In Croatia, according to the trade legislation, the time required for starting a business is tall, with a low cost. Regarding employment, rigidity of labor market
considered average and the associated cost half dismissal. Other variables to consider are:
• Opening business:
The time required to start a business is 45 days.
The associated cost is 12.2% ofincome per capita.
• Labor Market:
The index of labor market tightness is 30 (0 - 100 very fully flexible
The cost of firing an employee is 35 weeks salary.
• Registering property:
The time taken to register property is 210 days.
The cost of registering a property is 15.8% of the value of the property.
• Enforcing contracts:
The time required to enforce a contract is 630 days.
Thecost is 15.7% of the value of the debt.
• Closing a business:
The time required to liquidate a business is about two years.
The cost of this closure is 14.5% of the state of the business into bankruptcy.
There is no difference between domestic and foreign investors regarding the legal status of foreign investment in Croatia. When foreign investors found or participate infounding companies in Croatia, they gain rights and take on responsibilities under the same conditions and have the same status as domestic investors. Everything that is possible in relationships between domestic investors is also possible when foreigners invest capital.
Foreign legal entities in Croatia are allowed to invest capital in a company, bank or insurance company, start up as a soletrader or craftsman, and obtain a concession to exploit natural resources or other assets of interest to Croatia.
Foreign persons are allowed to acquire shares and ownership stakes in existing public and private limited companies.
Croatia recognizes the importance of attracting foreign investors, valuing the management, the commercial know‐how, and the fresh capital that they bring. That is whyforeign investors are entitled to additional guarantees that are not extended to domestic investors. For example, the rights gained through capital investment will not be reduced by any law or other regulation.
The Investment Incentives Act offers a wide variety of tax incentives for foreign and domestic investors. Corporate tax incentives are related to capital investmentsand depend on the size, number of employees and/ or location of the investment project. The tax benefits cannot exceed the amount of the investment. Non‐tax incentives take the form of grants or interest subsidies and are given on a case to case basis following a detailed application.
The investments in Croatia are welcome and encouraged. However, some areas of investmentare limited and subject to special conditions of approval procedure by competent authorities. The major exceptions are in the areas of foreign ownership of real estate, particularly forests and agricultural land, as well as industries connected with national defence and security. Otherwise, the regulatory framework for the establishment and operation of businesses in Croatia by foreign investors isrelatively straightforward and in line with the basic standards of the EU.
Immovable property ownership
The most complicated aspect of foreign investment in Croatia is the acquisition of land, registration and site development. In general, foreign entities and individuals may only acquire property with prior approval of the Ministry of Foreign Affairs, based on opinion of the Ministry ofJustice on the basis of reciprocity.
These restrictions on the foreign ownership of property can be avoided indirectly. Companies registered in Croatia are considered domestic legal entities and can acquire ownership rights over real estate without any restrictions.
The practical problems that foreign investors meet in Croatia are related to the difficulty of ascertaining the ownership of land and...