Croatian business buzzwords to know

Example of pečat (company stamp or seal in Croatia)

**This is a guest post in cooperation with T4C Razred, a free business consultancy service running from September 2020 until June 2021 that is available to anyone not born in Croatia. And now, I hand the mic to Michael Freer.**

A buzzword is usually a word or phrase that’s used often in a short period of time or in a specific sector. They’re open to change, and new ones are added all the time.

A few years ago I remember sharing English business buzzwords, and thought it would be interesting to highlight the business jargon that often pops up here in Croatia. These buzzwords are especially important to know if you’re starting a company.

In this post, we’ll explain the following Croatian business terms:

Fizička ili pravna osoba (Physical or legal person)

When setting up your business you might be asked whether you want to be a physical person or a legal person. This may lead you to pinching yourself to make sure you’re still there, and checking your immigration papers. Fear not, you are real, and your permit is still valid.

If you are a physical person, it means you have set a up a sole trader (obrt) style company, and therefore the liability is on you. This also means that the OIB for your obrt is the same as your personal OIB.

If on the other hand you opted for a legal person, it means you’ve set up a j.d.o.o, d.o.o., d.d. or the like. Your company will its own unique OIB ID number. Your personal liability will be limited.

Neto, Bruto, Bruto dva

People in Croatia don’t often talk about their salaries, but when they do they are talking about their ‘neto’ (net) monthly salary. This refers to the amount of money that hits their bank after ALL of those taxes are taken out each month.

On the other hand, in most English speaking countries, we talk about our ‘bruto’ (gross) salary, meaning what we earn pre-tax deductions for the year.

What you’ll rarely hear people speaking about is ‘bruto dva’, which is the total amount a company pays to employ you, including their employer tax contributions, your employee tax contributions, pension contributions, healthcare contributions and finally the money that ends up in your bank. It’s entirely possible that employees in Croatia don’t even know how much their employer pays to employee them.

You can calculate the estimated bruto and neto salaries using this calculator.

R1 račun

Once you have a company, you’re able to request an R1 račun from businesses. A “račun” is an invoice or receipt. The R1 is the taxman’s way of keeping you in check with your business spending. It also encourages you to memorise your company OIB and details for every potential encounter.

Whenever you’re purchasing something for the business, you need to request an R1 invoice so that it can be tracked as a valid expense. To get the R1, the business needs to have your company name and OIB on file. Once they are on file, they can look up your company with just the name going forward.

R1 receipts range from an A4 piece of paper for a packet of chewing gum, to a hand scribbled note on the back of a napkin. All equally as valid somehow, as long as they can be proven to be for business reasons of course.

Pečat (Stamp)

The pečat is a physical stamp that you purchase at the time you incorporate. The most basic version will have your company name and the jurisdiction where it was incorporated. However, it can be customized to include the business address and OIB.

They do come in different shapes and sizes though, so have fun designing yours when opening your company because that’s the last fun you’ll have with it. Phone, keys, wallet, stamp. Then you can leave your house.

This bit of analogue headache was supposed to have been phased out by now, finally replaced by a signature or even an e-signature. However, you will still find many places requiring your stamp as their own company policy.

Situations when you might need a stamp include:

  • Picking up post and parcels
  • Sorting out documents at the bank
  • Filing paperwork with the bank
  • Filing paperwork with the government
  • Physical, printed R1s

Fiskalizacija

When my accountant told me that I had to be fiscalised, I was worried. Having seen the film Hostel, I started to wonder how much my organs would be worth, and whether we could come to some sort of an agreement.

Fortunately, it was actually my company that needed to be fiscalised. This meant I had to download some software that enabled me to accept cash payments, and FINA (Croatian financial institution) would immediately know all cash transactions I was carrying out.

Not all companies need to fiscalise. Only those accepting cash or credit card payments need to add this to their plate.

To learn more about fiskalizacija, who must participate and which companies offer the software, check out this post.

Likvidacija

When you first see your accountant using the “liquidation” stamp, you might get a bit worried. But fear not, likvidacija has three main meanings in Croatian.

One refers to the process of closing down your company, so let’s hope you never use that one. Another use is when you ‘get rid’ of someone, okay now you can tell I’ve lived in Kaštela.

The final one is when you’re most likely to see it – when your accountant logs your invoices into the system and can file them away knowing they’ve been processed.

If you have a business idea, are starting a business or already have a start up in Croatia, we have some great news for you!
As part of a European project, T4C offers free business support to any foreigner or returning Croatian born abroad. The service is free to anyone living in Split Dalmatia County and can help you with things such as business planning, marketing, financial planning, strategy and product development.
It can also connect you with the necessary contacts to help grow your business and be successful. For more information, join the Facebook group here or e-mail Michael at [email protected].

More resources for those that want to open a business in Croatia

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