If you are planning to start a business in Croatia, the first step is to decide which 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 5 main types of businesses. In this post, we will go over each one and also provide links to detailed guides that explain how to open each kind of business.
The 5 types of businesses are:
- d.o.o. (limited liability company)
- j.d.o.o. (simple limited liability company)
- obrt (trade business)
- udruga (non-profit organization)
- OPG (family farm)
The facts are these…
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. It can be opened in person or online. [Read: How to get residency by opening a Croatian business]
Good for: All types of for-profit businesses
A j.d.o.o. is similar to a d.o.o., but is typically used for companies with limited start-up capital. The required start-up capital for launching j.d.o.o. is only 10 kuna.
A j.d.o.o. can have up to 5 founders. It can be opened in person or online.
Good for: Businesses with low overhead and upfront start-up costs such as online businesses
Obrt (trade business) 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, hairstylists, and carpenters would all fall into this category. Certain types of obrt require professional qualifications and others don’t.
While an obrt can have employees like a company, the business lives and dies with the person, unlike a company. The entity cannot go on without the individual who has registered their “craft” as an obrt. This also means that the owner carries the liability for the obrt personally. The owner doesn’t have protections like they would with limited liability companies like d.o.o. and j.d.o.o.
Since the obrt is not considered a traditional company, it does not require start-up capital like with a d.o.o.. Obrt can even be temporarily paused for up to 1 year.
If residency is not a concern of yours, 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 and you can choose between 3 tax models. There is also 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 requires an investment of 300.000 kuna)
An udruga (union, non-profit organization) is a form of business operated by a group of individuals (usually volunteers) who want to form a legal organization with an aim to accomplish a non-profit purpose.
Their primary function is to protect human rights and freedoms, as well as to further environmental, humanitarian, informational, cultural, national, pronatalist, educational, social, professional, sporting, technical, medical, or scientific interests and goals.
To start an udruga, you must have a minimum of 3 members (founders).
Good for: Non-government organizations, charities, volunteering
Bad for: For-profit businesses
Obiteljsko poljoprivredno gospodarstvo – OPG (family farm) is an agricultural type of business that includes members of the same family or a household. It is based on using its own or leased production resources and the skills, knowledge, and work of family members.
The activities that an OPG may perform are strictly defined. They include agricultural activities such as plant breeding, cattle breeding, growing of annual or perennial crops, breeding of livestock and poultry, and similar.
Start-up capital isn’t needed to open an OPG. Members of OPG can be permanently or occasionally employed.
Good for: Families who own production resources or would like to open an agricultural family business
Do you have a question about Croatian businesses? Let us know in the comments.
View other business posts
- 3 types of obrt
- 5 more things to know before starting a business in Croatia
- 5 things to know before starting a business in Croatia
- All the coworking spaces in Croatia (perfect for remote workers and digital nomads)
- Another 5 things to know before starting a business in Croatia
- Croatian business buzzwords to know
- Government grants and loans for entrepreneurs in Croatia
- How to get residency by opening a Croatian business
- How to open and close an obrt
- How to open and close OPG (family farm)
- How to open and close an udruga
- How to open and close a j.d.o.o.
- How to open and close a d.o.o.
- Yet another 5 things you should know before starting a business in Croatia
Please note: All information provided by Expat in Croatia is only for the purposes of guidance. It does not constitute legal advice in any form. For legal advice, you must consult with a licensed Croatian lawyer. We can recommend one if you contact us.