price is not more than EUR 1,900.00 per 

m² 

o Apartment is being purchased directly from the 

investor or building contractor 

o ½ monthly installments (including principal 

and interest) for the first 4 years 

o Not more than EUR 100,000.00 * 

o Repayment period not more than 20 years 

* Difference over EUR 100,000.00 would not be 

subsidized. 

1 - 4 year after 4 years 

o 4,95% o 10% (min. 2 years) 

o Prohibition of leasing of an apartment 

o Residence registration on the address of the 

apartment within 30 days 

o Obligation for commercial banks to return 

subsidized amounts to the Agency in case of 

not repayment of the loans

II. VAT 

1. Small businesses 

In general an entrepreneur whose deliveries of goods or services do 

not exceed HRK 230,000 (EUR 31,000) in the previous calendar year is 

not considered to be a VAT payer. 

If, during the current year, the entrepreneur makes deliveries that 

would be taxable, whose value exceeds HRK 230,000 (EUR 31,000) 

he/she shall acquire the status as a taxpayer as from 1 January of the 

following year. 

The entrepreneur is entitled to voluntary register as VAT payer from 

the onset of business activities but before the first delivery of goods 

and services or by filing request in the period from January 1 to January 

15 each year, irrespectively of the amount of taxable deliveries. 

However, in that case the entrepreneur has to remain in the VAT system 

for the next five years. 

Once registered as VAT payer, the entrepreneur is obliged to charge 

VAT on deliveries to customers and is entitled to deduct and reclaim 

input VAT. 

The entrepreneur who is not a registered VAT payer is: 

not entitled to charge VAT, 

not allowed to deduct input VAT, 

not obliged to keep VAT records. 

2. Applicable tax rates 

2.1 Nature of supply 

Rental for residential purposes 

Rental for other purposes 

(offices, commercial premises) 

exempt from VAT 

but without right for 

deduction of input VAT 

25 % 

Rental of land 25 % 

Rental of business facilities, etc. 25% 

Provision of tourist accommodation, 

newspapers and magazines, children’s 

food, water except bottled water, sugar, etc. 

10% 


II. VAT 

Rental of garages and parking space exempt / 25 % 

Rental to diplomats 

2.2 VAT exemption 

18 TPA Horwath | Real Estate Service 2012 

exempt if reciprocity 

applies 

Rental of property for residential purposes is in general VAT exempt. 

However, all related input VAT is not recoverable, i.e. it would represent 

the final cost for the entrepreneur who provides such rental 

services. 

If the real estate is rented for business purposes, VAT on rent should 

be charged. In addition, the entrepreneur is entitled to deduct input 

VAT relating to that real estate. 

Renting of parking spaces and garages is subject to VAT, but renting 

of parking spaces and garages is VAT exempt if it relates to the lease 

for residential purposes. 

Generally, deliveries of goods and services performed to diplomatic 

and consular representatives, as well as to diplomatic and consular 

personnel are exempted from VAT, under the condition of reciprocity. 

Supervisory State Body State Protocol should determine whether 

the conditions for the exemptions are met. The exemption is realised 

directly from supplier of goods or services. Taxpayer who has performed 

deliveries of goods and services to diplomatic and consular 

representatives, as well as to diplomatic and consular personnel has 

to prove that those deliveries are tax exempted by providing a certificate 

issued by the Supervisory State Body, on the basis of which the 

buyer is entitled to realise tax free purchases of goods and services. 

2.3 Change of conditions for taxation 

If the tax treatment of building which was effective in a certain year 

changes within ten years from the beginning of the use of the same 

building, then input VAT adjustment is effected for the period after 

the change became effective. 

In connection with this provision there is a possibility that the respective 

proportion of input VAT claimed over the past ten years will 

be claimed back by the tax authorities. This would be the case if real 

estate used for generating rent from business premises is used for 

generating rent from residential premises. If the building was used

for renting of residential property and now is rented as business 

premises, VAT that could not be previously deducted will become 

deductible in respective proportion dependent on the tax periods 

used for residential purposes. 

2.4 Partial taxable deliveries 

Entrepreneurs VAT payers who deliver goods and perform services 

that are partly subject to VAT and partly exempt from it, shall 

be entitled to deduct certain percentage of input VAT calculated as 

prescribed with the VAT Bylaw. Partial deduction of input VAT will be 

applied only for incoming invoices that refer to both taxable and exempted 

deliveries. 

3. Taxation of receivables, actual receipts and payments in advance 

Natural person who is a personal income taxpayer, and is registered 

for VAT, pays VAT on the basis or received (collected) consideration, 

irrelevant of the time when the rent is due for payment. 

