Whether you already own a property in Croatia or you are just about to buy one, the idea of leasing your property to tourists may have crossed your mind. Tourism is prevalent and developed in Croatia, so offering real estate lease to guests can be a very payable business. Please keep reading to find out more about the business’s basic rules for foreigners, written by our tax advisor Ivica Baban.
Real estate lease in Croatia
Foreign natural persons who are owners of real estate in the Republic of Croatia may provide tourist accommodation services.
What steps and tax obligations are required to provide a tourist accommodation service depends primarily on whether foreign natural persons who own real estate in the Republic of Croatia come from:
1. Member States of the European Union, the European Economic Area (Norway, Iceland, and Liechtenstein) or the Swiss Confederation
2. Other countries.
In this blog, we will address the situation where tourist accommodation is provided by foreigners coming from Member States of the European Union, the European Economic Area (Norway, Iceland, and Liechtenstein) or the Swiss Confederation.
Leasing properties in Croatia – Step by step guide
They may provide tourist accommodation services in the Republic of Croatia as natural persons without registering a craft or a company. The initial step is to obtain a work permit from the competent rental authority. In this way, foreigners are considered to be renters providing tourist accommodation service and natural persons resident in the Republic of Croatia. It is also necessary to be entered into the register of taxpayers in the Republic of Croatia on the prescribed form.
Tax obligations arising from the provision of tourist accommodation service can be divided into two groups:
a) As natural persons, renters are subject to income tax on the provision of tourist accommodation services, which they can pay:
1. In a lump sum by their own decision, if the receipts from the provision of tourist accommodation services do not exceed the amount of HRK 300,000.00 annually
2. If their receipts from the provision of tourist accommodation services exceed the amount of HRK 300,000.00 annually, they are obliged to keep business books and pay income tax based on the prescribed rates (currently, the income tax rates are 24% and 36%).
b) Renters are subject to VAT if they provide tourist accommodation directly to the guest and as renters are obliged to issue an invoice in which they will calculate VAT of 13%, which they are obliged to report as VAT payers in the Republic of Croatia on the prescribed form (20th day of the current month for the previous month) and pay within the legal deadline (the last day of the current month for the previous month).
If, as renters, they provide tourist accommodation service through a tourist agency, they are not obliged to become VAT payers in the Republic of Croatia, nor do they calculate VAT on the invoices they issue to the tourist agency. It is important to point out that in this case, the tourist agency issues an invoice to the guest on its own behalf, while the foreign owner of the property in which the tourist accommodation service is provided issues an invoice to the tourist agency without VAT.
If the agency would only work as an intermediary and issue an invoice for the intermediary to the foreigner, then the renter would be obliged to register as a VAT payer in the Republic of Croatia and to the invoices, it issues to the guest directly (and for which the tourist agency mediated ) to calculate VAT of 13%.
The registration itself as a VAT payer in the Republic of Croatia is done on the prescribed forms before providing real estate lease services.
When buying a property, often the foremost is the aesthetics or location of the property itself. However, the purchase of real estate is a legal process, so we must not neglect the legal side. What should you do, and how or when should you do it to make your purchase neat and easy as possible? All of this shall be explained through a series of blogs by our tax advisor Ivica Baban.
Foreign citizens who buy real estate in the Republic of Croatia are generally divided into two groups, depending on where they come from. Citizens living within the European Union make one group, while those living outside the EU make the other.
Why is this important?
While foreigners from the European Union may purchase real estate in the Republic of Croatia under the same conditions as nationals of the Republic of Croatia, those living outside the EU must obtain consent for the purchase of a real estate in the Republic of Croatia from the Ministry of Justice of the Republic in the administrative procedure. Without this consent, the new owner could not registrar his ownership of the land he purchased.
The only exception from this rule are agricultural land, for they are subject to a moratorium on their purchase by foreign nationals from the EU until June 2020.
There is an additional requirement concerning non-EU citizens. Only citizens coming from countries with which Croatia has reciprocity in acquiring the ownership rights of their nationals may go to administrative proceedings and seek the Ministry of Justice’s consent.
