Croatia is a beautiful country for tourism and travel and one of the safest in the world according to the US State Department – a Level One nation even for those going solo. It sits at the heart of Central and Southeast Europe with a population of around four million and its rapidly developing economy offers a substantial potential for market growth. A member of the European Union (EU) since 2013, it has benefited greatly from the free movement of persons, goods, services and capital.
EU and European Free Trade Agreement (ETFA) citizens can travel to Croatia without applying for a visa or work documentation to enter, live and work there, with just their passports for ID. There are around 95 other countries’ nationals who can also enter Croatia visa-free which gives travellers 90 days within a 180-day period, to visit friends, holiday or participate in business-related activities.
At the beginning of 2022, Croatia was not a member of the Schengen Agreement but fully expects to be by the end of the year. This is when the EU is expected to introduce ETIAS, a European Travel Information and Authorization System visa waiver which can be applied for online, for those who are ‘visa-exempt’ at the present time, to monitor visitors travelling within the Schengen area.
Croatia is careful over its borders. Not all countries’ citizens can travel ‘visa-free’ and Third Country Nationals should check what documentation is required especially if they want to work there
What Types of Work Visas and Permits for Croatia are there?
European Union (EU) and European Free Trade Agreement (EFTA) nationals have freedom of movement as Croatia has been a member of the EU since 2013 and EFTA since 2014. All they require to enter the country is a national passport with three months validity. They have the ‘right to temporary residence’ for three months, after which they must register their address with the local police and if working obtain the appropriate work documentation. They can also apply for a Residence Card
All short-stay travellers (tourists) must be registered with the police, which should be done by hotels, friends, landlords etc.
Available visas for those who need them:
Short-term (C) Visa to travel, enter for up to 90 days within a six-month period. Valid for up to five years. For instance – Tourist Visa, Business Visa, Personal Stay etc. but not for employment
Transit (A) Visa for travel through Croatia or airports
Long-stay (D) Visa. Is valid for up to six months and is applied for when the applicant has been granted a ‘Temporary Stay’ or a ‘Work Permit’ but only allows holders to stay for up to 30 days, although it can be for multi entries
Visas should be applied for before entering the country from an embassy or consulate abroad.
NOTE: Those people, for one reason or another, who wish to stay in Croatia for longer than 90 days, can request a Temporary Stay (Privremeni Boravak) as laid out in the Foreigners Act. This can be for a one- or two-year duration for a particular reason.
Bradford Jacobs ensures our clients comply with every aspect of taxation – wherever they operate. Our reputation as a front-line payroll provider is based on more than 20 years of experience. Our combination of local knowledge and global experience guarantees solutions to every problem.
This know-how is essential when foreign corporations are expanding their worldwide reach into the Republic of Croatia, a rapidly developing Balkan economy on the Mediterranean’s Adriatic coastline. Croatia, a member of the European Union, the World Trade Organisation and the Council of Europe, was expected to join the Schengen Area by the end of 2022 and was also negotiating membership in the Organisation for Economic Cooperation and Development.
Bradford Jacobs’ dedicated specialists remove the burden of worrying about complications while you focus on building your business in a new territory. From locating the brightest talent to running your payroll, our Professional Employer Organisation (PEO) and Employer of Record (EOR) specialists are with you every step of the way.
Overview of Taxes in Croatia
* Croatia is not in the Eurozone and uses the Kuna (HRK) as its currency.
Personal Income Tax (PIT): There are proportional rates of 20% up to HRK 360,000 (€47,566, US$51,368) and 30% for the excess above that.
Social Insurance Taxes: Employees contribute 20% of gross income to the Croatian Pension Insurance Institute (HZMO). Employers contribute 16.5% to the Croatian Health Insurance Fund (HZZO).
Corporate Income Tax (CIT): Companies pay the standard rate of 18% on taxable profits. A rate of 10% applies to companies with revenue in the tax year below HRK 7.5 million (€990,962, US$1,070,176).