For corporate profit taxpayer, VAT liability shall arise in the course of 

the accounting period during which the deliveries have been made 

and services rendered. If the invoice is issued prior to the delivery 

of goods and services, the VAT liability arises upon issuance of the 

invoice. 

In case of payments in advance tax liability shall arise upon expiry 

of the accounting period in which they have been collected. For the 

inception of tax liability the time of receiving the advance payment 

is relevant, and not the time of delivery of goods or performance of 

services. 

4. Input VAT on services paid in advance 

Input VAT is only deductible where the taxpayer uses the property 

for business purposes. Input VAT incurred before rent service actually 

begins can be deducted immediately if the service is paid and the 

invoice for advance payment is issued by the service provider. 

5. Partial private use 

Input VAT must not be adjusted if the part of building is used simultaneously 

for renting of business premises and for private purposes. 


II. VAT 

If delivered goods or performed services are used both for entrepreneurial 

and non-entrepreneurial purposes, and the part used for 

non-entrepreneurial purposes should be determined. The input VAT 

can be partially deducted using percentage of input VAT that refers 

to entrepreneurial purposes. 

6. Sales, gifts and cessation 

VAT on deliveries provided free of charge should be charged and 

paid by VAT payer. In general, this means that VAT basis is equal to 

production and purchase costs. 

The cessation of business may lead to adjustment of input VAT previously 

deducted. All deliveries provided in a cessation process are taxable 

in the same manner as the deliveries provided in normal course 

of business. 

The adjustment relates to input VAT on acquisition or construction 

costs deducted during the last ten years. The total amount of VAT requiring 

to be adjusted is reduced in line with the number of months 

the real estate is used for business purposes. The seller has the option 

of treating sales of property as subject to VAT and of invoicing the 

purchasers with 25% VAT, provided this is agreed in the contracts. The 

seller is at the same time entitled to deduct input VAT. Input VAT on 

payments in advance can be deducted immediately (and not only 

when the VAT liability arises), provided that at the time of the advance 

payment the probability of a VAT sales can be determined. 

7. Transfer because of death 

Where a property is transferred because of death, no adjustment of 

input VAT is required, because the new owner of the property inherits 

all the rights and duties of the previous owner. 

8. Retention of records 

Under the provisions of Accounting Law all documents and records 

used for entering business transactions into the general ledger (i.e. 

ownership over the real estate) must be retained for at least 11 years 

following the end of the relevant calendar year. 

9. Construction services 

Croatian VAT legislation does not prescribe that VAT liability can be 

transferred to the consumer in case of certain construction services. 


With respect to construction services in Croatia the usual practice is 

that a performer of construction services invoices an investor using 

the partial invoices. Partial invoices specify the value of services performed 

in the relevant period, value of services according to the contract 

and value of services that still need to be performed. For input 

VAT to be deductable, partial invoices should contain all the elements 

required by VAT Law and needs to be verified by an independent Supervisory 

Body. In general, tax liability on the basis of partial invoices 

arises in the accounting period during which the partial invoice is 

verified by the independent Supervisory Body. The tax base in this 

case is the value of services performed according to partial invoices. 

If the partial invoice is not verified by the Supervisory Body, the VAT 

liability arises in the accounting period (month) that follows the accounting 

period in which the partial invoice was issued. The service 

recipient (investor) is entitled to deduct input VAT in the accounting 

period in which the invoice was verified by the Supervisory Body. 

10. Landlords and agents 

10.1 Invoices 

Provider of rental services should issue invoices that must contain 

all the elements required under Article 15 of the VAT Law, as follows: 

the place of issue, invoice number and date, 

the name, address and personal identification number (“OIB”) of 

the company or citizen (tax registry number of the entrepreneur), 

who has delivered the goods or performed the services (seller), 

the name, address and personal identification number (“OIB”) of 

the entrepreneur who has taken delivery of the goods or services 

performed (buyer), 

the quantity and usual commercial name of the goods delivered or 

the nature and quantity of services performed, 

the date of delivery of goods or performance of services, 

the amount of the charge (price) of goods delivered or services 

performed, classified according to the tax rate, 

the amount of tax classified according to the tax rate, 

the total amount of consideration and tax, 

R1 / R2 remark: R1 for invoices of taxpayer who pays VAT on the basis 

of the issued invoices, R2 for invoices of taxpayer, who pays VAT 

on the basis of the received (collected) considerations. 

Real estate agents should charge VAT on the commission service for 

the real estate situated in Croatia. Commission fee for real estate situated 

abroad is not subject to VAT. 


II. VAT 

Where the service provided is not subject to VAT, an indication of the 

relevant statutory provisions should be stated on the invoice (i.e. rent 

for residential purposes). 