Consequently, other non-EU nationals coming from countries with which the Republic of Croatia does not have the principle of reciprocity in acquiring ownership of their citizens’ real estate may not, as natural persons, purchase real estate in Croatia.
Yet, there is another option for them. They may decide to set up a company (most often, it is a limited liability company or abbreviated d.o.o.) in Croatia. As owners of companies with headquarters in the Republic of Croatia, they may acquire ownership of the real estate.
It is necessary to know that the owner of the purchased property is then the company, not the owner of the company himself.
Don’t forget the taxes.
When buying a property in Croatia, in addition to the purchase costs, the buyer may be obliged to pay a real estate tax (PPN). The height of this tax can be defined in two ways. It is either 3% of the property’s purchase price or 3% of the estimated property value by the Croatian Tax Administration.
This will occur when the seller does not calculate value-added tax (VAT) for the property sold, as evidenced by the seller’s purchase contract or invoice issued.
Notaries are obliged to submit a copy of the purchase contract to the Republic of Croatia’s Tax Administration, which will send a decision on the obligation to pay real estate taxes.
In case that a notary does not certify the real estate transfer documents, the buyer is obliged to declare the obligation to pay real estate sales tax in Croatia within 30 days for those real estates that have not been subject to value-added tax on the sale.
Taxes apply to all – a foreign citizen from outside the EU who requires the Ministry of justice’s consent becomes taxable at the moment of obtaining that consent.
The 36-year old Maja Bručić, architect and founder of the Lotus Architect studio, does not cease to impress us with her ideas. In between working on numerous projects, she has managed to find some time for us and reveal some of her rituals, habits, and opinions on the real estate market’s current and expected architectural trends.
What does an average day of the most sought after Croatian architects look like?
My day begins around 8 am when I make myself a cup of double Mocca – the so-called bullet coffee (coffee, raw cocoa, oat milk, cinnamon, some honey). It’s the perfect kick-start for a working day. I immediately start with my business obligations. While drinking coffee, I handle the “most difficult” and most urgent business situations in the peace and comfort of my home.
I come to the office sometime before noon. There I solve all the current challenges with my team, follow their work, get involved in absolutely every project, actively participate in them, and encourage my team to take the initiative, be proactive, and take responsibility.
Usually, I have several meetings with clients, associates, and suppliers every day. The number of messages and calls I receive daily is also meaningful. I often go directly to the field, so business travels are practically a part of my routine since most projects are located on the coast, and many of my clients are foreigners. After a hard day, I usually relax by going to the wellness and spa area, and almost every day, I do sports, mostly running and tennis. I do not forget friends, family, and dear people, and I need to communicate with them every day. Often we spend time together at dinners – in a restaurant or at home. In these situations, listening to music is mandatory.
Where do you find inspiration for your work?
I find my inspiration in music, travels, people, and relationships. Most of all, I am inspired by love. I often get ideas through love relationships. Mostly it happens as I relax at home in a bath with a couple of tablespoons of salt and music. It inspires the best ideas.
What type of projects do you find most satisfying?
The projects that inspire me most are where I instantly connect with the client, where we are headed together toward the same goal, and enjoy that journey together. After that, I am most intrigued by the project’s size because bigger projects give you more challenges. Finally, projects have a higher meaning, that is, projects that change people’s awareness and future.
And clients – what are they like? Are there any differences between Croatian and foreign ones?
I considered myself blessed for working with local clients who are top professionals and experts in their professions, and at the same time learning from them and expanding my consideration means. I love my Croatian clients and associates. Then again, I must admit that generally, clients abroad are more understanding of our expertise and appreciate the architect’s opinion and profession more. Also, they are generally less demanding than domestic ones.
What are the top trends in the world of real estate in 2019, and what can we expect of it in 2020?
In 2019 and 2020, and beyond, trends are different in different spheres of architecture. Still, some general trends that cover all spheres are natural materials, i.e., connecting with nature as much as possible, connecting interior and exterior spaces, merging space, environmental concerns, or how the project will affect the environment. Care is taken to minimize the devastation of the surroundings and integrate as much as possible with the existing terrain. The focus is on sustainable and green and the use of renewable energy sources.
When it comes to homes, how would you describe current demands on the real estate market? How hard is it to comply with them?