Value Added Tax (VAT): The headline rate on goods and services is 25%, with 13% applied to such accommodation services, some newspapers and periodicals, goods for children and childcare, some leisure activities, and various foodstuffs. Exempt categories include financial services and rental fees.
Croatia Individual Tax – Single, Married
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. 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.
* Croatia is not in the Eurozone and uses the Kuna (HRK) as its currency.
Figures in HRK, euros and US dollars
Personal Income Tax (PIT): There is a monthly tax-free allowance of HRK 4,000 (€528, US$570).
20%: 0 – HRK 360,000 (€47,566, US$51,368)
30%: Excess above HRK 360,000
Social Insurance Taxes: Employees contribute to the Croatian Pension Insurance Institute (HZMO)
Companies committed to building their global profile have the opportunity of setting up a subsidiary overseas. Establishing a company in a foreign country can be costly, both in time and money, and there is no guarantee that the effort and financial outlay will bring any success.
Foreign companies have the option of opening a legal entity in Croatia in order to run payroll for their staff, with the most popular choice being a private limited liability company. In Croatia this is known as a Drustvo s Ogranicenom Odgovornoscu, or DOO. The subsidiary, like any local Croatian company, is regulated by the Companies Act and must register according to the entry procedures laid down by the Court Registry Act.
However, expanding overseas is a major step, especially for companies opening a legal entity in a new territory thousands of miles from their home base. If the move fails, companies face the extra expenditure and stress of closing the business, selling property and paying off employees. It is easy to stumble while chasing two objectives – advancing your company at home while crossing the world into new territory.
How to set up a Croatian Subsidiary
Are you planning to establish your business in Croatia? International companies making the move of opening a legal entity to hire staff and run payroll typically choose a private limited liability company. In Croatia, these are known as a Drustvo s Ogranicenom Odgovornoscu, or DOO. Like local companies, they operate under the Companies Act and follow registration procedures according to the Court Registry Act. These include:
Initially, the parent company must verify that the name chosen for the subsidiary is unique in Croatia. This is done through the Court Registry’s registrar site
The parent company submits to the Registry its Articles of Association and declaration from its board of intention to open a subsidiary
There can be a minimum of one founder, an entity or individual
Application to the Registry is made on form Po. All IDs of founders must be notarized; non-Croatians must have their passport details verified
Forms are electronically forwarded by the notary to the HITRO.HR office, a government service that enables the communication between individuals and commercial entities with the state administration and various authorities
All documents are sealed by the notary and forwarded to the HITRO.HR office and the National Bureau of Statistics
The completed Form RPS is required to obtain registration for the relevant sector with the statistics bureau
Once logged with the Court Register and the National Bureau of Statistics, the subsidiary must register with the relevant Ministry of Finance Tax Administration office
After registration is completed, open a business bank account for depositing initial share capital, the minimum required for a DOO being HRK 20,000 (€2,640, US$2,850)
Obtain Value Added Tax ID and pin number (PIB) from the Tax Administration by supplying incorporation documents and OIB (Personal Identification Number), which applies to individuals and companies. Non-European Union members must have a fiscal representative to handle their VAT affairs
Once registered, the Company Seal is issued after providing the Certificate of Incorporation
Benefits of setting up a Subsidiary in Croatia
Foreign companies opening a private limited liability subsidiary in Croatia can enjoy a series of benefits from its operation under the Companies Act and Income Tax Act. The subsidiary has a separate legal identity from the parent company and is treated the same as a local company. In general, the parent company’s liability is restricted to the share capital invested in the subsidiary; neither is it responsible for any debts of the subsidiary.
The subsidiary provides the parent company with the potential for further expansion throughout the ‘free market’ European Union and into other central and eastern European nations. Additionally, the subsidiary can ‘test the market’ by following its own business ideas and entering different areas of operation with the parent company. The subsidiary is also free to draw up its own contracts and agreements with clients.
