The most common types of companies that people can open in Croatia are obrt, j.d.o.o., and d.o.o. We have already covered how to open and close an obrt, j.d.o.o., and d.o.o. company as well as the different types of obrt.

This article digs deeper into the main differences between obrt and društvo s ograničenom odgovornošću (d.o.o. and j.d.o.o.). Get a better understanding of whether one of these types of structures will work for your new venture in Croatia.

In this post, we cover:

• Conditions and establishing costs
• Responsibilities and duties
• Book management and accounting
• Employment and salary
• Taxation of earnings
• Advantages and disadvantages

Differences between obrt, d.o.o. and j.d.o.o. companies in Croatia

Conditions and company establishing costs in Croatia

Operating with obrt in Croatia

Obrt (trade business) is the simplest and cheapest type of company to launch and operate in Croatia.

You can register obrt here:

• At the competent office for registration of trades nearest to the headquarters of obrt OR
• At the competent gradski ured za gospodarstvo (city economy office), or odjel za upravno-pravne poslove
• Online via e-Građani START application if you have a Croatian ID card and security certificate
• Online via e-Obrt application

[Read: How to set up a Croatian company online using START]

Obrt can be categorized into 2 groups:

• Paušalni obrt (flat-rate trade business) – ideal for beginners with small incomes; excluded from taxation since incomes can’t exceed 300.000 kuna
• Obrt (trade business) – ideal for businesses whose incomes exceed 300.000 kuna; included in the taxation system

Initial start-up capital isn’t required.

Here are the approximate costs of opening obrt:

• Issuance of a decision on the recognition of a foreign professional qualification on the acquired master’s title – 300 kuna
• Issuance of a decision on the recognition of individual parts of the foreign professional qualification on the acquired master’s title – 150 kuna

View detailed information on types of obrt in this post.

Learn how to open and close obrt in this post.

Operating with simple limited liability company (j.d.o.o.) in Croatia

To establish jednostavno društvo s ograničenom odgovornošću (j.d.o.o.) you need only 10 kuna for the initial start-up capital investment. If you’re planning to enter the service industry where there is no investment in equipment, you should open a j.d.o.o.

Registration can be done by javni bilježnik (public notary), and establishment costs are around 800 kuna. If you are not fluent in Croatian, an official translator is usually required at the notary for which there is an additional cost.

J.d.o.o. can have only one director and a maximum of three owners.

For detailed information on how to open and close a j.d.o.o., view this post.

Operating with limited liability company (d.o.o.) in Croatia

A d.o.o. (društvo s ograničenom odgovornošću) is the most common type of company for small entrepreneurs. The cost of establishment is approximately 5.000 kuna. The initial start-up capital is 20.000 kuna, which can be used by the owners immediately. Although, the start up capital can be 200.000 kuna if you are seeking to get a work and residence permit as the owner of the company.

A d.o.o. can have an unlimited number of directors and owners.

Learn how to open and close a d.o.o. in this post.

Responsibilities and duties of company owners in Croatia

The obrt’s owner is responsible for obrt’s duties, liabilities, and associated personal property. Owners of j.d.o.o. and d.o.o. have limited responsibility and liability as it relates to the company’s property only.

Book management and accounting in Croatia

J.d.o.o. and d.o.o. are required to manage all the business books according to the dual accountancy principle. Book entries are done when the bill is released, and PDV has to be paid even if an invoice isn’t charged on time. A licensed accountant is recommended, either on staff or a third party.

[Read: PDV (Value Added Tax) in Croatia]

Obrt can manage its business books according to the simple accountancy principle, which is simpler and cheaper. Owners can manage their books independently, on their own. Book entries are done when the bill is charged, meaning their receivables are only charged invoices.

Employment and salary in Croatia

If you’re the obrt’s owner, you’ll have to pay for all the contributions – pension, health insurance, employment, safety at work. Contributions must be paid even if you don’t achieve any profit in a given month. View the latest contributions in this post.

J.d.o.o. and d.o.o. are obligated to employ at least one employee (a director) whose bruto salary is at least the minimum wage set for directors. An employee also has the option to work part-time, but a director must be full-time.

View the latest minimum wage for directors and employees here.

Taxation of earnings in Croatia

Obrt’s owners can choose between 3 different types of taxes. They can pay an income tax, but it is possible to choose another taxation type if it’s more suitable for obrt’s management.

Obrt’s owners can choose between:

• Porez na dohodak (income tax) – the owner pays a progressive tax rate on income
• Porez na dobit (profit tax) – the owner pays taxes for the gained profit according to the 20% rate
• Paušalno oporezivanje – the flat rate is calculated according to the obrt’s profit, and the income is completely excluded from the taxation

Learn more about these taxation options here.

J.d.o.o. and d.o.o. do not have the option to choose how they are taxed.

Short list of advantages and disadvantages

Obrt

Advantages

• Paušalni obrt can be quickly launched
• Low opening costs
• Self-management of books
• No initial capital is needed
• Easy to open and close
• Not required to have an employee
• Ability to pause the obrt, during which taxes are not due (most commonly used for tourism businesses that pause during winter)

Disadvantages

• Owner is personally liable for the business
• Income tax payment is higher than a profit tax payment
• Master exam or professional qualification is usually required for obrt’s opening
• You may not take in more than 300.000 kuna of revenue annually

D.o.o. and j.d.o.o.

Advantages

• Profit tax payment is lower than an income tax payment
• Owner isn’t personally responsible for the business
• Dual book management enables quality reporting
• No limit on revenue
• J.d.o.o. can be opened with only 10 kuna start-up capital

Disadvantages

• Higher business costs
• Minimal initial capital of 20.000 kuna is mandatory for d.o.o. (unless you are seeking a work permit as the director, in which case it will be 200.000 kuna)
• Liquidation and closing process can be time-consuming and expensive, during which the director must continue to be paid full salary
• Accountant is recommended
• Must hire at least one employee, usually the director, who must have a full-time salary
• Not allowed to pause the business

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