How Has Croatia Improved? Doing Business 2020 Report Reveals All

Lauren Simmonds

Updated on:

As Poslovni Dnevnik writes on the 26th of October, 2019, Croatia ranks 19th out of 27 EU countries. Behind Croatia lie Hungary, Romania, Cyprus, Italy, Bulgaria, Luxembourg, Greece and Malta.

According to the Doing Business 2020 report published by the World Bank on October the 24th, 2019, Croatia ranked 51st in the world, from its previous 58th place.

Croatia overtook Hungary (now one place ahead of it), Romania, which fell from 52nd to 55th place, and Chile, which dropped from 56th to 59th place.

The top 10 countries are New Zealand, Singapore, Hong Kong, Denmark, South Korea, United States, Georgia, United Kingdom, Norway, and Sweden. Lithuania is high in 11th place, Estonia takes 18th place, Latvia takes 19th place, Germany takes 22nd place, and Switzerland 36th place. Among the more realistically comparable countries, Poland fell back from 33rd to 40th, the Czech Republic from 33rd to 41st while Slovakia from 42nd to 45th place.

When comparing the data from this year’s report for Croatia with last year’s, the following can be concluded, which is stated in the report:

The cost of starting a business has been reduced by reducing the mandatory share capital to 5,000 kuna.

The (initial) number of days for starting a business was slightly reduced from 22.5 to 19.5.

Reserving a company name is no longer a special step.

Founder signatures are not required.

The cost of a building permit has been reduced.

The cost of registering a property has been reduced by cutting the real estate sales tax to 3%.

The time required to register ownership has been reduced.

The number of tax payments has been reduced to 12 per year.

The number of days for connection to an electricity supply was reduced from 65 to 33 (where simplification of the procedure can be expected in 2020).

The confidence index in electricity supply and price transparency increased from 5 to 7 out of a total of 8 points.

The level of protection of minority shareholders has increased slightly.

There has been no progress in the area of ​​bankruptcy enforcement (where the average time remains 3 years, although in practice the Commercial Court in Zagreb handles cases even in 1 year, which would mean significant progress had it been recorded). It should be noted that the liquidation procedure of a company, whose cost has been significantly reduced, is not considered in this area. There is also no progress in the area of ​​contract implementation. Cross-border trade remains an easy area for Croatia as it is part of the EU market.

There is no shift in the number of days for tax payments, although one can assume a reduction due to the eP tax system, and the report already notes the possibility of online tax payments.

With regard to the number of tax payments, the Croatian Chamber of Commerce membership fee is calculated in the highest amount (1,083 kuna per month) paid by a certain percent of companies. In addition to that, the fee that is usually paid towards Croatian forests has also been removed for small companies.

These two benefits effectively represent a lesser burden for SMEs. The Croatian Chamber of Commerce doesn’t need to be paid for for the first year of a company’s establishment and after that it’s a mere 42 kuna a month. The tourism fee is calculated in because it still exists, and effectively only certain sectors (IT, business services, etc.) will be exempted from that in 2020.

For each country, including Croatia, the World Bank has published a detailed analysis.

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