Other benefits for a subsidiary:
Easier to obtain potential benefits and incentives and enter contracts with other Croatian or EU companies
More impact with clients and suppliers, as subsidiaries imply more permanency than branches
Employees feel there is more stability and job security than from being with a branch
In the wider commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case, the opportunities offered by European economies.
The Republic of Croatia ticks many boxes for international companies planning to enter the economy, either with investment or by establishing their own legal entities in the country.
Membership of the European Union (EU), since 2013, the World Trade Organization and United Nations have boosted its international footprint. By the end of 2022, Croatia was expected to be part of the Schengen Agreement and was hopeful of membership in the Organisation for Economic Cooperation and Development.
Croatia is rated as a high-income, developing service-based economy with a literate, well-educated and skilled workforce, although the employment market faces challenges and skills shortages due to a talent exodus to other EU nations.
However, Croatia has an impressive range of export activities – trading mainly with the EU – focusing on transport equipment, machinery, textiles, chemicals, food products and refined fuels. Plus, of course, Croatia is one of Europe’s leading tourist locations, with a spectacular and rugged coastline on the Adriatic opposite Italy, featuring around 1,200 islands and islets, plus mountains, forests, sprawling plains and lakes.
There are speedier alternatives to launching a subsidiary, however, with Bradford Jacobs opening the door to a hassle-free route into Croatia.
Expanding into Croatia
Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and residence permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance? Drawing up an expansion blueprint is not enough. Your business plan will have to answer all these questions.
Croatia has a welcoming business attitude towards foreign investment. But there are always issues surrounding compliance with the relevant legislation. In Croatia, this revolves around the Companies Act, the Labor Act, and other laws – plus European Union Directives.
There are other issues, too. Where will you find manufacturers, offices, and distributors?
There is a simple and effective alternative – partnering with a Professional Employer Organization (PEO) and Employer of Record (EOR) such as Bradford Jacobs. This way companies can plot a time-efficient and cost-effective path to locating and employing staff in Croatia. Here we set out some of the necessary steps.
Croatian Business Facts
Capital – Zagreb
Population – April 2022, 4.06 million
Regions – Four cultural regions: Croatia Proper, Dalmatia, Istria and Slavonia with 20 administrative counties, plus the city of Zagreb
Official Languages – Croatian
Economy and world ranking – US$67.6 billion by end of 2021. Ranked No.78 out of 196 countries with a GDP per capita of US$16,760
Leading sectors – Service: 59.35% including tourism. Industry: 21.6% including shipbuilding, construction, petrochemicals, and food processing. Agriculture: 3.22% including wine, olive oils
Main exports – Transport equipment; machinery; textiles; chemicals; fuels; foodstuffs
Main imports – Machinery; transport and electrical equipment; fuels and lubricants; foodstuffs
Main trading partners – Italy; Bosnia and Herzegovina; Germany; Slovenia; Austria and Serbia
Government – Parliamentary system; parliamentary republic
Currency – Kuna
Advantages and Challenges of the Croatian Market
Advantages of expanding into the Croatian market include:
Location: Croatia is strategically placed for investors who want to expand into central, eastern and southeastern Europe through its road, rail, air and sea routes and river ports
Competitive: Offers lower investment and labour costs than the European Union (EU) average
Workforce: Highly literate well-educated, with over 90% fluent in at least one foreign language
Trade: Benefits from membership of the European Union’s ‘open market’ among its 27 member nations, with nearly 50 beneficial trade agreements.
Funding: In the process of receiving 22 billion euros (US$23.1 billion) in the period from 2021 to 2027 from the EU and other financial sources
Adaptability: Croatia’s workforce has proved excellent at absorbing new technologies, particularly in the field of Information Communications Technology
Business support: Tax incentives and aid for R&D and labour-intensive investment projects
Challenges to expanding into the Croatian market include:
Vulnerability: The economy is heavily dependent on tourism, which accounts for around 20% of Gross Domestic Product
Exports: Largely dependent on EU nations
Labour: Skills shortages in some sectors due to emigration to other EU nations; high youth unemployment of 20% in 2021 and a declining, ageing population
Legal: Lengthy court procedures for enforcing contracts
Limited Company / Subsidiary or Branch in Croatia?
