Employing in Croatia

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Expanding into
Croatia

Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that needs to be done and documentation required.

Sailing boats on ocean in Krk, Croatia

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Expanding to countries such as Croatia – which is characterized by a productive and competitive workforce, multi-layered employment and tax laws, a resilient infrastructure network linking to the rest of Europe, with leading sectors in agriculture, energy, tourism, manufacturing, construction, and industry – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.

Ensuring compliance without the sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.

Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of an International Professional Employer Organisation (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework.

This can be best utilised when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.

Country EOR Guide - Bradford Jacobs

Download our Guide to Croatia

Learn all about expanding into Croatia and see what we can do to make your expansion easier.

Download our Guide to Croatia

Learn all about expanding into Croatia and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs

Hiring Staff
in Croatia

Hiring Staff
in Croatia

The Main Sectors of the Croatian Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

The tourism sector in the Republic of Croatia is one of the most important branches of the economy. According to official figures, the sector employs more than 99,000 people in over 20,000 companies.

The indented Adriatic coast offers opportunities for nautical, family, elite, gastronomic and health tourism. The region’s great natural wealth and the centuries-old cultural heritage are features which the tourism industry can offer both in the Adriatic region and interior of the country.

Numerous foreign investors have recognized the competitiveness of Croatia such as Accor, Hilton, Sheraton, Regent, Kempinski, Rezidor and Falkensteiner.)

Siemens, Ericsson Nikola Tesla, Microsoft Croatia, Oracle, Atos IT Solutions and Services, Constellation Software Group (IN2) and Danieli Systec are just some of the eminent international corporations that have recognized Croatia’s human resource capacities.

Besides foreign investors, numerous internationally recognized Croatian companies have seen rapid development, such as Infobip, Infinum, Microblink, Infodom, Agrivi, Q, Span, Electrocoin, Serengeti and Sedam IT, which are regularly found on the Financial Times’ list of Europe’s fastest-growing companies and the Deloitte’s list of the 50 fastest growing technology companies in Central Europe.

The sector is expanding and employs more than 53,000 people across more than 11,000 companies.

Due to readily available water, moderate climate and fertile land, the territory of the Republic of Croatia has been recognized since ancient times as ideal for the production of food and beverages.

Agriculture in Croatia is carried out in less than 1/4 of the country’s land area, and it accounts for less than 1/10 of the country’s GDP.

Currently, most other agricultural land is privately owned, and most landholdings are very small for profitable production. Slavonia is the most fertile agricultural region in Croatia and is often referred to as the granary of Croatia. Farming in Slavonia is characterized by capital-intensive, large-scale land holdings and market-oriented production.

The manufacturing industry in Croatia has a long history that dates back to the 19th century when several industry branches were developing the country such as wood industry, food processing, shipbuilding, footwear and leather processing, and textile production among others. Presently, manufacturing in Croatia is largely based on food and beverage, which account for 24% of the total manufacturing revenue in the country.
Industrial production in Croatia has an important place in the country’s total production. The most prominent forms are manufacturing, the petrochemical industry and shipbuilding. Some companies were closed down in the process of transition, or were damaged in the war, while others only partially adapted to world production trends. This mostly applies to the textile, leather, metal, and timber industries as well as some large shipyards.

There is also significant production in the construction and energy sectors. Some industries, however, continue to achieve positive results and are active in foreign trade.

The value of the sales of industrial products in 2019 was HRK 139.5 billion (EUR 18.6 billion), of which HRK 57.7 billion was in exports (EUR 7.7 billion). According to their total revenues, the leading industrial branches are the production of food, drinks, and tobacco, and these are followed by the chemical and oil industries.

The creative and cultural industry is one of the fastest growing sectors in the European Union, and Croatia is also growing stronger in this industry. The creative industry encompasses a number of activities – music, publishing, media, design, architecture, photography, as well as the film and video game industries.

There are about 9,800 companies operating in this sector, employing some 26,000 people.

The pharmaceutical industry in the Republic of Croatia is an industry with a long tradition. The know-how and experience of the workforce promises successful future development of the industry and related sectors. In addition, the pharmaceutical industry is one of the sectors of the Croatian economy experiencing intensive investments in research and development.

Additionally, internationally known companies such as Hospira (a member of the Pfizer Group), ACG Europe (a member of the ACG Worldwide group) and Dechra Group (Genera) have recognized the efficacy and knowledge of Croatian workers.

The production of pharmaceutical preparations in Croatia continues a trend of strong growth and has a significant impact on production in the entire industry. Today’s pharmaceutical sector employs more than 5,000 people in 51 companies.

Development of the Croatian automotive industry is based on a long tradition in related sectors, such as metal processing, welding, glass and plastic production and engineering. Croatian entrepreneurs engaged in the production of automotive parts have a tradition in high-precision manufacturing with zero failure tolerance, and their main competitive advantage is their excellent product quality.

Croatia can also boast of the electric cars production, such as Nevera by Rimac Automobili, presented in June 2021. The automotive industry employs over 8,900 people in 470 companies.