At present, residential architecture in Croatia is satisfying. However, if we are talking about the luxury segment, Croatia does not meet the market needs. The demand is much higher than the supply, and the supply of supposedly luxury objects often does not meet the external standards. The partner company I work with, the Consilium Expert Group, is focused on that segment, and the plan is to change the scene in the luxury real estate in the Republic of Croatia in the next ten years.
The goal is to offer superior solutions, exceptional design, and a high degree of comfort, guided by global trends and environmental concerns. Globally, traditional construction cannot meet the needs of an increasing number of people, so other solutions are now being considered, and a revolution in construction and architecture is expected, as it once was in the IT industry, such as creating fast-folding homes on land to speed up the construction process. As I have already stated, people’s awareness increases, and more and more quality natural materials are selected regarding traditional construction.
Taking future trends predictions into consideration, what would you advise to the investors?
When choosing a developer, look for an inspiring experience that will make positive changes and make a difference. I believe that it is possible to profit at the same time, have a profitable story, and do something new, better, different, and of better quality. Then, the pleasure of both myself and my work is much greater. Indeed, in my work so far, I have noticed that the people who have the most are the ones who aspire to it. This is what we at Lotus and the Consilium Expert Group hold and what you will always recognize in us. We are authentic in everything we do, and therefore it is no coincidence that so many people contact us and want to work with us. Trust is the key ingredient of a successful collaboration.
If you lounge for a city that combines great history, art, and culture with beautiful Mediterranean nature, take a closer look at Dubrovnik. Nicknamed „The pearl of the Adriatic, “this city’s value has been recognized even by UNESCO, who has listed it as a World Heritage Site in 1979.
Dubrovnik is often described as a museum town, but it’s also a town full of museums. In Dubrovnik, you can enjoy culture and art in all its forms: from music festivals, theater plays, art exhibitions to its architectural wonders. The old town is perfectly preserved and full of wonderful Renaissance, Gothic, and Baroque palaces, churches, and monasteries.
The popularity of Dubrovnik
More than one 1.200.000 guests visit Dubrovnik yearly. Many world-known celebrities have spent their vacations here, such as Christiano Ronaldo, Beyonce, Ivanka Trump, members of the U2, Ander Herrera, Mario Testino, Jessica Stein, John Malkovich, Steven Spielberg, Owen Wilson, Eva Longoria… Walking next to a celebrity has become quite common in Dubrovnik, which only adds to its timeless appeal and status.
Owning a property in Dubrovnik is nowadays considered not only a material gain but also a status symbol. With all the tourists visiting and the love its own residents have of it, Dubrovnik has flourished and grown into a world known destination!
No wonder many casts have chosen it as their filming set. The iconic medieval city of Dubrovnik has shown its flexibility in playing Nottingham Castle in Otto Bathurst’s 2018 release of Robin Hood, the casino city of Canto Bight in Rian Johnson’s Star Wars: The Last Jedi and, most famously, King’s Landing in eight seasons of the famous HBO series Game of Thrones. All this has contributed to its popularity in such a way that the global travel site Big 7 Travel has even pronounced it Europe’s Most Instagrammable Place of 2019.
Visit Dubrovnik…
Taking all this into consideration, the time is just right to visit this beautiful city. For a more laid back vacation, visit the city in spring or autumn, while the real rush awaits you during summer. Dubrovnik offers lots of amazing accommodation options, and choosing the best one might not be so easy!
From hotels to privately owned apartments and villas for rent in Dubrovnik, the possibilities are numerous. In the end, it all comes down to your wishes and needs. Just imagine your perfect vacation, and Dubrovnik will be the answer to all your needs.
…or buy a property in Dubrovnik
With all the tourism potential, investing in a hotel or villa in Dubrovnik might be the best business investment at the moment.
Villa Paraiso Mediterraneo Villa Endless View
A growing number of visitors demand a higher level of comfort and luxury while picking their accommodation, so investing in such properties guarantees a return on the investment.
Villa Orizzonte Villa Marchesa
Not to forget, you can always buy a property for your own vacations and spend as much time as you want at your own luxury home in Dubrovnik!