Foreign companies establishing a legal entity in Croatia generally select a private limited liability company, known as a Drustvo s Ogranicenom Odgovornoscu, or DOO, which is regulated by the Companies Act and must register according to the procedures laid down by the Court Registry Act. This is the ideal format for Small and Medium Enterprises (SMEs) and start-ups to establish a foothold in the economy.
The private limited company has a minimum share capital of HRK 20,000 (€2,640, US$2,850), at least one founder and a management board running daily operations. A supervisory board is required if there are more than 200 employees in any year or if the share capital exceeds HRK 600,000 (€79,312, US$83,640).
Another option is for foreign companies to establish a presence in Croatia by opening a branch, but this is not a legal entity in the country and all its liabilities are the responsibility of the parent company.
Foreign companies planning a move into the Croatian economy by hiring employees and operating their payroll have the option of opening a legal entity subsidiary. The typical choice is to set up a subsidiary as a private limited company, in Croatian a Drustvo s Ogranicenom Odgovornoscu or DOO. The subsidiary, like any local Croatian company, is regulated by the Companies Act and must register according to the entry procedures laid down by the Court Registry Act.
Their employees will be governed by the Labor Act and supplementary legislation dealing with benefits, entitlements, and compensation.
These issues are a major consideration during the process of hiring, onboarding, and drawing up contracts with your new staff.
Employment Contracts in Croatia
The Labor Act stipulates that employment contracts must be in writing, and if they are in a language other than Croatian the agreement must have a Croatian translation. Employers must provide a written contract, indefinite, or fixed term before the employee begins work. Failure to do so means the agreement becomes permanent and open-ended by default. The State Inspectorate is the supervisory body ensuring compliance with regulations. The main types of employment contracts are:
Open-ended Employment Contracts: Unless otherwise specified, an employment contract is considered open-ended, permanent, and indefinite. Employment continues until terminated mutually or by complying with relevant procedures.
Fixed-term Employment Contracts: These ‘temporary’ contracts apply where there is a defined duration for the contract, or it relates to a specific project or to temporarily replace a permanent member of staff. Under the Labor Act fixed-term contracts, either singly or consecutively, cannot exceed three years. A gap of up to two months between contracts does not break the three-year rule.
Probationary Periods: The contract cannot stipulate a probationary period exceeding six months. The employer must give at least seven days’ notice to terminate the trial period.
Collective Bargaining Agreements: These operate at industry and company level in conjunction with tripartite agreements between government, trade unions and employers. The Labor Act rules that where different agreements refer to the same workers or sectors, the most beneficial agreement for employees always applies.
In Croatia employee benefits, entitlement and compensation are described in the Labour Act, supplemented by legislation such as the Obligations Act, the Labour Protection Act, the Anti-Discrimination Act, the Minimum Wage Act and Foreign Persons Act.
Foreign companies hiring employees in Croatia must operate within this framework of legislation, which provides safeguards and guarantees for the workforce.
The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations – although this is a demanding scenario. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.
What Compensation Laws exist in Croatia?
Employment legislation in Croatia is dealt with in the Labor Act (1995), covering employment contracts, working hours and breaks, termination, discrimination, equal treatment, collective agreements, and other areas. Minimum levels of pay and other employment aspects come under supplementary statutes or collective agreements, with European Union Directives also playing a role.
Croatia is not part of the Eurozone and uses the Kuna (HRK) as its currency.
