Location

Croatia is an Adriatic and a Central European country. It streches in the form of an arc from the Danube in the northeast to Istria in the west and Boka Kotorska in the southeast. Its area is 56,538 sq.km., and the area of the coastal sea about 31,900 sq.km. Geographically, it is situated on the cross-roads between Central Europe and the Mediterranean. Geographical position: Croatia is situated close to densely populated and industrially developed European countries. Many internationally important transport routes cross Croatia. The importance of the geographical position of the Republic of Croatia is also enhanced by the Adriatic Sea, the northernmost gulf of the Mediterranean which is the closest to the central part of the European continent. The most important routes are centered along the Sava river, the Adriatic and the Drava river; there are also several important transversal routes from the Austrian and Hungarian border to the Adriatic coast (to Rijeka and Split). Natural and Geographical Features: The area of Croatia can be divided into three major natural and geographic parts: The Pannonian and Peri-Pannonian area comprises the lowland and hilly parts of eastern and northwestern Croatia; mountains higher than 500 m are rare and of an insular character. Most of this area is being used for farming and livestock breading. Slavonija and Baranja in the east are the most suiotable for growing cereals; the humid valleys and the hills are richly afforested while the northwestern part, which gravitates to Zagreb, is industrially the most developed. The hilly and mountainous area, which separates Pannonian Croatia from its coastal part, is less developed. Its future development will be based on its transit importance, the growth of the already existing wood and timber industry, and the still underexploited potential for the production of healthy food, and winter and rural tourism. The Adriatic Area includes the narrow coastal belt separated from the hinterland by high mountains. This is predominantly a karst area with very dry summers. The few streams mainly follow narrow gorges in breaking their way through to the sea. The Croatian coastal area may further be divided into the northern (Istria nad Kvarner) and southern part (Dalmatia). It also lends itself to a longitudinal division into the islands, the coast proper and the immediate hinterland. The Croatian Adriatic coast is one of the most indented in the world: it has 1185 islands and islets with a total coastline of 4,058 km, the total length of the mainland coast being 1777 km. The largest island is Krk; other large islands include Cres, Brac, Hvar, Pag and Korcula. The largest peninsulas are Istria and Peljesac, and the largest bay is Kvarner Bay. Area: Total state area 89,810 km2 Teritory area (land) 56,610 km2 Aquatorium areaá (internal sea line) 33,200 km2 Marine economy region (teritorial sea line) 23,870 km2 Total economy area 113,680 km2 Coastline length 5,835 km Coastline length of mainland 1,777 km Coastline length of islands 4,058 km Relief: A considerable part of Croatia lies at an altitude of over 500 m, but there are no mountains higher than 2000 m. Lowlands prevail in eastern and northwestern Croatia, while the highest mountains in the mountainous part are found in the area which separates the continental mainland from the Coast (Risnjak 1528m, Velika Kapela 1533m, Pljesivica 1657m) or close to the sea (Ucka 1396m, Velebit 1758m). The highest mountains in Dalmatia are Biokovo (1762m) close to the sea and Dinara (1831m) in the hinterland. Rivers: Croatia's rivers belong to the Adriatic and the Black Sea basin. The rivers in the interior are large and calmer (Sava, Drava, Danube). The coastal rivers are shorter and have a higher gradient. The longest coastal rivers are the Mirna and the Rasa in Istria and the Zrmanja, the Krka and the Cetina in Dalmatia. Karst streams running partly underground prevail in Lika. Lakes: Croatia has no large lakes (the largest, Vrana, near Biograd has an area of 30 sq.km. The most atractive are the Plitvice Lakes (a chain of 16 lakes with the river Korana as the effluent), the Red and Blue Lakes near Imotski (unique karst phenomena), freshwater lake Vrana, a cryptodepression on the island of Cres and lake Prokljan (along the Krka river near Sibenik). The best know man-made lakes are Lokve and Bajer in Gorski Kotar, Trakoscan in Hrvatsko Zagorje and Peruca along the river Cetina in Dalmatia. Lake Kopacevo and the surrounding swamp forests in Baranja are a major hatching ground and bird habitat. Adriatic Sea It stretches from the northwest to the southeast between the Balkan and Apenine peninsulas for 783 km, its average width being 170 km. Its average depth is 252 m; its northwestern part is shallow (maximum 23 m in the Bay of Trieste), while it is much deaper in the south (1200 m in the South Adriatic basin). The prevailing winds are the cold bura, the humid jugo and the refreshing maestrale. Climate: Northern Croatia has a continental climate. Central, semimountainous and mountainous regions, as well as the entire Adriatic coast, have a Mediterranean climate. Spring and autumn are mild along the coast, while winter can be cold and snowy in central and northern regions. TEN OF THE CROATIAN ECONOMY'S LARGEST FOREIGN INVESTMENTS IN THE PRIVATISATION PROCESS Foreign investments in the Republic of Croatia are regulated by the Company Act which came into force on January 1, 1995. According to this Act, foreign investors have the same rights, obligations and legal status within an enterprise as