Mansion near Dubrovnik
Have you noticed that it’s almost spring? As much as we like it, we are even more excited about the fact that the beginning of spring means we are each day closer to summer! For a perfect second home, you need a perfect location, and is there a better one than Croatia? Whether you are looking for a house for sale in Croatia or you want to rent a luxury villa for a week or two, now is the perfect time to start your search for the perfect real estate!
Here are a few suggestions
Offering a beautiful view of Opatija and state of the art, modern design, Villa Design is our first „house for sale“ suggestion. Constructed according to the principle of a low-energy home, it is oriented to offer you maximum privacy while being close to one of Croatia’s most prominent tourist destinations.
An equally beautiful sea view awaits you at the Villa Appeal! This villa offers a modern design characterized by clean lines, large glass surfaces, and an open floor plan. All bedrooms are ensuite, offering complete comfort and access to the balcony, where you will enjoy the most memorable mornings.
A whole new level of privacy, peace, and sophistication is a prime quality of the Villa Maritim. This waterfront property is located on the island Vis, a still unexplored, therefore not crowded, jewel of the Adriatic sea. Sandy beaches within walking distance from the villa, a private swimming pool, and a tastefully-designed terrace-outdoor space are the main features of this extraordinary property.
Another beautiful, yet more populated island, is Brač – home to the amazing Villa Violet! All lovers of the crystal clear sea naturally carved bays, and the typical, unique island lifestyle will find all they need in this 445 sqm of living space, located on a 4,100 sqm large plot! Croatia’s luxurious property comes with an even better-designed and discreet garden, offering full privacy to its residents.
Last but not least on our list of houses for sale in Croatia is Villa Ruby! This three-floor real estate, fully faced with the famous Brač stone, is spread over 980 sqm of living space, including the spa area with hammam, Russian sauna, and a small indoor pool. The typical, local features, combined with the luxuries of a modern lifestyle, make for a true masterpiece of pleasant living, whose extraordinary character is timeless.
How to pick just one out of these five amazing properties, and they are just a small part of what we have to offer! Be sure to check out the rest of our houses for sale before making your final decision. We’ll leave you to your thoughts and dreams while you scroll through our portfolio…
Croatia has still not stood out as a true luxury real estate market. Still, despite this, we have noticed a growth in foreign investors’ and buyers’ interest in Croatia’s luxurious properties. The demand for luxury real estate on our market has increased by 30% compared to 2017, and the number of real estate queries in Croatia Sotheby’s International Realty portfolio has increased by 30%. When it comes to top qualities our customers seek in a luxury property, location is ranked pretty high. Everybody wants the same thing – to rent or buy a luxury property on Croatia’s coast!
Rent a luxury property in Croatia for a truly memorable vacation
As a well-known tourist destination, Croatia offers a wide range of accommodation facilities. If renting a luxury villa in Croatia is what you seek, then Croatia Sotheby’s International Realty is your best partner in this search. Not so long ago, we have enriched our portfolio with luxury villas and apartments all over Croatia’s coast available for rent every week. A touch of luxury will make your vacation memories even more memorable, especially if you stay at a property that is just right for you. This is our mission – to pair up our customers with luxury real estate properties that suit them the best!
Make your Croatian, luxury real estate dream into reality.
On the other hand, you might fall in love with Croatia and wish to stay here for more than just a week or two. We’ll be right there to help you find just as perfect and suitable property as the country itself. To buy a luxury real estate property in Croatia, maybe your dream today, or become your dream in the future, but with our help, you will turn it into reality! With our expertise and guidance, the process will be smooth and easy, and at the end of it, you will be holding the keys to your dream Croatian home. To ensure we have the right property for you, we actively spread our portfolio with new luxury properties. New properties and new prices come with each day so make sure you check out our portfolio regularly. You never know when your perfect luxury real estate property in Croatia might appear!
Imagine spending your vacation at Croatia’s beautiful coastline or in its heartland, in a property as beautiful and special as the country itself. The only thing separating you from this unforgettable experience is your decision to book one of the luxury properties available for rent from our portfolio!
Why choose average when you can have luxury?