The Main Sectors of the Croatian Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Scenic coast of town Hvar at sunset, Dalmatia, Croatia
The tourism sector in the Republic of Croatia is one of the most important branches of the economy. According to official figures, the sector employs more than 99,000 people in over 20,000 companies.

The indented Adriatic coast offers opportunities for nautical, family, elite, gastronomic and health tourism. The region’s great natural wealth and the centuries-old cultural heritage are features which the tourism industry can offer both in the Adriatic region and interior of the country.

Numerous foreign investors have recognized the competitiveness of Croatia such as Accor, Hilton, Sheraton, Regent, Kempinski, Rezidor and Falkensteiner.)

Siemens, Ericsson Nikola Tesla, Microsoft Croatia, Oracle, Atos IT Solutions and Services, Constellation Software Group (IN2) and Danieli Systec are just some of the eminent international corporations that have recognized Croatia’s human resource capacities.

Besides foreign investors, numerous internationally recognized Croatian companies have seen rapid development, such as Infobip, Infinum, Microblink, Infodom, Agrivi, Q, Span, Electrocoin, Serengeti and Sedam IT, which are regularly found on the Financial Times’ list of Europe’s fastest-growing companies and the Deloitte’s list of the 50 fastest growing technology companies in Central Europe.

The sector is expanding and employs more than 53,000 people across more than 11,000 companies.

Due to readily available water, moderate climate and fertile land, the territory of the Republic of Croatia has been recognized since ancient times as ideal for the production of food and beverages.

Agriculture in Croatia is carried out in less than 1/4 of the country’s land area, and it accounts for less than 1/10 of the country’s GDP.

Currently, most other agricultural land is privately owned, and most landholdings are very small for profitable production. Slavonia is the most fertile agricultural region in Croatia and is often referred to as the granary of Croatia. Farming in Slavonia is characterized by capital-intensive, large-scale land holdings and market-oriented production.

The manufacturing industry in Croatia has a long history that dates back to the 19th century when several industry branches were developing the country such as wood industry, food processing, shipbuilding, footwear and leather processing, and textile production among others. Presently, manufacturing in Croatia is largely based on food and beverage, which account for 24% of the total manufacturing revenue in the country.
Industrial production in Croatia has an important place in the country’s total production. The most prominent forms are manufacturing, the petrochemical industry and shipbuilding. Some companies were closed down in the process of transition, or were damaged in the war, while others only partially adapted to world production trends. This mostly applies to the textile, leather, metal, and timber industries as well as some large shipyards.

There is also significant production in the construction and energy sectors. Some industries, however, continue to achieve positive results and are active in foreign trade.

The value of the sales of industrial products in 2019 was HRK 139.5 billion (EUR 18.6 billion), of which HRK 57.7 billion was in exports (EUR 7.7 billion). According to their total revenues, the leading industrial branches are the production of food, drinks, and tobacco, and these are followed by the chemical and oil industries.

The creative and cultural industry is one of the fastest growing sectors in the European Union, and Croatia is also growing stronger in this industry. The creative industry encompasses a number of activities – music, publishing, media, design, architecture, photography, as well as the film and video game industries.

There are about 9,800 companies operating in this sector, employing some 26,000 people.

The pharmaceutical industry in the Republic of Croatia is an industry with a long tradition. The know-how and experience of the workforce promises successful future development of the industry and related sectors. In addition, the pharmaceutical industry is one of the sectors of the Croatian economy experiencing intensive investments in research and development.

Additionally, internationally known companies such as Hospira (a member of the Pfizer Group), ACG Europe (a member of the ACG Worldwide group) and Dechra Group (Genera) have recognized the efficacy and knowledge of Croatian workers.

The production of pharmaceutical preparations in Croatia continues a trend of strong growth and has a significant impact on production in the entire industry. Today’s pharmaceutical sector employs more than 5,000 people in 51 companies.

Development of the Croatian automotive industry is based on a long tradition in related sectors, such as metal processing, welding, glass and plastic production and engineering. Croatian entrepreneurs engaged in the production of automotive parts have a tradition in high-precision manufacturing with zero failure tolerance, and their main competitive advantage is their excellent product quality.

Croatia can also boast of the electric cars production, such as Nevera by Rimac Automobili, presented in June 2021. The automotive industry employs over 8,900 people in 470 companies.

Commercial Laws in
Croatia

  • The Tax Administration – the administrative organization within the Ministry of Finance whose basic duty is to implement tax regulations and regulations concerning the payment of obligatory contributions. The Tax Administration can perform tasks related to recording, determining, monitoring, collection and enforced collection of taxes which belong entirely to the local and regional government and other public levies stipulated by law.The main duties of the Tax Administration are:
    • Normative activities
    • Maintaining official records
    • Assessment and collection of taxes and obligatory contributions
    • Tax audit
    • Enforced collection
    • Taxpayers services
    • Misdemeanor procedure
    • Monitoring the implementation and drafting laws from the scope of games of chance and entertainment games.
  • The Ministry of Labor, Pension System, Family and Social Policy – carries out administrative and other tasks related to the: labor law, labor market, employment and active labor market policy, unemployment records and employment assistance, work retraining and employability enhancement programs.