domestic investors, provided the condition of reciprocity is met. Foreign investors can acquire rights to additional guarantees which are not given to domestic investors. The Constitution of the Republic of Croatia states that rights acquired through capital investments cannot be withdrawn by law or any other legal act. It also insures free repatriation of profits and free repatriation of capital on disinvestment. Total foreign investments in Croatia from 1993 until mid 1997 amounted to 833.6 m USD, 36% of which was accounted for by the pharmaceutical industry. The main foreign investors were: Asea Brown Bovery, Coca-Cola Amatil, Ericsson, Heidelberger Zement, Siemens, Societe Suisse de Ciment Portland, Tuborg, etc.. TYPES OF INVESTMENT FOR FOREIGN LEGAL ENTITIES Foreign legal entities in the Republic of Croatia are allowed to: invest capital on a contractual basis; invest capital in a company; invest capital in a bank, savings institution or insurance company; start up as a sole trader or craftsman; acquire the right to exploit natural resources or other assets of interest to Croatia; take part in Build-Operate-Transfer (B.O.T.) deals and in Build-Own-Operate-Transfer (B.O.O.T.) deals. According to the Company Act, foreign entities are allowed to establish the following either alone or with domestic legal entities: public limited liability companies; limited partnerships; joint-stock companies; limited liability companies; silent partnerships. Foreign persons are allowed to acquire shares and ownership stakes in existing joint-stock and limited liability companies. All such companies are required to be registered in the Court Register of the competent Commercial Court, dependant on the location of the company's headquarters. When establishing a joint-stock company or a limited liability company, a foreign investor may either invest money, goods or rights. The minimum capital required when establishing a joint-stock company is the domestic currency equivalent of 15,000 EURO, while the minimum nominal value of a share is set at the domestic currency equivalent of 10 EURO. A joint-stock company may also be established by a single natural person or legal entity. The minimum capital required when establishing a limited liability company is the domestic currency equivalent of 2,500 EURO, while the minimum ownership stake is set at the domestic currency equivalent of 200 EURO. A company may be established by one or more persons. A foreign natural person is allowed to operate as a sole trader in the Republic of Croatia provided he/she holds a work permit and the condition of reciprocity is met. Before starting to engage in handicrafts, the person is required to obtain a trading licence, which is issued by the competent County office, dependant on where the headquarters of the particular handicraft is located. Preferential crafts are approved by the competent Ministry, dependant on the type of handicraft. REPATRIATION OF PROFITS The issue of transferring profits to a foreign country is regulated by the Foreign Exchange System, Foreign Exchange Transactions and Trade in Gold Act. According to this Act, the transfer of profits is unrestricted and may be effected after all legal obligations in Croatia have been met. If a company with profits to be transferred has its own foreign currency income from exports of goods and/or services, then the transfer of profits may be effected through the company's own foreign currency account held at an authorised local bank. A foreign investor may opt to keep the profits in Croatian currency in his or her domestic currency account held at an authorised local bank. In addition to the transfer of profits to a foreign country and payments in Croatia, the profits can be used for loans to domestic entities in accordance with the law, and for transfers into domestic currency accounts of other foreign persons. OWNERSHIP RIGHTS OF FOREIGN PERSONS OR LEGAL ENTITIES If a foreign person establishes a company in the Republic of Croatia, the company is considered to be a domestic legal entity and it may acquire real estate ownership rights irrespective of whether the real estate is acquired for business operations or for another purpose. Foreign persons are also allowed to acquire mortgage rights on real estate. Provided the condition of reciprocity is met, foreign physical persons or legal entities are free to acquire and dispose of property (real estate and movable property) in the Republic of Croatia. Regardless of whether a foreign entity performs an activity in Croatia or not, the acquirement of real estate ownership rights by a foreigner has to be approved by the Ministry of Foreign Affairs. BUSINESS OPERATIONS OF FOREIGN COMPANIES The Company Act provides special stipulations covering foreign companies (registered outside the Republic of Croatia) and sole traders (recognised outside the Republic of Croatia) who carry out business activities within the territory of the Republic of Croatia. Foreign companies and foreign sole traders enjoy, in principle, the same rights as domestic legal entities in their operations within the territory of the Republic of Croatia. The only condition that must be met when starting such operations is that a subsidiary must be established. Subsidiaries do not have the status of legal entities. All the rights and obligations stemming from their business operations are transferred to the founding company. A subsidiary may engage on behalf of the mother-company in all the operations that are included in the company's business activity. REPRESENTATIVE OFFICES