Jos Deuling,  Thursday, 19 September 2013

 

Foreigners can buy property in Croatia with the exception of farmland and woodland. If a foreigner wants to buy a monument with a unique historical or cultural value, e.g. a house in the old town of Dubrovnik, then the property must first be offered for sale to the government. If they don’t want it, then you are allowed to buy the property.

Buying a house privately

As of February 1, 2009, citizens from EU Member States have the same rights as Croatian citizens when it comes to buying real estate. Restrictions on buying property in Croatia remain valid for non-EU citizens.

The amendment is an important step towards liberalization of the Croatian real estate market. EU citizens do not have to wait anymore for permission from the Ministry of Justice before they can officially take ownership of their home. This used to be a lengthy administrative procedure.

Persons who are not EU citizens but who are from a country where Croatian citizens also may buy property must apply for approval from the Croatian Ministry of Justice. It may take 6 to 18 months before the application is approved. You also need a good lawyer to guide you through the process. Your lawyer will ensure that all documents be delivered to the Ministry at the right time. During this procedure, you may already live in your house. It's just that the house is not yet officially registered in your name. Only after approval of the Ministry of Justice you can register your home at the Land Registry () and then you officially own the property.

Buying a house through a private company

Another way to buy a house in Croatia is by setting up your own business and buying the property via this company. Until 1 February 2009, this was the only way for foreigners to buy a property in Croatia. So it has always been a fairly conventional construction. The formalities for setting up a business take about 14 days.

If you want to let your property in Croatia, it is convenient to buy the property through a private company so you can recover part of the VAT. Non- EU Foreigners who don’t want to wait for the approval of the Ministry of Justice can get the title deeds of the property much faster by buying via a private company. Starting your own business comes also with certain responsibilities and obligations. You have to keep accounts that should be checked by an accountant. And the Croatian government expects that your company generates revenue. That won’t be a problem if you let the property.

Buying privately is easy, but buying through your own company also has its advantages.

Advantages of buying privately

Buy privately is cheaper than buying through a company. It not only costs money to start a business, running a business means annual expenses. You have to keep accounts and generate income.
If you have owned the property for 3 years, you won’t have to pay capital gains tax if you sell your house.

Advantages of buying through a private company

You don’t need permission from the Ministry of Justice.
You can only let the property, if you bought it via your own company
You get the Title Deeds straightaway. This is especially useful for foreigners from non-EU countries. Otherwise, they have to wait 6-18 months before the Justice Department approves the purchase
If you buy a newly built house from a developer, you can recover 22% VAT after the purchase