August the 18th, 2019 – We’ve explored citizenship through naturalisation, marriage, descent, and special interest. We’ve delved into the world of Croatian work permits, and we’ve gone through the list of ways to obtain legal residence for both EU and non EU citizens, but I left one thing out – gaining residence through opening a business in Croatia. That needs an article of its own. Pour yourself a large, strong drink.
I’ll preface this by saying that opening a business to gain residence should ideally be a last resort, meaning that you’ve exhausted all other possibilities. This post is aimed almost exclusively at third country nationals (people who are neither citizens of Croatia or citizens of the European Economic Area), as citizens of the EEA/EU have a right to residence in Croatia based solely on their citizenship of an EU member state.
Croatian bureaucracy is infamous at this point. The phrase uhljebistan is not used without reason, and many people, from your ordinary mere mortals to rich foreign investors with huge capital, have been well and truly put off by the endless reams of red tape the Croatian Government likes to put up. Driving not only those who’d like to invest their hard earned cash away, but potential jobs, too.
With that being said, things are beginning to alter, albeit at a snail’s pace, and with the age of digitalisation finally dawning on Croatia, there might be hope on the horizon. Until then, let’s assume you’ve exhausted all your remaining options as a third country national and opening a business in Croatia is your last shot at obtaining that residence permit, or maybe you really do want to open a business here. Let’s begin.
In order to gain residence in Croatia on the basis of having opened a business, you’ll need to first open that business. You can open a j.d.o.o, a d.o.o., or what’s known as an obrt. Once that’s all done and dusted (and that’s a topic I’ll cover in another article), you can begin your application for a residence permit on that basis. The necessary forms will be provided to you when you go in person to MUP to make the application and hand in the appropriate documents.
But, hang on, it isn’t all that straightforward. There are currently two situations in which you can legitimately apply for a residence permit as a third country national after having opened a Croatian business (it cannot be what is known as an ”association” (udruga), which tend to be non-profit and the people involved are commonly volunteers. It has to be an actual business, intended to operate as a business).
The two situations in which you can legally obtain residence in Croatia through opening a business I mentioned above are as follows:
1.) You are a third country national and you own the business.
2.) You own the business, but you want to hire a third country national who does not have a residence permit (but obviously needs one), and the job you’re hiring them for is not covered by the quota. You can find out more about quotas from us here and from MUP, the authority which will be granting (or indeed denying) your permit here.
Let’s quickly look at some very important differences between EU/EEA citizens and third country nationals before we continue.
For EU nationals (and nationals of Iceland, Norway, Switzerland and Liechtenstein), who have a right to reside in Croatia owing to EU law, please let it be understood very clearly that you do not need to open a business to stay in Croatia under any circumstance.
Unfortunately, some would-be advisers and even accountants have wrongly told unknowing EU nationals this. If you’re a citizen of an EU/EEA country, your right to reside is based on your nationality, nothing else.
If you’re an EU/EEA citizen and you want to open a business in Croatia, things are much easier for you as you can do so on the same basis and with equal treatment as a Croatian national. This means you do not need to follow many of the rules placed on third country nationals, and it’s much less expensive for you to open and operate a business here.
Third country nationals, at whom this article is aimed:
SCENARIO 1: You own the business, and you yourself are a third country national:
If you’te a third country national and you’ve opened a business in order to gain residency, here is what you need to submit about your business:
1.) You must hire at least three Croatian citizens as full time employees.
2.) You must invest an eye-watering 200,000 kuna into your business if it is a j.d.o.o or a d.o.o., 300,000 kuna if it’s an obrt (craft).
3.) You need to hire yourself, employ yourself, and pay yourself a salary which meets the current average Croatian wage, or is higher.
You may need to prove that your new business is not operating at a loss, but this may not be asked of you when you first apply. You’ll also need to show proof of you having paid your taxes in Croatia, properly and correctly. This includes the necessary contributions, too (pension and health insurance). If you have had any debts to the Republic of Croatia at any point (tax debts), you’ll need to prove you’ve paid them off.
In addition to that, you’ll need to provide other documents for your residence permit, such as a valid passport and a copy of it, click here and scroll down to third country nationals for the list of documents you’ll typically need to provide the police with.
SCENARIO 2: You own the business, and you want to hire and employ a third country national
If you are a business owner and you want to hire a third country national who does not already have legal residence in Croatia, then here’s where quotas come into the mix again. These can be a bit confusing, but the links I provided (where I mentioned quotas previously) will give you some guidance, as will the police. Make sure to ask them as they may not provide this of their own accord.
If the third country national you’re hiring will be doing a job that is in the quota, then there’s less of a fuss surrounding this process. If they’re going to be doing a job that is outside of the quota, then you’ll need to provide additional documents and prove additional things. Here is a list of those things:
1.) You’ll need to hire or already employ three Croatian citizens on a full time basis and be able to provide proof of that
2.) You’ll need to have invested a minimum of 100,000 kuna into your business, and be able to provide proof of that
3.) You’ll need to be able to prove that your business doesn’t operate at a loss
4.) You’ll need to have hired yourself as an employee in your business and be paying yourself the equivalent of the average Croatian wage, or above it
5.) You’ll need to submit proof you don’t owe anything to the state (tax debts), have paid anything you have previously owed, and you’re paying your taxes and contributions in Croatia
In Croatia, there is an excellent organisation called HITRO.hr, who work to help in quicker and better communication between business/companies and the administrative bodies of the state. Thanks to digitalisation slowly but surely creeping up on Croatia, this allows for certain things to be done online. Please note that this only regards certain types of companies and businesses and their registration.
Their services are available in English as well as in Croatian, and they detail the procedure of opening different types of businesses, what the costs are, and what you should watch out for. Not to mention contact numbers. Pay them a visit here and select the English language option if you need to.
In addition to that, Fina (Financial Agency) can provide for faster, more efficient and much more secure access for company/business owners to certain services and information. These include ePayment, eTax, eVAT, and ePension.
The requirement of having employed three Croatian nationals as full time employees in your business may be deemed fulfilled even if you hire three Croatian nationals on a part time basis, but there are other requirements you must fulfil for this to be considered the same as full time employment. Ask when you apply what this means for you.
The law currently states that for each additional permit, you need to provide double the requirements listed above, or triple (and so on) for each additional permit you want to be issued as a business owner wanting to employ third country nationals who are gaining residence in this manner.
This is an extremely bureaucracy filled process which will not only cost you a lot of money, but a lot of time, patience and nerves along with it. Unless you are genuinely wanting to open and run a business here in Croatia, I would strongly recommend that you avoid this way of gaining residence as a third country national.
For EU citizens, things are far cheaper and far less complicated, but as I stated previously, if you’re from the EEA, you absolutely do not need to open any sort of business to be granted residence in Croatia. Please be very wary of anyone who tells you otherwise. EU citizens can review their rights covering everything from their right to reside to opening a business here.
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