Are you considering opening a Croatian business? Before you do, it’s critical to the future success of your venture that you know exactly what running a company in Croatia means before you do it. There can be lots of surprises and none of them are good.
If you haven’t already, read our first 5 things to know before starting a Croatian company. In the below post, we cover 5 more important things to think over prior to opening a business in Croatia.
1. What kind of business do you want to set up
Choosing the right company structure is crucial to achieving your business goals. In Croatia, there are different business structures, none of which are created equal. It is important that the option you choose match your needs.
2. Closing a company is a bit of a process
If you get to the point where you no longer want to have an open and active company, there are 3 options:
- Sell the company to another person – This is the least costly option. The buyer must have an OIB and be a registered person inside Croatia.
- Remove all activity – This means no income comes in and no expenses go out. However, you will still have to pay for an accountant to do your annual tax filings and you will still have to pay the salary for the director.
- Close the company – There are two ways to close a company, depending on whether or not the company has debts to settle. If there are debts, then the company must go into liquidation during which the director salary must still be paid.
If you started your company for the sole purpose of gaining residency in Croatia, it’s important that you know the cost implications once the company is no longer tied to your residency.
3. Multilingual can be mandatory
Owners of retail and tourism-based businesses (such as caffes, hotels and restaurants) are required to speak both Croatian and English by law. To fake it until you make it, just ensure that you can communicate with inspectors and government agents during your start up process and have Croatians on staff who can help with translation.
4. Delays, delays, delay
The type of business you start will determine how much interaction you have with the government. Inevitably, the more interaction you have with the government, the more opportunity there is for massive delays in the start up of your business.
You may be ready, but the government doesn’t care about your timelines or opening dates. Be prepared to wait for inspectors, licenses, registrations and anything else the government says you need to operate your business legally.
That being said….
5. It’s who you know
The Croatian bureaucracy is still a very manual and, much of the time, ledger-based environment inviting a lot of variance in information, processes and deadlines. There is little sense of urgency on the part of the government and rarely do departments communicate with each other. They’ve got all the time in the world and they don’t know you.
The best way to get through the bureaucracy is to find somebody to connect with personally. Bring them rakija and chocolates. Tell them your story. Be courteous. It’s amazing what can be accomplished once that personal relationship is created.
How do you find somebody to connect with? It’s not easy. Ask around to find anybody who knows someone that works in the city government offices, starting with your accountant. Then work your way down the line until you get to the department you need.
Please note: All information provided by Expat in Croatia is only for the purposes of guidance. It does not constitute legal or financial advice in any form. For legal advice, you must consult with a licensed Croatian lawyer. For financial advice, you must consult with a licensed Croatian tax advisor or accountant. We can recommend one if you contact us.