A taxpayer who pays tax on the basis of the issued invoices must 

issue invoices bearing the special mark R-1. A taxpayer who pays tax 

on the basis of the received (collected) considerations shall issue invoiced 

with the same content but bearing a special mark R-2. 

Please note that the VAT legislation prescribes that invoices sent by 

means of telecommunication will not be considered as invoices in 

accordance with VAT provisions. As of 1 January 2012 the VAT legislation 

allows the issuance of invoices electronically. In order to be 

valid, electronic invoice must be issued in accordance with the Law 

on electronic document and should include an electronic signature, 

as prescribed by the Law on electronic signature. 

11. Real estate transfer tax, inheritance tax and gifts tax 

Subject to real estate transfer tax is purchase, exchange, inheritance, 

gift, contribution of real estate into a company and withdrawal of real 

estate from a company, the acquisition of real estate in the procedure 

of liquidation or bankruptcy, acquisition pursuant to a ruling by 

a court or other body and other acquisitions of real estate. 

Real estate transfer tax is paid on every transfer of land ownership. 

Transfer of ownership over the buildings is taxed by real estate transfer 

tax or by VAT. Transfer of ownership over the building built before 

the 1 January 1998 is taxed by real estate transfer tax. The tax base is 

the market value of the real estate at the time of acquisition. If the 

purchase price is set below market price, the tax authorities are authorised 

to revaluate the value of a real estate, i.e. to adjust the tax 

base. 

Real estate transfer tax is paid at the rate of 5%. 

Transfer of newly built buildings that are subject to VAT are exempted 

from real estate transfer tax. Newly built buildings are buildings or 

parts of them constructed after the 1 January 1998. 

The tax on inheritance and gifts is paid on real estate, cash, receivables 

and securities and on movable property if the individual market 

value is greater than HRK 50,000 or app. 6,700. 


The inheritance and gifts tax is paid at the rate of 5%. Inheritance or 

gift of a real estate is subject to real estate transfer tax. In addition to 

inheritance tax, if the testator deducted input VAT on inherited property, 

VAT is also due. 

The inheritances and gifts tax is not paid by: 

1. the spouse, linear relatives, and adopted children and adoptive parents 

of the deceased or the donor, 

2. brothers and sisters, their progeny, and sons- and daughters-in-law 

of the testator or donor if they lived in a joint household with the 

testator at the time of the testator’s death or with the donor at the 

moment of the receipt of the gift and ex-husband and wife in the 

process of separation/divorce, 

3. individuals and legal entities to whom the Republic of Croatia or 

a unit of local and regional self-government gifts or gives moveable 

property without charge for the sake of compensation for damage 

or for some other reasons in connection with the Croatia War of Independence, 

4. the Republic of Croatia and units of local and regional self-government, 

bodies of the government and bodies of units of local and 

regional self-government, public institutions, religious communities, 

foundations, the Red Cross and other humanitarian associations 

founded according to separate regulations, 

5. individuals and legal entities that receive gifts (donations) for the 

purposes laid down by separate regulations. 

Tip: Diplomatic and consular representatives and diplomatic and consular 

personnel are exempted from real estate transfer tax and VAT under 

the condition of reciprocity. Therefore, diplomatic and consular representatives, 

as well as diplomatic and consular personnel are tax exempted in 

case of buying a real estate. 


III. Real estate forming part of business assets 

1. Preparation of financial statements 

Entrepreneurs are obliged to prepare financial statements in line 

with the Croatian Financial Reporting Standards (HSFI). As an exemption 

from the general requirement, large entrepreneurs as per the 

definition of the Accounting Law or the entrepreneurs whose shares 

or securities are listed on stock exchanges prepare financial statements 

in line with IFRS. 

As of 1 January 2008, the Implementation of HSFI resulted in several 

significant changes, as follows: 

Goodwill has to be depreciated over 5 years; 

Investment property has to be recognised if owner holds a land 

and/or building in finance lease to earn rentals or for capital appreciation 

or both. Investment property is initially measured at cost 

and subsequent measurement can be performed by application of 

fair value model or cost model; 

Non-current assets held for sale must be presented separately in 

the balance sheet. Non-current assets held for sale shall not be depreciated; 

and 

Deferred tax assets and deferred tax liabilities must be recognised 

for all taxable temporary differences. 

1.1 Size of the entrepreneur 

Based on the size of the entrepreneur, the Accounting Law prescribes 

which financial statements each entrepreneur is obliged to prepare. 

Small entrepreneurs are those who do not meet more than two of 

the following conditions: a total annual turnover of HRK 65 million, 

total assets value up to HRK 32.5 million and average number of employee 

equals 50 over the year. 

