Useful Info
Frequently Asked Questions
- Taxation (taxes) with reference to immovable property
- When we talk about taxation with regard to immovable property there are two very important things we should make a distinction between:
1. taxation which is imposed on property as such in property transactions as the result of having property rights to that particular property
2. taxation imposed on the earnings (profit) people have in property transactions
1. Since 1998, when the value added tax (VAT) law came into force in the Republic of Croatia, a tax rate of 23% has been imposed on the newly built properties ( a property built and consigned after 01.01.1998 is legaly and taxably considered to be a new property), while, according to the capital transfer tax law, a tax rate of 5% is imposed on the existing – old properties, fields, building sites and all properties in transaction.
2. Taxes imposed on the profit made in the property transaction are regulated by the profit tax law when a legal or physical person, who is a profit taxpaxer, is involved; or they are regulated by the income tax law when a physical person, who is an income taxpayer, is involved.
Legal property transaction is the process of acquiring property rights to a property in the Republic of Croatia.
The process of acquiring property rights to a property is:
Purchase and sale, exchange, inheritance, donation, including or excluding a property from a company, acquiring a property in the process of liquidation, acquiring based on a court's or another body's decision and all other ways of acquiring property from an individual. Property transaction does not mean to acquire a newly built property on which taxes are imposed according to the vallue added tax (VAT) law.
A capital transfer taxpayer is a person who acquires a property – a buyer.
The capital transfer tax base is the market value of a property at the moment of acquiring.
- The position of foreigners in legal property transactions in the Republic of Croatia
- Acquiring without limits
* Movable property ownership
* Limited property rights to movable and immovable property
Special conditions for acquiring property rights
* By inheritance - a special condition for acquiring property ownership by inheritance is reciprocity.
* On the basis of a legal business
o There is a reciprocity - a foreign country citizen has the right to acquire property ownership in case that a Croatian citizen, on the basis of a legal business, has the same right in that particular country
o With the consent of Foreign Secretary (foreign minister). Foreign minister's consent to acquiring property rights is given but only after ministry of justice states its opinion.
Foreigners cannot acquire property rights to:
* Immovable property on areas excluded for protection and interest of the Republic of Croatia
* Farmland
* Protected natural resources
* Wood and woodlots
Apart from already mentioned way of acquiring property ownership, in Croatia foreigners can found a company and then as a company they can buy a property. The most common form of a company in the Republic of Croatia is a company with a limited responsibility which can be found by one person only and that person can also be its single member. The lowest amount of its original capital cannot be lower than 20.000,00 kn (kunas).
Links
