Description:

The right for foreigners to buy and own property in Croatia is based on reciprocity, in that Croatians must be allowed to own property in the country where the foreigner wishing to buy comes from (this is therefore not an issue for most European countries including the UK. The same applies for the USA).

There are two ways to purchase property in Croatia. Either foreign buyers can buy in their own name in which case they have to get permission from the Ministry of Justice to buy which can take up to a year, or, they can set up a Croatian Company to buy the property, therefore avoiding the need to apply for permission from the Ministry of Justice.  Those wishing to purchase with the aid of a mortgage would also need to set up a company (loan value up to a max of 70%).


The fact that it can take up to 12 months to get approval from the Ministry of Justice does not actually mean you can't go ahead and purchase property in the meantime as it's possible to buy property and apply afterwards. If permission is not granted then the buyer may resell or transfer ownership of their property. Permission is normally a formality as long as the reciprocity agreement exists.

In order to get around the reciprocity agreement and/or gain from advantageous tax breaks when letting or selling it is possible to set up a company to purchase a property. The cost of setting up a company is around £500 and most estate agents (for a fee) will be able to do this for you. Although using a company to purchase a property in Croatia gets around the reciprocity agreement, it does bring about certain obligations such as filing annual accounts.

Once a suitable property has been found the buyer can choose to have a survey carried out, although this is not commonly done by Croatians buyers. Once the buyer has had an offer approved by the vendor a pre-contract is signed by both parties and a deposit of between 5 and 10% of the asking price is paid by the buyer. This deposit is lost if the buyer (for any reason pulls out), it is also good practice to have a similar clause entered for the vendor which would mean the vendor paying the same amount to the buyer if they withdraw from the agreed sale.


The final contract for sale is normally available 6 weeks after the deposit is put down and is signed in front of a notary once all conditions for the sale have been satisfied including the final payment to the vendor.

When buying a property in Croatia there are certain fees to account for, these include Property purchase tax of 5% and legal fees of around 1.5% of the purchase price.

If the property is not your sole residence and you sell it within 3 years of buying it then you're liable to 35% capital gains tax, after 3 years the tax liability is reduced to 0%. Profits from renting out your property are taxed at 25%, except when rental property is owned by a company.  When buying a new build property (1998 construction onwards) VAT of 22% is levied on the property, a company can claim this VAT back whereas an individual cannot.  When purchasing through a company it is worth bearing in mind that corporate profit tax of 20% is payable on profits from asset disposals, to get around this consider selling the company with the property as a company asset, this avoids any tax liability.

A relaxation of the rules governing purchase of property in Croatia by foreigners is expected in the next couple of years once Croatia is accepted into the EU.

Costs of buying a property in Croatia.

Real Estate Transfer Tax:
Real estate transfer tax of 5% of the market value is levied on the transfer of property ownership. The transfer tax does not apply to the acquisition of new buildings being sold for the first time. Instead, the sale is subject to 22% VAT of the value of construction, i.e., the net construction value.

Legal Fee:
It is common practice to hire a lawyer to do all the necessary preparations. Lawyers typically charge around 1% to 1.5% of the purchase price (plus 22% VAT).

Real Estate Agent's Fee:
The commission for real estate agents ranges from 3% to 6% (plus 22% VAT) paid separately by the buyer and seller. Agents in Croatia are not licensed, so buyers must be careful when dealing with them and seek out reputable agents that have experience dealing with the purchase of property by foreigners.