Medium-sized entrepreneurs are those who fulfil two of three conditions 

prescribed for small entrepreneurs but do not meet two of 

three following conditions: a total annual turnover up to HRK 260 million, 

total assets value up to HRK 130 million and average number of 

employees is less than 250 over the year. 

The entrepreneurs who fulfil two of three above described conditions 

are considered to be large entrepreneurs. 


1.2 Prescribed financial statements 

Small entrepreneurs are obliged to prepare following financial statements: 

Balance sheet, 

Income statement, 

Notes to the financial statements. 

Both medium-sized and large entrepreneurs are obliged to prepare 

following financial statements: 

Balance sheet, 

Income statement, 

Cash flow statement, 

Statement of changes in capital, 

Notes to the financial statements. 

2. Calculation of profits 

Corporate profit tax base is defined as accounting result of the company 

adjusted according to the corporate profit tax regulations. 

3. Renovation and renewals 

Asset is initially recognised at costs. Costs include all costs necessary 

to bring the asset to working condition for its intended use. This 

includes cost of site preparation, delivery and handling, installation, 

related professional fees for architects and engineers and the estimated 

costs of dismantling and removing the asset and restoring 

the site. Renovation and renewal costs that increase the value of the 

asset should be capitalised. Otherwise, renovation and renewal costs 

are recognised as expenses. 

4. Standard depreciation 

Depreciation of fixed tangible assets shall be recognised as expenditure 

up to the amount calculated on the basis of the acquisition 

costs by using the linear method and applying the annual depreciation 

rates. The maximum deductable tax rate to be applied by using 

straight-line method for buildings is 5% per annum. This rate can also 

be doubled. The amount of depreciation exceeding the maximum 

tax allowable depreciation is treated as tax non deductible expense 

but can be deducted in the first subsequent tax period in which ac- 



counting depreciation is lower than the maximum tax allowable. If 

lower depreciation rates are used for accounting purposes such rates 

prevail for tax purposes as well. 

5. Demolition costs 

Where buildings are demolished, the question arises as to whether 

the demolition costs and the residual book value of the building can 

be treated as tax deductible expenses at the time of demolition, or 

whether they require to be capitalised. To apply the correct tax treatment 

there are certain circumstances that are considered relevant: 

If the building was demolished in order for the property to be further 

used as private property and with connection to business activity, 

demolition costs cannot be treated as tax deductible. 

If the building was demolished in order for the property to be sold, 

rented or used in other course of business and there is a connection 

with business activity, demolition costs can be treated as tax 

deductible. 

6. Hidden reserves 

Creation of hidden reserve is not taxable with corporate profit tax if 

non realised income is not recognised in profit and loss account. In 

case unrealised gains are recognised in profit and loss account, nonrealised 

income becomes taxable. 

According to the Croatian Corporate Profit Tax Bylaw, hidden reserves 

created on a basis of assets revaluation must be included in 

the corporate profit tax base in the amount of depreciation expense 

incurred for the increased value of assets. In addition, hidden reserves 

are included into the corporate profit tax base when the asset is disposed 

of. 

In case of merger, revaluation reserves (the amount not yet depreciated) 

must be included in the corporate profit tax base through 

the final corporate profit tax return of the company which is to be 

merged into another company. 

7. Cessation of business 

If a sole trader/entrepreneur ceases its business, his business assets 

are becoming his/her own private assets. His/her tax obligations depend 

on the circumstances under which he/she acquired business 

assets. 


If he/she was able to deduct input VAT upon asset acquisition or has 

purchased the assets for the purposes of his/her entrepreneurial activity 

without VAT or at a discounted tax rate before the application 

of the VAT Law, it is considered to be a withdrawal for his/her private 

purposes and it is subject to taxation. The tax base in that case is the 

market price of a certain asset which is equal to met purchase value. 

If the assets were introduced into the business as private assets of the 

entrepreneur that were taxed when acquired, there is no tax obligation 

after cessation of business, because tax was once already paid. 

8. Liquidation of company 

In the process of liquidation the company is considered to be regular 

corporate profit taxpayer. Upon transfer of the assets to the shareholders 

or if the assets are used for further investment, the difference 

between net book value and market value will create a taxable income 

for the company. Transfer of the assets to the shareholders is 

also subject to VAT. Real estate transfer in the process of liquidation is 

subject to real estate transfer tax. 

9. Real estate and business reorganisations 

In certain cases transfer of real estate is exempt from real estate transfer 

tax. Real estate transfer tax shall not be paid when real estate is 

contributed into the registered share capital, transferred in the process 

of merger and de-merger. 

