Croatia is a popular tourist destination among European holiday-makers, and benefits from its central location in Europe. It is within quick reach by car from southern Germany, Austria, Switzerland, Slovenia and Italy. ‘First-time- and holiday-home buyers find everything here that they require for life in a sunny climate: glorious scenery, beautiful coastlines dotted with bays, countless islands just off the mainland, historic towns and first-class restaurants.
Is it difficult to buy a property in Croatia?
Since entering European Union, buying a property in Croatia got easier. But, there are some differences when it comes to foreign citizens?
Can foreign citizens buy a property in Croatia?
Yes, but the rules are slightly different for foreign citizens. If you are buying the property in Croatia for the first time, you should know that people from other countries (which are part of European Union) can purchase the property the same way as Croatian citizens.
If you come from a country outside of the European Union you can buy a property under the Principle of reciprocity. What that means? Republic of Croatia has the Reciprocity Agreement with other countries that regulate property purchases for its citizens. If the country you are registered in has an agreement with Croatia you can buy the property. You can check the list of countries here.
The difference regarding property purchase if you come from the EU country is that you will need consent from the Ministry of Justice in the Republic of Croatia.
Without that permission, you won’t be able to finalize the purchase. The whole process can last a couple of months while the Ministry checks the laws and that reciprocity between countries exists.
An important thing to remember is that only Croatian citizens can buy agricultural land and forests. The only way foreigners can buy agricultural land and forests without restrictions is by founding a company in Croatia. After that, you would be able to purchase property as company ownership.
The company in Croatia can be founded by citizens from all around the world.
Find every document on the official website of the Ministry of Foreign and European Affairs in Croatia.
How to buy a property in Croatia?
There are two ways to buy a property in Croatia. You can do it as a private individual or through a company you founded in Croatia (read more on Can foreign citizens buy a property in Croatia).
First step would be to hire a lawyer or an agent that will guide you through the whole process. They can help you go through situations like avoding properties with incorrect legal paperwork.
What are the main steps in property buying process?
1. Pre-contract agreement between the buyer and vendor (seller).
The buyer is expected pay a down payment equivalent to 10% of the selling price (This percentage may differ, depending on the contracting parties, and the down payment can be as high as 15%).
2. The buyer then should apply for the consent from the Ministry of Foreign Affairs(MOFA). Necessary documents include:
- The purchase agreement
- The seller´s proof of title (land registry certificate: ZK izvadak)
- Certificate confirming that the property is within the construction zone envisaged by the zoning plan (Uvjerenje o namjeni)
- Proof of citizenship for the buyer
- Proof of citizenship for the seller
- Power of attorney, if an attorney is involved.
3. A binding contract is then prepared by a lawyer and signed by the notary. An official note of the contract should be made in the Land Registry.
Once MOFA consent is granted, the contract needs to be registered in the Municipal Cadastral Department´s Land Books (Zemljišne Knjige), and the purchase tax needs to be paid. The 5% real estate transfer tax does not apply to new buildings. In this case, a 25% VAT is levied on the construction value of the building. New buildings are defined as properties built after 31 December 1997.
Most common costs and fees in property purchase process
- Most common fee for lawyers service go up to 1,5%. In most cases this includes the Land Registry ownership registration and the preparation for property purchase process.
- Real estate agenies can charge you up to 6% of the property’s sale price (plus VAT).
- If you are citizen that lives outside of EU you will have to pay 70 HRK for the permission from the Ministry of Justice (read above „Can foreign citizens buy a property in Croatia?)
- The buyer is also paying a property transfer tax (3%). Note: the tax can be paid only by bank transfer and only in Croatian Kunas
- If you are buying a property through a company, you should register the company first. The company has to have a starting capital – €2800. You can take that money after the completion of registration. The fee for the public notary is €500. Note: according to law, Croatian company has to have an accountant – his/hers monthly fee is approximately €150 per month.
* the best way to find out every possible fee is to talk with your lawyer or hiring a real estate agency that will handle all of these operations for you.
VAT in Croatia
VAT in Croatia is currently 25%.