Maternity Leave: Pregnant employees are entitled to 98 days of leave, which can begin 28 days before the due date or up to 45 days where there are complications. Full entitlement depends on having made the required contributions to the Croatian Health Insurance Fund (HZZO)
Sick Leave: Employees unable to work through ill health receive the first 42 days of benefit paid by their employer at a statutory minimum of 70% of salary, although most employers pay the full amount. After 42 days employers are compensated through the HZZO
Minimum Wages: The minimum wage for 2022 was set by the Government at HRK 4,866 (€623.70, US$694) equating to HRK 56,640 (€7,484, US$8,082) based on 12 payments annually. Some foreign employers must earn more than the minimum by up to twice the national average
Probation Periods: Employers must give seven days’ notice to persons on a trial period, which cannot exceed six months
Working Hours: A regular working week is 40 hours over five eight-hour days as set by the Labor Act. Hours can be redistributed to more or less than eight per day up to 48 a week – or 56 in exceptional circumstances – but must average 40 a week over 12 months
Overtime: Extra hours cannot exceed 10 a week or 180 annually unless collective agreements allow up to an annual maximum of 250. Overtime rates depend on contracts or agreements as the Labor Act makes no statutory provisions. Employers must request overtime in writing
Notice Periods: Statutory notice periods depend on the length of service. Two weeks for one year’s continuous service; six weeks for two years’ service; two months for five years’ service; 10 weeks for 10 years of service; three months for more than 20 years’ service
Termination, Severance, Redundancies: Under the Labor Act, justifiable termination includes such economic reasons; breach of contract; incapacity to fulfil work duties. Statutory Severance pay is one-third of the average salary over the previous three months multiplied by years of continuous service with the same employer, capped at six times the average monthly salary. Dismissing at least 20 staff over 90 days involves collective dismissal or redundancy regulations. The Croatian Employment Service has the power to suspend the dismissals for up to 30 days.
Paid Vacations: The statutory minimum is 20 days of paid leave per calendar year, after six months of continuous employment, and excludes public holidays or statutory non-working days. Leave must include one period of two weeks and unused allowance must be taken by June 30 of the following year
Social Security in Croatia
The social security program in Croatia covers health insurance and pensions. The Ministry of Health is responsible for administering the health system and the functions of the Health Insurance Fund (HZZO).
Healthcare contributions are mandatory for employers on behalf of their employees. All residents must have health insurance, while European Union and European Economic Area citizens can be covered by insurance from their home country’s social security organizations. Employers contribute 16.5% of gross salaries to health insurance.
The state pension system has two mandatory tiers, Pillars 1 and 2, while Pillar 3 is based on voluntary contributions. The Croatian Pension Insurance Institute (HZMO) administers pillar 1 with benefits governed according to the Pension Insurance Act. Pillar two is based on private sector funds under the supervision of the Financial Services Supervisory Agency.
Employees contribute 20% of gross income to the pension fund, split 15% to pillar 1 and 5% to pillar 2.
Locating and then recruiting top talent in an overseas territory is a major commitment for companies who have set their sights on Global Expansion – and one that encounters many obstacles.
The Republic of Croatia’s developing economy is proving an increasingly attractive option – and a tempting location for attracting top talent migrating from other countries, with its Adriatic coastline, mountains, lakes, forests, castles and rolling plains.
The Labor Ministry announced plans in April 2022 to attract recruits into the skills shortage sectors, such as Information Communications Technology, construction, health care, social welfare and highly-skilled professions such as medical practitioners, pharmacists and nurses.
So those foreign companies planning to find the right talent when they move into Croatia face concerns.
Where to begin? This is where Bradford Jacobs’ global experience is vital for taking the smartest recruitment route into Croatia.
The Recruitment Process in Croatia
Croatia’s population of just over four million has declined over the past 20 years and includes a workforce that is also expected to drop in numbers due to an ageing workforce. However, it is a highly literate population with a skilled workforce. The recruitment drive will be focusing on boosting business services, distribution and transport, manufacturing, and utilities.
There are also gaps to be filled in computer programming, information technology, architecture and construction, and legal and accounting services.
Recruitment is the first stage of making your company operational and competitive in Croatia. There are many complications in moving staff into the country – in addition to the complexities of obtaining work visas and permits. To avoid these issues, it is vital to know where to locate the finest candidates for your company’s expansion plans.
