{"id":2415,"date":"2018-08-09T15:57:18","date_gmt":"2018-08-09T14:57:18","guid":{"rendered":"http:\/\/www.candybrick.com\/?p=2415"},"modified":"2018-08-09T15:57:18","modified_gmt":"2018-08-09T14:57:18","slug":"tax-in-croatia","status":"publish","type":"post","link":"https:\/\/candybrick.com\/de\/tax-in-croatia\/","title":{"rendered":"Return on Investment: Taxation in Croatia"},"content":{"rendered":"

Don’t be mistaken. Tax in Croatia isn’t like it is in a haven such as the Cayman Islands<\/strong>. It can be quite high. However, this won’t be the case with your Candy Brick investment property that gives you a high return on investment.<\/strong><\/p>\n

If you purchase your villa as a natural person you will have to pay VAT which in Croatia is 25%. <\/strong>This would be an additional \u20ac87,500 which you wouldn’t be able to claim back.<\/p>\n

 <\/p>\n

 <\/p>\n

<\/h2>\n

That is why we recommend you open a private limited company in Croatia (d.o.o.).<\/h2>\n

This is more advantageous as you can claim your VAT back in 30 days!<\/strong> If you can’t cover this amount for the 30 days, we can offer you an interest free loan to cover it.<\/p>\n

 <\/p>\n

<<CONTINUE TO READ>>\u00a0<\/a>
\n<\/p>\n

The corporate tax in Croatia<\/h2>\n

The corporate tax in Croatia<\/a> is 12% of profits for companies<\/strong> with an annual income lower than 3 million Croatian kuna (HRK).<\/p>\n

Let’s compare this to other countries:<\/p>\n

– In Italy, companies are subject to a corporate tax rate of 27.9%.<\/p>\n

– In Germany, it is even higher ranging anywhere between 30-33%.<\/p>\n

– Austria is the lowest, but it still stands at 25%.<\/p>\n

 <\/p>\n

So now we have this data, let’s calculate the tax in Croatia you’ll have on your Candy Brick investment property.<\/h2>\n

First, we need to calculate your profit before tax. That’s the income minus the costs.<\/strong> Your income is \u20ac30,000 as guaranteed by the Candy Brick Rental Guarantee. If you opt for the Candy Brick\u00a0Full Management Guarantee you then pay only 20%<\/strong> of your income to look after the rental of your villa, while others can charge up to 40%.<\/p>\n

This gives you a profit before tax of \u20ac24,000.<\/strong> On this you pay the corporate tax in Croatia of 12%, as it is less than 3 million Croatian kuna (HRK). That works out as \u20ac2,880. This gives you a profit after tax of \u20ac21,120, that you can withdraw as a dividend.<\/p>\n

 <\/p>\n

<<CONTINUE TO READ>><\/a><\/p>\n

<\/p>\n

Depreciation<\/h2>\n

Consider though you can add the depreciation of the price of your villa as a cost to reduce your tax bill.<\/strong> Depreciation is an income tax deduction that allows you to recover the cost of assets that you purchase and use in your business, such as your villa.<\/strong> In Croatia property is depreciated over 20 years, this means you can deduct 5% off the price of your villa, that\u2019s \u20ac18,000.<\/strong><\/p>\n

So, now deducting the full management guarantee and the depreciation from your income<\/strong>, you have a profit before tax of \u20ac6,000.<\/strong> This would reduce your corporate tax in Croatia to \u20ac720, giving you a net profit after tax of \u20ac5,280 that you can withdraw as a dividend.<\/strong> This might actually seem disadvantageous, but remember, this is just an accounting calculation.<\/strong> In your bank account, you\u2019ll have a total of \u20ac23,280 after tax<\/strong>, as we add back the depreciation of \u20ac18,000.<\/p>\n

If you require your rental income to help you pay off your bank loan, you may want to opt for the higher dividend and not count for depreciation.<\/strong> However, if you loan your company the \u20ac360,000 via an interest-free loan,<\/strong> you could benefit from both the reduced corporate tax and repaying yourself the full \u20ac23,280 as an interest-free loan repayment. This is sufficient to cover your bank repayment, and you won’t have to pay any dividend tax on that.<\/strong><\/p>\n

(NB: Candy Brick does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction)<\/em><\/p>\n

<<CONTINUE TO READ>>\u00a0<\/a>
\n<\/p>\n

Return On Investment<\/h2>\n

Considering your investment of \u20ac360,000, this gives you an annual return of investment of 8.3% before costs and taxes, and 6.47% after.<\/strong><\/p>\n

Please note, these calculations have been made excluding other marginal and communal costs, such as your water and rubbish collection,<\/strong> that you can use to reduce your profit before tax. We have also not included the additional income you could make from selling the excess electricity your solar panels make back to the grid.<\/strong> This could be between \u20ac3-4 a day when the villa is not in use. In the future this income could increase up to 10x should the government reintroduce feed-in tariffs<\/strong>. Nor have we included the benefit of spending 2 weeks for free in your villa, worth \u20ac2,500 (excluding July and August).<\/strong><\/p>\n


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Don’t be mistaken. Tax in Croatia isn’t like it is in a haven such as the Cayman Islands. It can be quite high. However, this won’t be the case with your Candy Brick investment property that gives you a high return on investment. 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