If your planning to start a business in Croatia, the first step is deciding what kind of business to open. The type of company structure is critical to the success of your business, and should match your business goals.
In Croatia, there are 4 main types of businesses.
An udruga is for non-profit organizations, whose primary function is to “protect their interests or for the protection of human rights and freedoms, as well as environmental, humanitarian, informational, cultural, national, pro-natalist, educational, social, professional, sporting, technical, medical, scientific or other beliefs and goals”. To start an udruga, you must have a minimum of 3 owners.
Good for: Non-government organizations, charities
Bad for: For-profit businesses
A d.o.o. is the equivalent of a limited liability company, and is the most common business in Croatia. A d.o.o. can be owned by one or multiple persons. To set up the company, 20.000 kuna in start up capital is required. However, if you are a non-EU national that plans to use the company as a basis for a residence permit, the start up capital required can be as much as 200.000 kuna or more.
Good for: All types of for-profit businesses
View our guide on how to open and close a d.o.o. company in Croatia.
A j.d.o.o. is the similar to a d.o.o. typically used for companies with limited start up capital. It only costs 10 kuna to start the company initially.
Good for: Businesses with low overhead and upfront start up costs such as online businesses
Bad for: Caffes, restaurants, manufacturing, retail
View our guide on how to open and close a j.d.o.o. company in Croatia.
A t.o., which stands for “trgovački obrt”, is not a company in the traditional sense and is instead connected to a specific person and the type of “craft” in which they specialize. For example, locksmiths, hair stylists, and carpenters would all fall into this category. While a t.o. can have employees like a company, the business lives and dies with the person unlike a company e.g. the entity cannot go on without the individual who has registered their “craft” as a t.o.
Since the t.o. is not considered a traditional company, it does not require the standard 20.000 kuna of start up capital. You may not take in more than 300.000 kuna in revenue with an obrt.
If residency is not a concern of yours and you don’t plan on having more than 300.000 kuna in revenue, the obrt is a very favorable way of opening a legit business. Your tax obligation is much lower overall than with a d.o.o. or j.d.o.o., you’re not at risk of having a tax inspector showing up at your address and there is a lot less oversight as long as you make your contributions on time.
Good for: Individuals with a professional trade or craft
Bad for: Companies with revenue from multiple categories of business, Non-EU nationals that want to get residency through opening a company (as it is not allowed with an obrt)
View our guide on how to open and close an obrt in Croatia.