Quite often, the one thing making a difference between an „ok“ vacation and a great one is the accommodation you choose to stay in. Even if you spend your days wandering around, exploring the surroundings, and only need a place to shower and sleep, you still want this shower and bed to be of great quality, comfortable, and eye appealing. And, possibly, with a lovely view to wake up to every morning of your stay.
Luxury is so much more than a price range, though we are quite often keen to define it in this way. Luxury is a perfect fit for your needs and desires, complete satisfaction with an experience, such as choosing luxury accommodation for your vacation in Croatia.
Our portfolio of properties for rent in Croatia
Therefore, we have decided to help our lovely customers feel true luxury while staying at one of our properties available for rent every week. By paying close attention to your wishes and needs, we guide you through the process of finding the perfect property for rent in Croatia and negotiating the terms of rent with the property owner.
It’s never too early to start thinking about your next vacation. Start today by taking a look at our portfolio of luxury properties for rent in Croatia and asking yourself this question: „Which of these is calling my name?“
The sun, the sea, beautiful weather, and Mediterranean lifestyle, combined with great properties in great locations, are the recipe for a successful business year when it comes to Croatia’s luxury real estate market. The numbers have gone up and are expected to continue growing throughout the following year.
Retrospective of the luxury real estate market in 2018
2018 has generally been kind to Croatia’s luxury real estate market since demands for this sort of property were up by 25 percent compared to 2017. At the same time, the prices of luxury real estate in Croatia rose by 10-15 percent. The average price for a villa ranges between 5000 to 6000 euros for a square meter.
Clients opting for these properties are mostly foreigners, coming primarily from Germany, Austria, the Czech Republic, Slovakia, England, and Scandinavian countries. Also, some inquiries came from Russia and China. The average age of property buyers varies between 45 and 60. Russians and Chinese want the property they buy to match the highest standards, while Europeans are more open to redecorating and reconstructing the property themselves.
Clients have their preferences regarding location, choosing mostly properties at the coastline between Primosten and Trogir (especially in Split) and around the town of Dubrovnik. Besides their beauty, these areas owe their popularity to the proximity of airports, motorways, and marinas. When it comes to the islands, the most popular ones in 2018 were Brac and Hvar.
Despite great results, the market has its issues. The most prominent ones are the somewhat closed banks towards supporting investors and the lack of offer suited for clients aiming at luxury properties.
Predictions for the luxury real estate market in 2019
Still, positive market trends are expected to continue in 2019, with expected price growth of up to 10 percent, followed by even greater demand for luxury real estate in Croatia. The start of construction of several tourist resorts with 5-star hotels is expected in 2019, along with some world-class hotel brands to the Croatian market, such as 4seasons and Marriott.
An invitation with the text “Everything Happened on the Square – Galerija Mala” in 1989 marked the beginning of a small yet important gallery in the heart of Zagreb.
At the very beginning, the gallery’s management stated that they would only present the most current production and contemporary art. Galerija Mala was one of the first private galleries in Croatia.
Located between Mala kavana and Ban cafe, Galerija Mala represents the cultural point of the northern side of the main Zagreb square. It acts as a sales gallery of works of Croatian authors and thus promotes Croatian art.
Photo credit: Galerija Mala
History of Galerija Mala
Opened just before the holidays, the gallery started working with the exhibition of Miroslav Šutej, a prominent and popular academic artist whose career was then at its peak. After the holidays, the gallery hosted presentations of the book “Zagreb before the beginning,” the Golden Bule facsimile, the new Zagreb postcards … Thanks to the attractive location, right next to Harmonica, the rich and always up-to-date program, Galerija Mala became an unavoidable place of cultural encounters. Social events are scheduled throughout the year, under the continuous and independent guidance of Mirna Hromatko Reiser.
The gallery space was formerly used by the publishing organization Mladost. For the needs of the gallery, space was rebuilt by the Architectural Design Institute of Zagreb. In just over 40 square meters, this gallery is home to many artwork and activities. For example, sales and promotion of paintings and graphics, fine plastic, art jewelry, bibliographic and art-related publications, graphic maps, and graphic sheets.
