1. How high is purchase tax in Croatia?

In Croatia all real estate sales are taxed a fixed rate of 5% of the price of the property, regardless of which property or what type of transaction is of concern. The tax is paid by the buyer. When switching properties each owner is obliged to pay 5% on his/her property. Up until recently this was not the case and tax was paid on the difference in value of the two properties.

2. Can foreigners buy property in Croatia?

Yes they are, provided they are citizens of countries with which Croatia has signed a Reciprocity Agreement, with a required approval from the Ministry of Justice and the Ministry of Foreign Affairs of the Republic of Croatia. The procedure is as follows: once you have decided on a property, you will conclude a Purchase Agreement with the seller at a notary's office (signature certification may only be done by the seller, although it does not hurt if the buyer does it as well), which you will submit to the Ministry of Foreign Affairs, along with a copy of your passport, also certified by a notary public, and other accompanying documentation. One will usually wait as long as a year for a certificate from the Ministry of Foreign Affairs, sometimes even longer. During that time, one can carry out an advance registration of the existence of the Purchase Agreement at the Land Register. Foreign nationals who have companies in the Republic of Croatia may buy real estate in the Republic of Croatia, but only in the name of the company, and in such cases no approvals from the Ministry of Justice and the Ministry of Foreign Affairs of the Republic of Croatia are required. If you do not have a company, we can enable you to open one within around thirty days.

To learn mora about this topic:
NEW Real Property for Foreign Legal or Natural Entities in Croatia

3. Can foreigners sell property in Croatia?

Yes. All foreign persons and companies are allowed to sell their property located on Croatian territory. The only, temporary, exception is for legal entities from the former Yugoslavia whose cases will be dealt with in parallel with the succession of the former Yugoslavia.

4. What kind of documentation does a buyer have to present when purchasing a real estate in Croatia?
When purchasing a real estate in Croatia, a buyer must present evidence of Croatian citizenship, namely the ID card or the passport, original or a copy thereof certified by a notary public, and the same applies for foreign nationals who must present documents from their home countries.

5. Is the buyer subject to any taxes other than purchase tax?

The buyer is subject to income tax only in the case when the property is sold within a three-year period for a higher price than it was bought for. In that case the buyer is obliged to pay 35% income tax on the difference between the buying and selling price, plus additional tax depending on where in Croatia the buyer resides. Property tax does not exist in Croatia.

6. How is the rental of property taxed?

Tax on the rental of property varies depending on the type of property (room or building), and also on whether the landlord is a person or company. When a person rents out a property the amount, which is taxed is the rental fee minus a 30% allowance. Should this amount be less than 2.400 kn per month, an income tax of 20% plus additional tax is charged, and if it is more, 30% plus additional tax. In the case when a company rents out a property, to an individual or company, VAT of 22% is charged, and instead of income tax, at the end of the year, a profit tax of 35% is paid. In the rental of rooms and common space (hallways, bathrooms, kitchen etc.) the same taxes apply with the exception that the allowance increases from 30% to 50%.

7 . What about Value Added Tax (VAT)?

According to the law on VAT when buying a newly built purchase a tax of 5% is charged on the value of the land, whereas VAT of 22% is charged on the value of the building. Properties sold by individuals are exempt from VAT.

8. 8. How to avoid possible problems when buying a property?
Before concluding the Real Estate Purchase Agreement, the property/legal status of the real estate is verified, with obligatory presentation of the land register certificate in buyer's name as evidence of ownership of the subject property, without burdens.

Laws which are regulating real estate buisness

- Zakon o obveznim odnosima (NN 53/91, 73/91, 3/94, 7/96, 91/96, 112/98)

- Zakon o vlasništvu i drugim stvarnim pravima (NN 91/96, 68/98, 137/99, 22/00, 73/00, 114/01.)

- Zakon o zemljišnim knjigama (NN 91/96, 137/99, 114/01)

- Zakon o nasljeđivanju (NN 48/03, 163/03)

- Zakon o najmu stanova (NN 91/96, 48/98, 66/98)

- Zakon o zakupu poslovnog prostora (NN 91/96, 124/97)

- Zakon o prodaji stanova na kojima postoji stanarsko pravo (NN 68/98, 163/98, 22/99, 96/99, 120/00, 94/01, 78/02)

- Zakon o gradnji (NN 175/03)

- Zakon o porezu na promet nekretnina (NN 69/97, 26/00, 153/02)

- Zakon o porezu na dodanu vrijednost (NN 47/95, 164/98, 105/99, 54/00, 73/00, 127/00, 48/04.)

- Pravilnik o porezu na dodanu vrijednost (NN 60/96, 113/97, 7/99, 112/99, 119/99-ispravak, 44/00, 64/00, 80/00, 109/00, 54/01, 58/03 i 198/03)

- Zakon o porezu na dohodak (NN 127/00, 150/02, 163/03, 30/04)

- Opći porezni zakon (NN 127/00, 86/01, 150/02)

- Zakon o područjima posebne državne skrbi (NN 26/03)

- Zakon o javnom bilježništvu (NN 78/93, 29/94, 162/98)

- Zakon o državnoj izmjeri i katastru nekretnina (NN 128/99)

- Zakon o izmjenama i dopunama Zakona o prostornom uređenju (NN 32/02, 68/98, 61/00)

- ZAKONA O POSREDOVANJU U PROMETU NEKRETNINA (NN 107/07)