VAT is payable on newly built buildings in all above outlined cases, 

except in case of transfer of a business unit. 

Tip: According to the General Tax Law, if the transfer of a unit is done in 

the manner that it includes the transfer of items, receivables, rights and 

liabilities included in the short term and long term asset and it allows the 

unit to continue to perform independently its current business activities, 

it will be considered that the unit represents a business unit. 

10. Losses in commercial letting and tax schemes 

Tax losses can be carried forward for five years from the year in which 

the loss occurred. Tax losses cannot be carried backwards. Tax losses 

from previous years should be utilised and offset against taxable 

profit in the order in which tax losses incurred (i.e. the losses from 

earlier year are offset first). 



According to the corporate profit tax legislation, tax losses can be 

transferred in case of business combinations (i.e. mergers, acquisitions, 

spin-off and split-off). Legal successor has a right to utilise 

transferred tax losses carried forward and off set them with the taxable 

base until expiration. 

Legal successor has the right to transfer tax losses in case of business 

combinations is limited i.e. it would cease if legal predecessor does 

not perform business activity for two tax periods before the status 

change and / or if legal successor would change business activity of 

legal predecessor in substance. 

The purpose of limiting the right to transfer tax losses by legal successor 

in case of business combinations is to prevent business combinations 

(merger, acquisition, etc.) that are set up in order to utilise 

tax losses of legal predecessor, i.e. to avoid corporate income tax liability. 


IV. Property and private foundations 

1. Fundamental principles of taxation 

For real estate held in Croatian foundations the following tax exemptions 

apply: 

Foundations are not corporate profit taxpayers. However, if foundation 

is engaged in an economic activity and non-taxation would 

result with unjustifiably privileged position in the market, the tax 

authorities can issue a resolution by which the foundation would 

become a corporate profit taxpayer. 

Foundations are not subject to real estate transfer tax nor inheritance 

or gift tax. 

If foundations do not act as an entrepreneur, i.e. do not perform 

deliveries of goods and services, they are not considered as VAT 

payers. 

2. Foundations property transfers 

Assets of the foundations can be used only for the purpose for which 

foundation was incorporated. In order to be able to transfer the property, 

foundation would be obliged to obtain approval of the Ministry 

of Finance. Property in foundation’s ownership cannot be sold or 

transferred if this would impair the financial position of foundation. 

Property can be transferred to natural or legal entities only if this is 

allowed by the resolution on incorporation. 


V. Properties and local authorities 

Local authorities are not subject to corporate profit tax except in 

case when they carry out business activities and if non-taxation 

gives them competitive advantage. 

When local authorities acquire a certain property, they are not 

obliged to pay real estate transfer tax. In this context acquisition 

refers to any kind of buying and selling, inheritance, donation, etc. 

Local authorities cannot deduct VAT charged by other companies. 

1. Public Private Partnerships 

Public Private Partnership (“PPP”) is considered to be a long-term 

relationship agreement between public sector (city, county or municipality) 

and private sector (legal entity with ability to develop and 

manage certain projects) with a purpose of providing public interest 

services in authority of a public sector, to the final users. PPP projects 

mainly relate to the following: 

planning, construction and/or reconstruction of public infrastructure, 

construction and/or reconstruction of public information and 

communication systems and/or installation of public interest by 

taking over one or more liabilities relating to financing, management 

and maintenance. 

Those project activities are performed by a private partner. For exchange, 

public partner may transfer to a private partner certain rights 

and/or concession and/or may pay certain consideration in cash. 

Usually private partner incorporates special purpose vehicle (SPV), a 

company which will be directly involved in the project realisation for 

this purpose. 

There are two main types of PPP: Built Operate Transfer (BOT) (concession) 

and Private Finance Initiative (PFI). 

BOT model understands that the private partner constructs and manages 

the project and the public partner gives concession for usage of 

that project to the private partner, i.e. property. The construction cost 

and management service fee is collected from the end users. 

In PFI model, private partner is involved in planning, finance, construction, 

management and maintenance of a building for the public 

sector purposes (e.g. schools, hospitals, government buildings etc.). 

In this case private partner has construction right, a legal instrument 


which enables separation of the ownership over the building from 

the ownership over the land. Therefore, private partner is the owner 

of the building constructed on the public partner’s land. Public partner 

pays certain rental fee to a private partner for usage of that building. 

Construction right is subject to real estate transfer tax, which is 

payable at the rate of 5% on its market value. The problem is that 

construction rights market has not been developed yet in Croatia, 

and therefore market value will be difficult to determine. Except on 

land, construction right may be imposed on the existing old building 

acquired by the private partner. Real estate transfer tax paid by 

the private partner in the moment of construction right (i.e. building) 

acquisition will be refunded through the rental fee payable by 

the public partner. In addition, if private partner is registered for VAT 

purposes, he will be obliged to calculate VAT in the moment of real 

estate (building) sale/delivery. 

