Buying property in Croatia is relatively simple. There are however two distinct routes you can take - either buying as an individual ‘private’ person, or through the formation of a Croatian company. Both routes have their own advantages and disadvantages - so before buying a property in Croatia, it is important to thoroughly examine your reasons for buying so as to decide which of the two routes is best for you.
The basic rule is as follows: if you are buying a holiday home, and intend to use it solely for yourself and your close family, go the ‘private’ route. If you are buying mainly as an investment, and are planning on renting the property, go the ‘company’ route. To view a PDF document on the advantages and disadvantages of each route, click here. To see the costs of setting up a Croatian company, see below.
Once you have found a property you wish to purchase, the sales procedure is really quite simple.
- You send us all of your contact information (postal address, fax number etc.) and a fax or scan of your passport.
You can then transfer the non-refundable booking deposit, usually €2500, either directly to the seller, or into your Croatian lawyers bank account (we can recommend very reputable, thorough, English speaking lawyers, with a proven track record, to act on your behalf during the sales process). - Your information will be sent to your lawyer for the sales contracts to be drawn up.
The contracts will then be sent to you via e-mail/fax for approval.
When you are happy with the contracts you sign them, both English and Croatian - 6 copies of each - and fax one English and one Croatian to your lawyer. You then send all the contracts through the post also to your lawyer. - Payment can then be made into the lawyers bank account (either the first payment if an off-plan sale, or the full amount if buying a completed property).
Once the vendor of the property signs the contracts, the payment will be transferred to his account.
The lawyer will handle all applications to the ministries to have you registered as the owner (there is an agreement of reciprocity between Ireland/England and Croatia, meaning Irish/English citizens are entitled to buy property in Croatia, and vice-versa). This consent from the ministries can take anything up to a year to receive, due to the amount of foreign purchases in recent months, but this is merely a formality.
The following is a list of additional costs involved in purchasing property in Croatia:
Agency Fee
We charge a fee of 4% of the property purchase price. This is payable once you sign your sales contract.
Furnishing
Annual Holiday Home Tax
There is an annual holiday home tax of EUR 2 per m2 of property, which covers street lighting and road maintenance etc.
Insurance
Capital Gains Tax
As an individual, you will be liable for a Capital Gains Tax of 35% if you sell your property before 3 years from the purchase date. If you sell after 3 years the tax is void*. If the purchaser or a member of their family has used the property as their residence (they must possess a Croatian residents permit) then the tax becomes void.
As an individual, if you sell more than 3 properties in 5 years you must form a company (and be liable for 20% income tax).
* You could still be liable for Capital Gains Tax in your country of residence. Ask for advice.
Real Estate Transfer Tax
A tax of 5% of the market value of real estate is imposed on the transfer of real estate ownership. The tax is payable by both domestic and foreign legal entities and individuals, unless an international treaty provides otherwise. Transfer of immovable property comprises any acquisition of immovable property in the Republic of Croatia. The tax base is the market value of real property at the moment of the acquisition. The acquirer of real property is the one who is obliged to pay the tax.
Company Setup
If you decide to set up a company in Croatia for your purchase, we can help.
We have a team of lawyers who can quickly form a company for you, who strive to have the company set up within 20 days of receiving the relevant papers from you.
Prices (subject to confirmation):
EUR 2,300
For the purchase of an existing company (inclusive of base capital)
EUR 1,550
For the set up of a new company (you must inject EUR 2,700 as base capital)
Contact us for details.
Complete Currency foreign exchange service
In order to provide our clients with the best possible service, we have partnered with Complete Currency, a UK firm that specialises in foreign exchange. Based in the heart of the City of London, they pride themselves on their ability to offer a personal service coupled with the best exchange rate, to private and corporate clients alike.
They offer a range of foreign exchange products to ensure that our clients maximise their potential within the foreign exchange market, taking advantage of exchange rate fluctuations and safeguarding their investment.
So, our clients can feel comfortable in the knowledge that Complete Currency have over 30 years of currency trading and money transfer experience at their disposal, and will see to it that our clients get the best exchange rate for their purchase.
Visit www.completecurrency.co.uk for more details, or call +44 (0) 870 890 2915
