Purchase a Property in Croatia
Purchase a Property in CroatiaUpdated on Wednesday 22nd April 2020
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Located in central-southern Europe, Croatia is a member of the European Union since 2013. Its economy is based on the services, industrial and agricultural sectors, together with a continuously growing tourism. With 700 km of the coastal region, with more than 1,000 islands and with the landscapes of the Dinaric Alps, Croatia has a lot to offer to the real-estate market. If you intend to purchase a property in Croatia, you should collaborate with our experienced Croatian lawyers. They can help you successfully go through all the legal operations involved in the real estate acquisition such as consulting, elaboration of the contracts and real estate due-diligence.
How can I purchase a property in Croatia
Whether your reason to purchase a property in Croatia is capital growth, holiday rental income, or simply your desire to spend the spare time in this country, you should be interested to know more about the property acquisition procedure. In the following, you will find some indications on central aspects concerning the property purchasing in Croatia:
- since you might not be fluent in Croatian, preliminary to the property identification, you might want to find professional assistance for the translation issues;
- as soon as you found a property, you will need to find all the relevant information about it. A law firm in Croatia can search the property for you in the Land Registry;
- checking with the local planning office is also required in case you buy a land on which you intend to commence building operations;
- details regarding the ownership (vlastovnica) are to be found in the Katastar – the property and cadaster registry;
- depending on the state of the property, you might want to invest in some renovation works. You could rely on our Croatian lawyers to conduct the needed research concerning the requirement of any permits and planning permissions from the Conservation Office.
Legal aspects concerning property acquisition in Croatia
Since 2009, the terms for property acquisition in Croatia are the same for locals and foreigners. The only restriction imposed by the Croatian legislation regards the agricultural land acquisition, that foreigners are not entitled to purchase. Once the sale contract has been concluded, there is a 5% purchase tax that the buyer has to pay together with the submission of the current cadaster verification and of the approvals of construction.
For any tax payment and also in order to access a Croatian bank account, you will need a personal identification number (OIB – osobni identifikacijski broj), which you can obtain as a legal person domiciled in Croatia. If you need a loan for your investment in a Croatian real estate, you must apply for a mortgage loan at one of the Croatian Banks.
Who can buy a property in Croatia?
Domestic and foreign entrepreneurs who want to establish the business presence in Croatia can acquire a property in this state. An office building is in most cases the choice of business persons who want to expand the operations in Croatia. Warehouses, storages, houses, condominiums and apartments in Croatia can be purchased by foreigners who intend to set up the operations and live in this country.
Buying a property by setting up a company in Croatia
Investors from abroad have the possibility of buying properties for commercial use by registering a company first. A pre-sale contract can be issued until the company is registered with the Croatian Trade Register. This is a suitable option for entrepreneurs looking to rent the acquired properties, or for real estate developers. Non-EU citizens need to consider this type of property purchase procedure as it is the most recommended one in their case.
Fees for property purchase in Croatia
Among the fees related to a real estate acquisition in Croatia, we mention the property tax, the real estate transfer tax of 4% rate and the real estate agency fee through which the property is purchased. You should consider that many property owners in Croatia offer the possibility of negotiating the prices. We suggest you address to our advisors for in-depth support at the time of property acquisition.
What is RETT?
RETT is the Croatian equivalent of the stamp duty, which is a flat rate of 3% of the property price, imposed to both domestic and foreign property buyers in Croatia. Such a fee is normally paid within 15 days from the date the property purchase took place. As for the VAT rate for properties in Croatia, this is set at a 25% rate for constructions made after 1988. However, this VAT can be refunded if the property is used for commercial purposes, but for more details regarding this aspect, you can talk to one of our Croatian lawyers.
Permissions for buying a property in Croatia
Buying a property in Croatia is subject to a few requirements imposed on foreigners, particularly for non-EU citizens. For instance, if such citizens are residents in Croatia and if their country of origin has specific reciprocity agreements with Croatia, the Ministry of Foreign Affairs will have to grant the approval for buying a real estate property. As it is known, foreigners cannot acquire agricultural lands or forests in Croatia, except if they have a company in Croatia. If the Ministry of Foreign Affairs considers that there are no impediments for purchasing a real estate property in Croatia, non-EU citizens will then be able to finalize the transaction and pay the taxes imposed. In addition to this information, you might want to see or contact a lawyer in Croatia and find out more about the conditions for purchasing a property in this country and about the formalities involved. Here are some simple steps related to the property purchase in Croatia:
- A pre-contract agreement and a payment of 10% of the selling price are needed in the first place.
- The certificate of ownership, a copy of the pre-contract agreement, proof of citizenship for both seller and buyer are among the documents that must be verified by the authorities.
- Next, a copy of the notarized binding contract must be submitted to the Land Registry.
- The Municipal Cadastral will have to receive the sale contract, alongside proof of tax payment – the 4% tax is not imposed for new constructions if a property is purchased directly from a real estate investor.
EU citizens can purchase properties in Croatia under the same conditions as local ones. Extra attention is needed in the case of non-EU citizens who must follow a set of regulations imposed by the authorities. You can have a discussion with our Croatian attorneys and find out more in this matter, about the whole procedure and negotiation process.
Can I ask for legal advice about the contract?
Yes, it is quite important to have legal support by your side when purchasing a property in Croatia, as a foreigner. Even though the legislation in the real estate sector is quite permissive, it is good to ask for assistance and understand from the beginning the conditions of property purchase, starting with the pre-contract agreement, that must comprise information about the seller, the buyer, the property, the price, and other related details. One of our Croatian attorneys can tell you more about the sale-purchase contracts and can explain to you all the conditions before acquiring a property.
Do I need real estate due diligence in Croatia?
Yes, it is a good idea to solicit real estate due diligence in Croatia and verify the property before the acquisition. This is a recommended procedure that discloses a complete report with information about the property you are about to purchase, such as former owners, the first acquisition, if there were legal issues involved, or if there are hidden problems that you cannot discover by yourself. In this case, you can rely on the support of our lawyers in Croatia for real estate due diligence procedures because they have needed expertise in this area. They can solicit all the information you need about a property in Croatia, in order for you to know complete details about the future acquisition.
We have gathered facts and statistics about the real estate sector in Croatia, offered by the Croatian Bureau of Statistics.
- There are more than 70,000 foreign citizens who own a property in Croatia;
- Around 3% of the foreigners with properties in Croatia have chosen Zagreb, the capital, for buying one;
- Approximately 33% of the properties in Istria are owned by foreign citizens;
- Around 26% of the properties in Primorje-Gorski Kotar are owned by foreigners.
- Most of the luxury properties are purchased by citizens from Germany, Austria, Slovenia, and Hungary;
Don’t hesitate to contact our law firm in Croatia for any property sale-purchase agreement. Our local lawyers offer professional property acquisition counseling, juridical counseling concerning mortgage issues and they can facilitate and speed up the obtaining of all needed permits and documents.