The Private Buyer Route
UK and Irish Citizens, under condition of reciprocity,
may acquire real estate in Croatia subject to approval
by the Ministry of Justice. This process of approval
can take from 12-18 months.
Should a buyer wish to purchase a property which is
a cultural monument or listed, historical building (e.g.
within Old Towns of Dubrovnik, Split or other ancient
settlements) the property has to be offered first to
3 authorities. In this case a pre-contract is drawn
up with 10% deposit. Your lawyer will advise of the
method of protecting this deposit paid in the interim.
The decision for non-purchase by these authorities is
given within 60 days (however for the seller this is
only valid for 6 months and needs to be reapplied for).
The contract can be signed after the authorities have
declined the first right to buy and the remaining money
paid. During this period no occupation can take place.
Should the authorities want the property then the buyer’s
deposit is returned intact.
Where a buyer’s finances are not in place needing
time to raise money, a pre-contract is drawn up with
10% deposit and an agreed time before signing contract.
No occupation can take place before contract is signed.
Papers requesting approval from the Ministry cannot
be submitted based on a pre-contract. If the purchaser
withdrew from the deal in the interim, the deposit would
be forfeited – the vendor withdraw, they were
required to return double deposit.
However, in such a buoyant property market, with rapidly
rising prices, there is distinct risk that the purchaser
may be gazumped. The rising market price makes it worthwhile
for the vendor to break the contract and return the
deposit and penalty to the purchaser, and still be well
ahead. In addition, vendors prefer buyers with upfront
Here at Savills Croatia, we advise payment of
the full upfront price allowing our clients to:
• Take occupation
before the permission is granted.
• Begin internal
refurbishment (within the same footprint)
• Have peace of mind
in that the property is theirs and there is no risk
Please note that when buying property off-plan, the
payments can be staged with traditionally a down payment
of 35% of the contact value followed by up to five equal
installments over the development period.
The Corporate Buyer Route
There can be advantages in purchasing property
in Croatia via the ‘Corporate Buyer Route'.
These advantages need to be offset with the initial
and ongoing costs in maintaining the new entity.
Our in-house legal team at Savills Croatia analyses
our client's needs and expectations, on a case-by-case
basis, and then advise on the most appropriate route
to meet our client's objectives.
Our legal team can assist our clients in forming a
limited liability company and this can be completed
in 1-2 weeks. The average set up costs, VAT registration
& legal fees including initial basic capital of
20,000 kuna (€2,800) are €3,500. The initial
capital is yours after incorporation. A bank account
has to be open and an accountant must be employed for
the running of the company approx €150-250 per
The advantages of the corporate buyer route are as follows:
• Approval by The
Ministry of Justice is not required and you have full
ownership of the property as soon as the final payment
• If you plan to
sell your property within the first three years, the
profit realised (appreciation) from the sale is not
subject to Capital Gains tax (35%). However, company
(profit) tax is payable and is currently 20%. There
are provisions in the Croatian tax law to account for
amounts invested in the real estate, as well as depreciation
of buildings. Our legal staff advises our clients on
this issue, case-by- case.
• When selling the
property purchased under the corporate buyers route,
depending on the date the property was built, there
are additional tax benefits to the seller. The sale
of a Croatian company that owns real estate may the
most tax efficient exit strategy for a foreign investor.