Croatia, known for its stunning coastline, rich history, and vibrant culture, has become an attractive destination for real estate investment. Whether you’re looking to buy a dream vacation home, invest in rental properties, or explore commercial opportunities, Croatia offers a diverse and exciting real estate market. In the next few sentences, we will explore key aspects of buying and selling real estate in Croatia, the Croatian legal framework, and essential tips for investors.
Legal Landscape of Real Estate Buying in Croatia
Understanding the legal framework is crucial when navigating the Croatian real estate market. As a foreign investor, it’s important to be aware of the regulations and requirements. Foreigners are generally allowed to buy real estate in Croatia under the principle of reciprocity. However, it’s advisable to consult legal professionals who specialize in real estate to ensure compliance with all regulations. Additionally, engaging the services of an attorney or a licensed real estate agent can help the transaction process and provide valuable insights into the local market.
Special rules are in place for the citizens of European Union member states, Republic of Iceland, Principality of Liechtenstein, Kingdom of Norway, and Swiss Confederation, for whom the rule of reciprocity is not applicable, allowing them to acquire real estate property in Croatia under the same rules as Croatian citizens.
Buying for Non-EU Citizens
Citizens of countries other than EU Member States, Republic of Iceland, Principality of Liechtenstein, Kingdom of Norway, or Swiss Confederation are required to receive consent for the acquisition of ownership rights in real estate in Croatia. A written application for consent must be submitted to the Registry and Archives Department of the Ministry of Justice and Public Affairs of Croatia if you are planning to acquire real estate in Croatia.
The following documents must be enclosed with the application:
- Legal basis of the acquisition of ownership (real estate purchase agreement, deed of gift, lifelong support contract, etc.), the original or a certified copy.
- Proof of ownership by the seller of the relevant real estate, i.e., a copy from the land register.
- Certificate of the administrative body competent for urban and physical planning, according to the location of the real estate, on the legal status of the real estate (whether it is within boundaries of the construction area envisaged by the urban development plan).
- Proof of citizenship (e.g., certified copy of passport) or proof of legal entity status (copy from the court register) if you are a foreign legal entity.
- If you are represented by an attorney-in-fact, the original power of attorney or a certified copy must be submitted.
- If you are abroad and have not designated an attorney-in-fact to represent you, you must designate an attorney-in-fact for receipt of documents with a domicile in Croatia.
Process of Buying Real Estate in Croatia
The real estate buying process begins with obtaining a unique identification number (OIB) and opening a bank account in Croatia, which is mandatory for property transactions.
The real estate purchase agreement must be concluded in a written form, signed by all parties involved, with their basic information listed in the contract, including their name, surname, address of residence, and personal identification number. Also, the contract must contain all information related to the real estate subject to the sale. The process of buying and selling real estate ends with the registration of ownership rights in the land registers. Therefore, it is extremely important that the contract contains all these elements and fulfills all the assumptions prescribed by the Law on Land Registers (Zakon o zemljišnim knjigama) for the ownership rights to be registered in the land registers. To register the right of ownership in the land register, the signatures on the real estate purchase agreement must be certified by a public notary, and a separate tabular statement allowing the registration must be included or attached to the agreement. Whether the tabular statement will be contained in the contract or will be a separate document depends mostly on the dynamics of payment of the purchase price.
The right of ownership of the real estate can be pre-registered in the land register even before the payment of the purchase price, and later justified by submitting a tabular statement.
Real Estate Purchase Tax Liability in Croatia
The purchase and sale of real estate in Croatia create a tax liability according to the Real Estate Sales Tax Act (Zakon o porezu na promet nekretnina). The tax liability amounts to 3% of the market value at the time of the liability, at the time of signing the purchase agreement. The payee in the contract of sale is the acquirer, except when there is an obligation to pay value-added tax. Given that the contract for the sale of real estate must be concluded with a notary in writing, notaries are obliged to inform the Tax Administration of the Republic of Croatia about the conclusion of the contract, which then issues a tax decision determining the liability.
Essential Tips for Real Estate Buyers in Croatia
Croatia’s real estate market has witnessed significant growth in recent years, driven by factors such as increased tourism, a stable economy, and favorable investment conditions. The coastal regions, including Dalmatia and Istria, remain particularly popular among both local and international buyers.
Before buying real estate in Croatia, it is wise to inform yourself about the situation and the way in which it is possible to buy real estate in Croatia. It is primarily important to research how the market works and what the conditions are required for a foreigner to buy real estate in Croatia. In addition to researching the conditions and the market, it is crucial that you engage professionals in the process of buying real estate so that the entire process runs as quickly and efficiently as possible. This especially applies to the quality choice of a person who will legally represent you, a lawyer, who will prepare all the necessary documents on your behalf and check everything necessary for your purchase to be successful.