Simple and effective interior
The interior of the gallery is fascinating. The ground floor is dominated by a rock placed opposite the passage, so it’s intended to display paintings and graphics. The second rock is located opposite the entrance and decorated for shelves and showcases. It is suitable for exhibiting other works. The gallery’s central space has remained free so that visitors can see exposed works of art. Since 1989, space has kept all its essential features. It is always painted in neutral white, suitable for displaying all the artwork.
Photo credit: Galerija Mala
Gallery’s activities
Among many artists whose works were exhibited in Galerija Mala, it is hard to point up anyone in particular. Still, we will mention Nikola Reiser, Marijan Muljevic, Milan Steiner, Luj Logic, Stip Nobil, Vasko Lipovac, and Dimitar Popovic. Particularly noteworthy was the „Kravate“ exhibition, an authoring project by Andrew Seifried, also presented in Zadar and Dubrovnik.
The gallery also receives numerous inquiries from artists living and working in Europe, especially from Vienna, Ljubljana, Budapest, and Venice. One of the Gallery’s goals is to enhance and expand the cooperation with artists and raise the cultural and artistic level, not only of the Gallery but of Zagreb as one of the most interesting tourist European cities.
The Gallery can also boast of participating in numerous hotel and business interiors furnishing with artwork and graphics. Artworks can breathe a whole new life into our everyday living space and refresh it. The leadership of Galerija Mala recognized this a long time ago.
Croatian architects and the construction styles have a respectable reputation in the European circles, and masterpieces of old Croatian construction still dazzle the entire world. Starting from the 11. century Croatians were remarkable master builders and throughout history created works of art in the architectural and cultural sense.
This tradition of exquisite construction and talent continued until today when Croatia has several renowned architectural studios throughout Europe. One of those representatives is Studio Dva Arhitekta, who designed one of our portfolio gems, villa Novitas on Murter’s island.
We had the pleasure of exchanging a few words with one of the Dva Arhitekta studio founders, Mr. Zoran Zidarić.
What are the current trends in the world of the architectural design of luxury properties?
Our experience in designing a luxury vacation home is that there is no particular trend. Every house is a story for itself.
Is Croatia in trend with the newest architecture ideas?
In principle, it seems to us that Croatian architecture follows the world trends, but our office is dealing with and wants to deal with an architecture that cannot be categorized as a trend.
What is the reputation of Croatia in European Architectural Circles?
Croatian architecture and architects are certainly respectable in European circles in terms of their work and expertize.
What identity do you hold in the design of your property? Is it always determined by the location on which it is located?
Input data is always the wish of our clients and the specificity of the location, along with our architectural expression, constant research and the desire to move forward.
Tell us the story of Villa Novitas, one of your works within our portfolio.
Murter’s holiday home is located in the dense tissue of the settlement, on a narrow and long parcel. In order for the client to have the desired privacy, we have placed an extremely deep loggia on the ground floor that combines the daily contents of the kitchen, the living and dining area, and is pool oriented.
Such an open and covered area is inspired by Mediterranean city lofts.
On the other hand, the sleeping area is located in the basement, which is colder and even more protected from the view, the light is obtained over the longitudinal garden.
The client’s love for exotic plants offers inspiration to solve the contact zones with neighbors and create a private world
The elemental form affirms the environment and transforms it into the extension of the space of the house, away from the environment outside the edges of the parcel. Such an approach is also reflected in the choice of materials – floors and walls are in similar textures so that they become a whole.
Villa Novitas has a typical Dalmatian story – from one point of view it is a multi-story house made for the market and from the other, it is a pseudo-traditional luxury villa with a pool.
Is the quality of the real estate in Croatia a top priority, or needs to be accented better?
We believe that there are many people in Croatia who work hard and try to educate people about the importance of good architecture.
How would you describe Croatia to your colleagues overseas in one sentence?
Filled with possibilities, which we do not use enough 🙂
Is there a project you really want to work but has not come up yet?
Not in the sense that we can specifically say, but each challenge in the work is a further motivation.
How much has Croatia advanced in terms of architecture compared to the previous period? (over the past three years)
In terms of tourism-related architecture, we are witnessing top achievements. Unfortunately, housing developments are still not happening that much.
Have you looked inside our portfolio? What is your grade?
We are pleasantly surprised by the wide offer and quality of real estate, just continue that way!