Public-private partnership was introduced in November 2008, as an 

addition to the EU Guidelines on public private partnerships already 

adopted. Due to limited experience, careful consideration of project 

costs, financing, tax and legal issues is recommended prior to undertaking 

any such project. 


VI. Property funds: tax considerations 

Incorporation of property funds in Croatia is enabled by the Croatian 

Investment Funds Law. Acquisition of real estate companies or shares 

by foreign investment funds in Croatia is not subject to the provisions 

of this law. 

1. Key features of property funds 

Property funds in Croatia are legal entities whose shares are listed 

on the stock exchange. Prior to purchase, real estate has to be evaluated 

by a certified court expert and the price should be set at market 

condition. 

Investments may include the following types of property, both in 

Croatia and abroad: 

Residential and/or commercial buildings including respective land, 

Construction land on which construction work is carried out, provided 

the value of the land does not exceed 20% of the fund’s 

property net value, 

Construction land, 

Agricultural land, 

Other real estate investments, if explicitly defined in the statute and 

prospectus of the fund. 

2. Investment regulations 

Maximum of 15% of the fund’s property net value can be invested 

in securities of one issuer, 


in financial derivative instruments or certificates whose prices are 

based on real estate, 


in other real estate investment funds shares or interest, 

At least 50% of the fund’s property must consist of real estate located 

in Croatia, 

Value of real estate owned by the fund is not allowed to exceed 

20% of the fund’s net value at the time of the real estate acquisition, 

Real Estate Investment funds are not allowed to have more than 

25% of voting rights shares issued by one of single issuer holding 

voting rights, or securities obtained from one singular bonds edition. 


3. Distribution of profits and taxation 

Funds are subject to real estate transfer tax at the rate of 5% and /or 

VAT when acquiring a real estate. 

Capital gains realised by legal entities through the real estate investment 

funds are subject to corporate profit tax at the rate of 20%. 

According to the latest amendments to the Croatian Income Tax Law, 

as of 1 March 2012 dividends and profit shares above HRK 12,000 

or app. EUR 1,600 distributed to individuals from the profit realised 

after 1 January 2001 should be treated as capital income. Personal 

income tax on basis of dividends and profit shares should be withheld 

at the rate of 12% without recognition of personal allowance. 

Non-taxable amount of dividends and profit shares income up to the 

annual amount HRK 12,000 or app. EUR 1,600 should be tax deductible 

in annual personal income tax calculation, based on submitted 

annual personal income tax return. Individuals do not pay income tax 

on distributed profits realised before 1 January 2001. 

Profit distribution to legal entities in Croatia is not subject to tax. 

However, dividends paid to legal entities abroad are subject to withholding 

tax of 12%. This rate can be reduced if the respective double 

tax treaty is applicable. 

The Croatian legislation does not provide specific regulations according 

to the real estate investment funds are obliged to distribute 

dividends. 

4. Marketability 

Unlike the prices of stock exchange listed property companies’ 

shares, prices of property funds shares are not affected by stock exchange 

fluctuations. Instead, value of the shares depends on the current 

market value of the fund assets, i.e. on the fluctuations on the 

real estate market. 


VII. Property investment abroad 

1. Regular income 

Most double taxation agreements assign the right to tax income 

earned from immoveable property to the country in which the property 

is situated. This applies on both private and business property. 

Profits realised from agricultural and forestry businesses are also considered 

as income from immoveable property. 

Example: 

A tax resident in Austria inherited rental property in Croatia: the rental 

income realised from the Croatian property is taxable in Croatia. 

This rule is applied not only in case of direct benefit to the owner of 

the land, but also where the benefit from the immoveable property is 

indirect and arises from the exercise of a bare right of use. 

Example: 

A resident in Croatia purchased property in Croatia and constructed 

an apartment block, which he subsequently leases to an Austrian 

company. The Austrian company subleases individual apartments. 

The Austrian company has right only to sublease the apartments, but 

the income from the sublease is taxable in Croatia. 

The Austrian company would create permanent establishments and 

according to the Corporate Profit Tax Law, this company would be 

liable to pay corporate profit tax on income derived in Croatia. 

2. Profits on disposal 

Profits on disposal of immoveable property are generally taxable in 

the country in which the property is situated. 

Example: 

Austrian tax resident natural person would be liable to pay personal 

income tax in Croatia if he/she has sold the property within three 

years from the property acquisition not held for habitual purposes 

of that individual. 

The treatment is the same for Croatian and foreign tax residents. 