Once recruited, companies must then consider the implications of handling payroll for their staff and dealing with the revenue and social insurance authorities. Foreign companies generally establish a limited liability subsidiary to undertake these tasks and must follow strict registration procedures. Requirements include:
Checking with the Court Registry to choose a unique company name, which cannot include the word ‘Croatia’ or its derivatives without permission from the State authorities
The parent company submits to the Registry its Articles of Association and declaration from its board of intention to open a subsidiary
Applying to the Court Registry on Form Po. All IDs (in the case of foreigners, their passports) must be notarized, with all founders and signatories attending the notary in person
The notary submits sealed documents to HITRO.HR and the National Bureau of Statistics with all necessary fees
Completing the RPS Form to obtain registration for the relevant sector from the Bureau of Statistics
Once registration is approved, HITRO.HR makes the incorporation documents available
Opening a business bank account to deposit minimum initial share capital for a DOO of HRK 20,000 (€2,640, US$2,850)
Registering with the relevant Ministry of Finance Tax Administration office, once the company is entered in the Court Register and with the National Bureau of Statistics
Obtaining Value Added Tax ID and pin number from the Tax Administration by supplying incorporation documents and Form OIB (Personal Identification Number). Non-European Union members must have a fiscal representative to handle their VAT affairs
Once registered, the Company Seal is issued on production of the Certificate of Incorporation
Legal Checks on Employees in Croatia
Scope: Employers cannot ask questions during the application and interview process that contravene the candidate’s rights under the Anti-Discrimination Act. This also applies to agencies carrying out checks on behalf of the employer. The applicant must advise the employer of any health condition that would compromise their ability to do the job or endanger the well-being of others.
Medical history: Employers can require applicants to undergo a medical examination at the employer’s cost, to check their health status.
References: Candidates are expected to provide verbal or written confirmation of references, previous employment, and educational qualifications.
Criminal records: Candidates cannot be asked to provide evidence of previous or pending criminal procedures unless required by specific laws attaining to certain occupations.
Required: Checks that the potential employee satisfies work permit, residency, and visa requirements
Basic Facts on Hiring in Croatia
Employment legislation in Croatia is generally covered by the Labor Act, which includes various requirements regarding hiring employees. These include:
Employment contracts are in writing. Bi-lingual or multi-lingual contracts are allowed but must include a Croatian version
The absence of a written contract does not invalidate the employment agreement
Employers must provide written confirmation of the agreement before the employee starts work, or it will be assumed an indefinite contract is in place
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; working hours and breaks; salary and payment schedule; notice period and termination. The contract can simply reference relevant statutes to give this information
The contract cannot diminish statutory rights or collective agreements to the detriment of the employee and must comply with the Labour Act and the Obligations Act
Contracts are deemed to be indefinite unless a fixed-term contract is justified in specific circumstances, in which case successive fixed-term contracts cannot exceed three years, including the initial contract
Probationary periods cannot exceed six months and can be terminated by the employer with seven days’ notice
Employers must register employees with the Ministry of Finance’s Tax Administration to obtain their Personal Identification Number (OIB)
Employees must also be registered with the Croatian Health Insurance Fund (HZZO) and the Croatian Pension Insurance Institute (HZMO)
After hiring and onboarding, employers must be aware of other considerations. Minimum standards apply to such as sick leave, working hours, maternity allowances, paid vacations, termination, severance, notice periods and social insurance payments. Other rules regulate workplace discrimination. Examples include:
Working hours set by the Labor Act are generally 40 hours per week but can be adjusted if they average 40 hours over 12 months
The Government-set minimum wage in 2022 was HRK 4,866 (€623.70, US$694) or HRK 56,640 (€7,484, US$8,082) based on 12 payments annually
Employers withhold employee’s income tax and social insurance contributions and remit them to the authorities
Maternity leave totals 98 days for women covered by the Croatian Health Insurance Fund (HZZO)
To succeed in business in Croatia, it is vital for both employers and employees to have a strong understanding of the business culture.
