Regardless of whether you adore the beautiful clean and clear sea or you prefer to enjoy the hinterland, Croatia is one of the most popular destinations not only for vacations but also for life in general. In addition to the natural beauty, the hospitality of the people and the relaxed way of life, the favorable prices attracted many tourists who wanted to buy a property and initially rent it, and later live in it.
Whether they want to live in the perfect property in Croatia that you have finally found for yourself or you would rather rent it, they must first buy it. And what to pay attention to when buying it, and then when renting it, read below.
Citizens of foreign countries are free to buy real estate in Croatia, but the rules differ depending on whether the person lives inside or outside the EU. If you are a citizen of the European Union, then the process of buying real estate is identical to that followed by Croatian citizens. This means that there are no additional regulations that you should pay attention to if you are buying real estate as a resident of one of the EU member states. This also applies to individuals coming from Norway, Iceland or Switzerland.
If a foreigner who lives outside the EU and the previously mentioned countries decided to buy real estate in Croatia, then the purchase procedure is somewhat different. First of all, it should be checked whether the Republic of Croatia has signed the so-called Contract or agreement on reciprocity with the country from which the foreigner comes. In addition, the approval of the Ministry of Justice should be obtained to complete the investment process.
Legal framework for renting real estate in Croatia for non-residents from third countries
If real estate renters in Croatia come from third countries, they must establish a trading company or trade, because that is the only way they can offer accommodation services. When they open one of the listed business entities, they are considered Croatian residents or tax payers and have the same obligations as any Croat.
A foreigner can rent a property in Croatia independently or through an agency. If it is about self-renting, there are 4 important items that should be taken care of in order for everything to be in accordance with the law:
1. Establish a trading company or trade.
2. Register in the register of taxpayers.
3. They are not required to register in the register of VAT payers as long as the annual salary does not exceed HRK 300,000.
4. Fill out the Declaration on the status of renters - non-residents P-VAT
A foreigner must possess certain documents to be able to fill out the P-VAT statement:
• Certificate of residency from the tax authority of the country in which it is headquartered,
• proof of registered activity,
• documentation on the appointment of a tax representative.
If a foreigner rents real estate in Croatia through an agency, the law is somewhat different and says:
• it is not necessary to establish a trading company or a trade in order to be able to provide real estate rental services to a Croatian travel agency, i.e. if it serves as an intermediary,
• you do not need to register as a taxpayer if a citizen of a third country is a taxpayer in his own country,
• if a foreigner is not a taxpayer in his country, then he must pay income tax.
It is important to note that the annual tax liability cannot be determined in a lump sum; they can be paid as a flat rate by residents of EU or EEA member states.
Legal framework for renting real estate in Croatia for non-residents from EU or EEA countries
In this case, the foreigner can also choose whether to rent the property independently or through an agency. If he rents through an agency that charges and pays VAT, the foreigner is not a taxpayer.
Independent rental of real estate
If a foreigner is a resident of an EEA or EU member state, the process of renting real estate in Croatia is somewhat more complex and includes the main points related to the following:
• must be registered in the register of taxpayers and obtain a VAT number, and pay income tax as a flat rate,
• it is necessary to fill out the P-VAT form,
• minimum conditions should be checked depending on the type and category of the object,
• an Application for the issuance of a decision on the approval of the provision of catering services should be submitted,
• all the prescribed conditions that must be met are checked by inspecting the facility,
• it is necessary to obtain a board for renters and create an official price list and house rules for guests,
• after all, it is necessary to register guests with the tourist association and issue invoices, pay the annual lump sum of residence tax and pay income tax if the annual turnover exceeds HRK 300,000.
Finally, all renters must obtain MTR ( minimum technical requirements ) for the apartment if it is used for the purpose of tourist rental. In addition, all lessors who are EU residents have the obligation to fill out the P-VAT form, even those who do not have the obligation to pay VAT in their country, regardless of the form in which the property is rented.