DTA with Applicable as of DTA provision 

Albania 1998 Art. 13 para 1 

Armenia 2011 Art. 13 para 1 

Austria 2002 Art. 13 para 1 

Belarus 2005 Art. 13 para 1 

Belgium 2005 Art. 13 para 1 

Bosnia and Herzegovina 2006 Art. 13 para 1 

Bulgaria 1999 Art. 13 para 1 

Canada 2000 Art. 13 para 1 

Chile 2005 Art. 13 para 1 

China 2002 Art. 13 para 1 

Czech Republic 2000 Art. 13 para 1 

Denmark 2010 Art. 13 para 1 

Estonia 2005 Art. 13 para 1 

Finland 1991 Art. 13 para 1 

France 2006 Art. 13 para 1 

Germany 2007 Art. 13 para 1 

Greece 1999 Art. 13 para 1 

Hungary 1999 Art. 13 para 1 

Indonesia - Art. 13 para 1 

Iran 2009 Art. 13 para 1 

Ireland 2004 Art. 13 para 1 

Israel 2007 Art. 13 para 1 

Italy 2010 Art. 13 para 1 

Jordan 2007 Art. 13 para 1 

Korea 2007 Art. 13 para 1 

Kuwait 2004 Art. 13 para 1 

Latvia 2002 Art. 13 para 1 

Lithuania 2002 Art. 13 para 1 

Macedonia 1997 Art. 13 para 1 

Malaysia 2005 Art. 13 para 1 

Malta 2000 Art. 13 para 1 

Mauritius 2004 Art. 13 para 1 


VII. Property investment abroad 

Moldova 2007 Art. 13 para 1 

Morocco - Art. 13 para 1 

Montenegro 2005 Art. 13 para 1 

Netherlands 2002 Art. 13 para 1 

Norway 1991 Art. 13 para 1 

Poland 1997 Art. 13 para 1 

Qatar - Art. 13 para 1 

Romania 1997 Art. 13 para 1 

Russia 1998 Art. 13 para 1 

San Marino 2006 Art. 13 para 1 

Serbia 2005 Art. 13 para 1 

Slovakia 1997 Art. 13 para 1 

Slovenia 2006 Art. 13 para 1 

South Africa 1998 Art. 13 para 1 

Spain 2007 Art. 13 para 1 

Sweden 1991 Art. 13 para 1 

Switzerland 2000 Art. 13 para 1 

Syria 2010 Art. 13 para 1 

Turkey 2001 Art. 13 para 1 

Ukraine 2000 Art. 13 para 1 

United Kingdom 1991 Art. 13 para 1 

3. Tax liability of foreign business investors 

Foreign business investors, who derive income from real estate 

in Croatia on a regular basis, create permanent establishments in 

Croatia and become liable to register at least a branch office according 

to the Croatian Companies Law. The branch office is subject to 

corporate profit tax and should register for VAT if taxable supplies 

exceed HRK 230,000 or app. EUR 31,000 in one year. 