As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Croatian work culture, we want to support your Global Expansion plans. Therefore, we will address all the aspects of the work culture in Croatia to start your expansion well-informed.
The Republic of Croatia’s developing economy and increasing interaction with European neighbours have obvious attractions for foreign investors – just as its spectacular Adriatic coastline, castles, forests, mountains, and lakes are a major temptation for foreign workers.
Croatia is at the crossroads of eastern and central Europe, a Balkan nation with land borders joining Slovenia and Hungary to the north, Bosnia-Herzegovina and Serbia in the east, a short border with Montenegro in the south and maritime borders on the Adriatic with Italy.
The nation’s European footprint is growing. Croatia became a member of the European Union in 2013, is expected to join the Schengen area by the end of 2022 and is on the list of potential members of the Organization for Economic Cooperation and Development. The United Nations, Council of Europe, NATO, and the World Trade Organization already count Croatia among their ranks.
Croatia is a mix of ethnic groups – close to 20 – but 90% of the population are Croats, with Serbs comprising the largest other nationality at over 4%. The other groups each account for less than one per cent of the population. Despite the Croat majority, it makes sense to be aware of other cultural groups as attitudes and outlooks may vary.
These are among the considerations for employees moving into the country – maybe as part of the Government’s drive to attract foreign workers to compensate for those skilled and highly-educated Croatians who migrate to other European Union countries.
As a result, it is best to expect a variety of nationalities among new colleagues … so there will be a lot to get used to. Ready for the challenge? Now is the time to get down to business. So here are a few tips on taking the best steps and clearing those cultural barriers.
Language: A highly literate nation and at the managerial and business level many Croatians are multi-lingual with English, German and Italian (especially in the Adriatic regions) commonly used. But it is always best to check whether an interpreter is advisable
Punctuality: This is important as it shows respect, and that the relationship is taken seriously
Getting Started: Initial meetings are often a getting-to-know-you session – don’t assume too much hard business will be discussed. The first agenda may serve as guidelines as to how subsequent meetings will be focused
Negotiations: Although Croatians tend to think before they speak – taking time to formulate their questions and responses – they can be animated and quite loud. Don’t be cowered into a flustered reply as it can be seen as a sign of weakness. However, avoid pointing a finger to emphasize an opinion – rude!
Greetings: A firm, brief handshake backed by friendly eye contact. Titles and surnames to begin with, until the hosts suggest moving to first names. Wait to be shown where to sit at the table as a place is likely reserved for you
Business Cards: Exchanged normally without any ritual
Dress Codes: Smart, neat, and tidy
Gift Giving: Not expected, but if given make it something small and thoughtful from the home country. Extravagance could be misinterpreted … bribery alert!
Out of Hours: Lunches and dinners are an opportunity to learn more about each other. Croatians always value personal contact above written communication
Avoid: Comments about the former Yugoslavia – the Balkan conflicts of the 90s are not a subject for conversation
Croatia’s Minimum Wage
The Government set the monthly minimum wage in 2022 at HRK 4,866 (€623.70, US$694) equating to HRK 56,640 (€7,484, US$8,082) based on 12 payments annually. The minimum applies to all Croatian workers, although some foreign employees must be paid above the minimum.
Probation Periods in Croatia
Trial periods are included in the employment contract and cannot exceed six months. Employers must give seven days notice of termination.
Working Hours in Croatia
The Labor Act sets 40 hours a week in eight-hour days as the norm. Flexible or redistributed working hours can be up to 48 in a single week – or in exceptional circumstances 56 – but should not average more than 40 over 12 months.
Overtime in Croatia
Employers’ requests for overtime work must be in writing. Extra hours cannot exceed 10 a week or 180 annually unless collective agreements allow up to an annual maximum of 250. The Labor Act does not set overtime pay rates, which are agreed upon contractually or collectively.
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