Foreign Business Setup in Croatia: A CFO’s Guide to Owning vs. Leasing Office Space in Zagreb and Split

TL;DR: Expanding to Croatia isn’t just about real estate — it’s about structure, timing, and compliance. Foreign companies can freely incorporate and operate here, purchase most commercial properties (with certain limits on agricultural land), and navigate an EU-aligned tax system that rewards clarity over speed. The main challenge is choosing the right entity type, understanding VAT versus real estate transfer tax, and preparing for Croatia’s new property tax reforms coming into effect in 2025.

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Understanding Croatia’s Legal Landscape

Croatia welcomes foreign investment and allows full foreign ownership of companies. The most common company types are:

  • d.o.o. (limited liability company) – minimum share capital €2,500

  • j.d.o.o. (simple limited liability company) – minimum share capital €1

Company registration includes notarization of founding documents, capital payment to a temporary account, registration with the Commercial Court, assignment of a statistical code, and issuance of a tax number (OIB). Key steps can be completed through the government’s one-stop business registration system.

The company, not the individual, typically holds the lease or property title. This limits personal liability, supports banking compliance, and ensures proper registration of the beneficial owner (UBO).

Croatia’s Tax Framework—What You’re Really Paying For

1. VAT (PDV)

Businesses must register for VAT once annual taxable turnover exceeds €60,000. The standard VAT rate is 25%.

2. Corporate Profit Tax

Croatia applies a two-tier system:

  • 10% for companies with annual revenue up to €1,000,000

  • 18% for those exceeding that threshold

3. Real Estate Transfer Tax vs. VAT on Property

  • Resale property: 3% real estate transfer tax

  • Newly built property sold by VAT taxpayers: 25% VAT instead of transfer tax

4. Annual Property Tax

As of 2025, Croatia levies an annual real estate tax determined by local municipalities, ranging between 0.60 – 8.00 €/m² of usable area. Rates differ across cities, including Zagreb and Split.

Banking & Financing Reality Check
Croatian banks emphasize transparent ownership and operational substance before extending credit. Newly established foreign companies often start with low-debt structures—leasing furniture and equipment while preserving cash for payroll and VAT obligations. Maintaining solid accounting records and payroll compliance from the outset strengthens credibility with financial institutions.
Leasing vs. Owning: The Strategic Divide

Leasing — Flexibility at a Cost

Leasing is often the best first move for new market entrants:

  • Minimal upfront investment

  • Fast setup with fewer legal hurdles

  • Better short-term cash flow control

Watch for: annual rent indexation, renovation obligations, and clauses concerning early termination or property ownership changes. A lease term of two to three years generally fits early-stage operations.

Owning — Control, Equity, and Responsibility

Purchasing property offers long-term stability and capital appreciation:

  • Full control over layout and fit-out

  • Ability to sublease unused space

  • Insulation from rent increases

However, ownership carries transaction taxes, annual property taxes, and capital costs. It suits established subsidiaries with stable revenue and multi-year projections. Always factor in VAT, tax depreciation, and municipal variations.

Zagreb vs. Split: Two Faces of Opportunity

Zagreb is Croatia’s administrative and financial hub, ideal for corporate headquarters seeking talent, access to ministries, and strong business networks. Expect higher rent levels and competition for prime locations.

Split offers proximity to the coast and a growing professional services sector, with more affordable office options and tourism-driven opportunities. Many foreign investors begin in Zagreb and expand to Split once operations stabilize.

Formation Mechanics: Setting Up a Croatian Company

  1. Choose entity type:

    • d.o.o. (€2,500 capital) or

    • j.d.o.o. (€1 capital, with statutory limits)

  2. Prepare founding documents: notarized Articles of Association and IDs of founders.

  3. Deposit share capital: open a temporary bank account and deposit funds.

  4. Register with the Commercial Court: obtain your company registration and OIB.

  5. Classify activities: file statistical documentation for your business activity code (NKD).

  6. Register UBO: report beneficial ownership within the required time frame.

  7. Register for VAT and payroll: mandatory once turnover exceeds €60,000 or upon hiring staff.

Croatia recognizes qualified electronic signatures, though some steps still require notarization.

Risk, Regulation, and the Exit Plan
Plan your exit from the beginning. If leasing, negotiate clear terms for assignment or early termination. If buying, understand how resale triggers the 3% transfer tax and how VAT applies to new constructions. Maintain up-to-date UBO filings, accurate bookkeeping, and awareness of local real estate taxes—these details directly affect profitability.
Conclusion: Strategy Over Speed
Croatia rewards companies that plan before expanding. Select the right entity, calculate your tax exposure, and choose whether to lease or buy based on long-term strategy, not emotion. Both Zagreb and Split offer opportunity—success depends on aligning structure, taxation, and operations from day one.
FAQ
Frequently asked questions
We have put together some commonly asked questions.
What’s the fastest way to enter Croatia—j.d.o.o. or d.o.o.?
A j.d.o.o. can be established with €1 share capital but has limits. A d.o.o. with €2,500 capital is the standard and scales better.
When must I register for VAT?

Registration is mandatory when annual taxable turnover exceeds €60,000, though voluntary registration is possible.

What is Croatia’s corporate profit tax rate?
10% for revenue up to €1,000,000; 18% for revenue above that
What taxes apply to property purchases?
Resales incur a 3% transfer tax. New builds sold by VAT taxpayers are subject to 25% VAT instead.
Is there an annual property tax?
Yes, municipalities charge between 0.60 – 8.00 €/m² of usable area annually.
Must I register beneficial owners (UBOs)?
Yes, newly formed companies must report beneficial ownership promptly after registration.

If you’re planning to establish a business presence in Croatia—whether a Zagreb headquarters or a Split coastal branch—book a consultation with Relocation Croatia. We’ll guide you through entity formation, tax strategy, and property planning so you can start strong.