VI. VI. TPA Horwath offices 

All the offices at a glance 

AUSTRIA 

■ Vienna 

TPA Horwath 

Wirtschaftstreuhand und Steuerberatung 

A-1020 Vienna, Praterstrasse 62-64 

Tel. +43 1 588 35-0, Fax ext. 500 

E-Mail: wien@tpa-horwath.com 

TPA Horwath Wirtschaftspruefung 


Tel. +43 1 546 17-0, Fax ext. 505 

E-Mail: wp@tpa-horwath.com 

TPA Horwath Unternehmensberatung 


Tel. +43 1 588 35-0, Fax ext. 500 

E-Mail: ub@tpa-horwath.com 


Corporate Finance Consulting 


Tel. +43 1 588 35-640, Fax ext. 335 

E-Mail: cfc@tpa-horwath.com 

AKTUAR 

Versicherungsmathematik 


Tel. +43 1 588 35-521, Fax ext. 504 

E-Mail: aktuar@tpa-horwath.com 

ALTA 

Wirtschaftstreuhandgesellschaft, 

Wirtschaftspruefung und 

Steuerberatung 


Tel. +43 1 588 35-0, Fax ext. 500 

E-Mail: wien@alta.at 

■ St. Poelten 


A-3100 St. Poelten, Steinergasse 2a-4 

Tel. +43 2742 470 74-0, Fax ext. 50 

E-Mail: st.poelten@tpa-horwath.com 

■ Krems 


A-3500 Krems, Schwedengasse 2 

Tel. +43 2732 702 80-0, Fax ext. 9 

E-Mail: krems@tpa-horwath.com 

■ Langenlois 


A-3550 Langenlois, Bahnstrasse 90 

Tel. +43 2734 24 92-0, Fax ext. 12 

E-Mail: langenlois@tpa-horwath.com 

■ Zwettl 


A-3910 Zwettl, Landstrasse 52 

Tel. +43 2822 528 04-0, Fax ext. 4 

E-Mail: zwettl@tpa-horwath.com 

■ Lilienfeld 


A-3180 Lilienfeld, Liese Prokop Strasse 4 

Tel. +43 2762 520 53-0, Fax ext. 50 

E-Mail: lilienfeld@tpa-horwath.com 

■ Schrems 


A-3943 Schrems, Bahnstrasse 51 

Tel. +43 2853 772 84-0, Fax ext. 6 

E-Mail: schrems@tpa-horwath.com 

■ Graz 


Wirtschaftstreuhand und Steuerberatung 

A-8010 Graz, Muenzgrabenstrasse 36 

Tel. +43 316 80 58-0, Fax ext. 4010 

E-Mail: graz@tpa-horwath.com 

TPA Horwath Wirtschaftspruefung 

A-8010 Graz, Muenzgrabenstrasse 36 

Tel. +43 316 83 56 29-0, Fax ext. 3033 

E-Mail: wp.graz@tpa-horwath.com 

■ Klagenfurt 


A-9020 Klagenfurt 

Walther-von-der-Vogelweide-Platz 4 

Tel. +43 463 327 46-0, Fax ext. 199 

E-Mail: klagenfurt@tpa-horwath.com 

■ Villach 


A-9500 Villach, Trattengasse 32 

Tel. +43 4242 327 46-0, Fax ext. 399 

E-Mail: villach@tpa-horwath.com 

44 TPA Horwath | Tax-Service 2011 

■ Hermagor 


A-9620 Hermagor, Riedergasse 3/8 

Tel. +43 4282 2715-0, Fax ext. 299 

E-Mail: hermagor@tpa-horwath.com 

BULGARIA 

■ Sofia 


BG-1000 Sofia 

St. Nedelya Square No. 16, fl oor 3 

Tel. +359 2 981 66 45 

Fax +359 2 981 66 35 

E-Mail: tpa-horwath@tpa-horwath.bg 

CROATIA 

■ Zagreb 


HR-10 000 Zagreb 

Grand Centar, Ulica Petra Hektorovića 2 

Tel. +385 1 48 82 555 

Fax +385 1 48 22 220 

E-Mail: tpa-horwath@tpa-horwath.hr 

CZECH REPUBLIC 

■ Prague 


CZ-120 00 Prague 2, Mánesova 28 

Tel. +420 2 22 826-411, Fax ext. 412 

E-Mail: tax@tpa-horwath.cz 

■ Opava 


CZ-746 01 Opava, Solná 13 

Tel./Fax: +420 553 622 565 

E-Mail: audit@tpa-horwath.cz 

■ Znojmo 


CZ-669 02 Znojmo, Mariánské náměstí 6 

Tel. +420 515 505-550, Fax ext. 551 

E-Mail: tax@tpa-horwath.cz 

HUNGARY 

■ Budapest 


H-1024 Budapest, Buday László u. 12 

Tel. +36 1 345 45-00, Fax ext. 02 

E-Mail: tpa@tpa-horwath.hu 

POLAND 

■ Poznan 


PL-61-761 Poznan, ul. Żydowska 1 

Tel. +48 61 851 38-60, Fax ext. 62 

E-Mail: offi ce@tpa-horwath.pl 

■ Warsaw 


PL-02-019 Warsaw, ul. Grójecka 5 

Tel. +48 22 581 35-40, Fax ext. 41 

E-Mail: offi ce@tpa-horwath.pl 

ROMANIA 

■ Bucharest 


RO-Sect. 1, Bucharest 

46 Grigore Cobălcescu St. 

Tel. +40 21 310 06-69, Fax ext. 68 

E-Mail: info@tpa-horwath.ro 

SERBIA 

■ Belgrade 


Terazije 4/5 11000 Belgrade, Serbia 

Tel. + 381 60 60 61 201, Fax ext. 49758 

E-Mail: serbia@tpa-horwath.com 

SLOVAKIA 

■ Bratislava 


SK-81109 Bratislava, Pribinova 25 

Tel. +421 2 20 67 89-11, Fax ext. 13 

E-Mail: tax@tpa-horwath.sk 

SLOVENIA 

■ Ljubljana 


SI-1000 Ljubljana, Leskoškova 2 

Tel. +386 1 520 86-60, Fax ext. 69 

E-Mail: offi ce@tpa-horwath.si 

www.tpa-horwath.com

Introduction - TPA Horwath

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