OF FOREIGN COMPANIES According to the Trade Act, a foreign person may establish a Representative Office for the purpose of effecting market research, promotional and information activities and its presentation. A Representative Office does not have the status of a legal entity and is not empowered to conclude contracts. A foreign Representative Office may start operating upon registration in the Register of Foreign Entities held at the Ministry of Economic Affairs. For its business operations, a Representative Office is allowed to hold both foreign and domestic currency accounts in authorised domestic banks. CONCESSIONS Rights to concessions are regulated by the Law on Concessions. Foreign persons cannot become owners of certain types of real estate (natural resources and other wealth which is of special interest to the Republic of Croatia). The decision on whether to grant a concession is made by the Croatian Parliament or the Government. A concession cannot be granted for the exploitation of forests or other assets regulated by special laws if they are state owned (e.g. maritime property, agricultural land, water resources). A concession may be granted for a period of up to 99 years (40 years for agricultural land). A concession may be granted to a domestic or foreign legal entity, or natural person on the basis of the results of public tenders or bid invitations. The party granting the concession and the applicant sign an agreement which is inscribed in the Concession Register kept at the Ministry of Finance. An annual fee is paid for each Concession Right. FREE ZONES Free Zones can be established in the area of a seaport, river port, along international roads and in other areas in which there are conditions for their operations. All activities may be carried out within such a Zone (production of goods, refinement of goods, wholesale trade and mediation in trade, services, etc.), except for retail trade. A Free Zone, as a rule, may be established on the basis of a concession granted by the Government of the Republic of Croatia (Ministry of Economic Affairs, Free Zones Administration). A concession to establish a Zone is granted on the basis of a public tender or a public bid collection. A Zone may be founded by one or more domestic persons, or by the Government of the Republic of Croatia if a particular economic interest for the establishment of a Zone exists. Foreign persons cannot be founders of a Zone. The founder of a Zone and other domestic and foreign legal entities and natural persons may be the users of a Zone. Goods may be freely stored in a Zone. For the goods stored in a Zone that are not allocated for turnover on the domestic market, no customs duties or taxes are levied and no other economic obligations are applied. Tax benefits for the users of a Zone: users who build or participate in the construction of infrastructure facilities within a Zone, the amount of which exceeds one million HRK, are exempted from paying profit tax in the first 5 years of doing business; other users in a Zone pay profit tax amounting to 50% of the prescribed rate, which currently amounts to 35%, i.e. 17.5%; the Croatian Government may exceptionally increase tax benefits for a single Zone, i.e. for the performing of certain activities within a Zone. Established Free Zones: Krapina-Zagorje Free Zone, Krapina Free Zone Kukuljanovo, Rijeka Free Zone Osijek, Osijek Free Zone Podi, Sibenik Port of Rijeka Free Zone, Rijeka Free Zone Zagreb, Zagreb AREAS OF SPECIAL STATE WELFARE In order to stimulate economic development and capital investment in the areas which were temporarily occupied, the Areas of Special State Welfare Act stipulates a whole range of benefits. These selected areas are divided into two groups, i.e. depending on the size of the municipal centre and its distance from the border. These groups also have an influence on the level of benefits themselves. CUSTOMS BENEFITS: The Law establishes customs exemptions for legal entities and physical persons that have residence status in the areas subject to special state welfare when importing, delivering or receiving equipment or parts for the reconstruction or development of activities carried out in these areas. In such cases approval is required from the Ministry of Reconstruction and Development. BENEFITS FOR THE TAXATION OF INCOME AND PROFIT: The usual protective interest rate is 5%, however, entrepreneurs in the areas of special state welfare are covered by a protective interest rate of 20% (areas belonging to the first group) 15% (areas belonging to the second group) Personal allowances (800 HRK in other areas of Croatia) amount to: 3,500 HRK (taxpayers from the first group) 2,700 HRK (taxpayers from the second group) BENEFITS FOR THE TAXATION OF REAL ESTATE: The Act also establishes tax exemptions on real estate transactions in these areas provided real estate is sold by a legal entity and used by the buyer for further performing his/her business activities. Physical persons are also exempted from paying real estate sales tax if they buy real estate in the same area where they have residence status. SHARES The Croatian Privatisation Fund's shares in property in the areas of special state welfare may be distributed free of charge or with discount to physical persons or legal entities who live or start a business in these areas.

next>

HOME - HOUSE - APARTMENT - LAND - HOTEL - YACHT CHARTER
RENT AN APARTMENT - RENT A CAR - AVIO CHARTER - INVESTMENT
WHERE WE ARE - ISLANDS FOR SALE - YOUR OFFER - YOUR REQUEST
OUR CLIENTS - ABOUT US - FAQ - CONTACT