Corporate income tax – The standard rate of tax on profits in Croatia is 20%.  This rate applies to Croatian companies holding property in Croatia.

Capital gains – Capital gains made by Croatian companies holding property in Croatia, or non-Croatian resident company trading in Croatia, on disposal of property, are subject to corporate income tax at the standard rate.  Non-residents are not subject to tax on capital gains unless they sell prior to the elapsing of three years from the purchase of the property. In this case 35% tax on profit is incurred.

Property transfer tax – The purchase of Croatian real estate built before 1998 is subject to property transfer tax at the standard rate of 5% paid by the buyer on the total purchase price.  On properties built after 1998, the buyer incurs 5% transfer tax only on the value of the land itself and not on the value of the entire property.

PDV (VAT) – Buildings (excluding the related land) whose construction was completed after 1 January 1998 are subject to 22% PDV.  The PDV is applied to the value of the building itself and does not apply to the cost of the land on which the construction is located.  When the buying process occurs through a Croatian registered company, the PDV may be recouped if the company is registered to the PDV system.

The above is intended for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice and buyers are asked to seek further professional advice.