To find out more download our Croatia Country Guide…

Employees in Croatia are  governed by the Labor Act and supplementary legislation dealing with benefits, entitlements, and compensation. The State Inspectorate is the supervisory body ensuring compliance with regulations. General requirements applying to all contracts include:

  • Written employment contracts are a mandatory requirement. Bi-lingual or multi-lingual contracts must include a Croatian version
  • An employment agreement between employer and employee is not invalidated by the absence of a written contract
  • Employers must give the employee a written confirmation of their agreement before they start work, or it will be assumed an open-ended contract applies
  • Employers risk a €13,300 (US$14,287) fine for non-compliance
  • Minimum requirements of the contract are: Full details of both parties; description of the role and start date; salary and payment schedule; working hours and breaks; notice period and termination. The contract can simply reference relevant statutes to give this information
  • The contract cannot reduce statutory rights or collective agreements and leave employees with reduced benefits and must comply with the Labor Act and the Obligations Act
  • Contracts are indefinite by default unless a fixed-term contract is justified in specific circumstances.
  • In this case successive fixed-term contracts cannot exceed three years, including the initial contract
  • A gap of up to two months between fixed-term contracts does not circumvent the three-year rule
  • Probationary periods cannot be for more than six months and can be terminated by the employer with seven days’ notice

To find out more download our Croatia Country Guide…

Income Tax: Individual resident taxpayers are liable for their worldwide profits, while those considered non-residents are taxed only on income sourced in Croatia. Tax residents are individuals who reside in Croatia for 183 days in one or two tax years, or who have real estate at their disposal for the same period, even if they do not physically live in them. Those who do not fulfil these criteria are deemed non-residents.

The tax year is the calendar year; married couples cannot submit joint returns and must file independently. Returns are submitted by the end of February following the tax year, with outstanding taxes paid within 15 days of receiving an assessment from the Tax Administration.

To find out more download our Croatia Country Guide…

Commercial Laws in
Croatia

Catholic cathedral in the center of Zagreb, Croatia
  • The Tax Administration – the administrative organization within the Ministry of Finance whose basic duty is to implement tax regulations and regulations concerning the payment of obligatory contributions. The Tax Administration can perform tasks related to recording, determining, monitoring, collection and enforced collection of taxes which belong entirely to the local and regional government and other public levies stipulated by law.The main duties of the Tax Administration are:
    • Normative activities
    • Maintaining official records
    • Assessment and collection of taxes and obligatory contributions
    • Tax audit
    • Enforced collection
    • Taxpayers services
    • Misdemeanor procedure
    • Monitoring the implementation and drafting laws from the scope of games of chance and entertainment games.
  • The Ministry of Labor, Pension System, Family and Social Policy – carries out administrative and other tasks related to the: labor law, labor market, employment and active labor market policy, unemployment records and employment assistance, work retraining and employability enhancement programs.

To find out more download our Croatia Country Guide…

Employees in Croatia are  governed by the Labor Act and supplementary legislation dealing with benefits, entitlements, and compensation. The State Inspectorate is the supervisory body ensuring compliance with regulations. General requirements applying to all contracts include:

  • Written employment contracts are a mandatory requirement. Bi-lingual or multi-lingual contracts must include a Croatian version
  • An employment agreement between employer and employee is not invalidated by the absence of a written contract
  • Employers must give the employee a written confirmation of their agreement before they start work, or it will be assumed an open-ended contract applies
  • Employers risk a €13,300 (US$14,287) fine for non-compliance
  • Minimum requirements of the contract are: Full details of both parties; description of the role and start date; salary and payment schedule; working hours and breaks; notice period and termination. The contract can simply reference relevant statutes to give this information
  • The contract cannot reduce statutory rights or collective agreements and leave employees with reduced benefits and must comply with the Labor Act and the Obligations Act
  • Contracts are indefinite by default unless a fixed-term contract is justified in specific circumstances.
  • In this case successive fixed-term contracts cannot exceed three years, including the initial contract
  • A gap of up to two months between fixed-term contracts does not circumvent the three-year rule
  • Probationary periods cannot be for more than six months and can be terminated by the employer with seven days’ notice

To find out more download our Croatia Country Guide…

Income Tax: Individual resident taxpayers are liable for their worldwide profits, while those considered non-residents are taxed only on income sourced in Croatia. Tax residents are individuals who reside in Croatia for 183 days in one or two tax years, or who have real estate at their disposal for the same period, even if they do not physically live in them. Those who do not fulfil these criteria are deemed non-residents.

The tax year is the calendar year; married couples cannot submit joint returns and must file independently. Returns are submitted by the end of February following the tax year, with outstanding taxes paid within 15 days of receiving an assessment from the Tax Administration.

To find out more download our Croatia Country Guide…

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