Buying property in Croatia as a foreign national or legal entity

The first step is to determine the legal status of the buyer. Citizenship is relevant for a natural person. If the buyer has multiple nationalities, each of them can affect the acquisition regime. A person with Croatian citizenship acquires real estate as a Croatian citizen.

In the case of a legal entity, the starting point is the country of its registered seat. It is also necessary to check the legal form, powers of representation, ownership structure and the persons who ultimately own or control the company.

Four basic groups of buyers

Once the buyer's status is established, the property's legal status must be reviewed. The land-register description, cadastral use, spatial plan and physical condition address different legal issues, so all relevant records and documents should be examined together.

1. Croatian citizens and legal entities based in Croatia
2. citizens and legal entities from the European Union and other EEA countries
3. Swiss citizens and legal entities based in Switzerland
4. citizens and legal entities from other countries

European Union and EEA

As a rule, citizens and legal entities from the member states of the European Union and Iceland, Liechtenstein and Norway acquire real estate under the conditions that apply to Croatian citizens and domestic legal entities. As a rule, the consent of the minister responsible for judicial affairs is not required for such an acquisition.

The equal acquisition regime covers apartments, houses, commercial premises and building land. Special rules concerning the property's status apply to all buyers, including for cultural assets, protected nature, maritime domain (pomorsko dobro) and other special regimes.

The transitional restriction for the acquisition of private agricultural land for buyers from the EU and the EEA expired on June 30, 2023. From July 1, 2023, the principle of equal treatment applies to them, along with general rules on the protection, use and disposal of agricultural land.

Swiss citizens

Swiss citizens can acquire real estate under conditions that, as a rule, correspond to the conditions for Croatian citizens. When submitting a proposal for registration of title, they attach a certificate of registration of temporary residence in Croatia.

A separate check is carried out for agricultural land and other properties under a special regime.

Swiss legal entities

For legal entities based in Switzerland, the regime depends on the purpose of the purchase and the overall circumstances of the transaction. The acquisition of real estate that serves as a permanent business unit can be carried out without consent in cases provided for by bilateral rules.

Consent may be required for the acquisition of residential real estate, certain indirect acquisitions, and investments through companies that serve to hold real estate. For this reason, every purchase from a Swiss legal entity should be analysed before entering into a contract.

For citizens and legal entities from countries outside the EU, the EEA and Switzerland, the acquisition of ownership generally requires the existence of reciprocity, the consent of the minister responsible for judicial affairs, a legally valid basis of acquisition and real estate that a foreign buyer is allowed to acquire under Croatian law.

Reciprocity means that Croatian citizens in the buyer's country can acquire suitable real estate under comparable conditions. The content of reciprocity varies between states and sometimes between their federal units.

The current official information of the Ministry is authoritative. Citizenship, residence, type of real estate, its purpose and method of acquisition can affect the result of the verification.

Consent procedure

The procedure is conducted as an administrative procedure. The request can be submitted by the buyer or the seller, and the contract, proof of the seller's ownership, real estate data, proof of the buyer's status and other prescribed documentation must be attached.

Consent relates to a specific acquirer, property and legal transaction. Changing the buyer, the property or an essential term of the agreement may require a new procedure.

A contract concluded without the necessary consent does not have the intended ownership effect, and the law provides for nullity for acquisition contrary to the prescribed assumptions. That is why the contractual structure and deadlines should be adapted to the duration of the administrative procedure.

A third-country buyer needs a legal basis for the acquisition, usually a sale and purchase agreement, before applying for consent. Completion of the acquisition depends on that consent, so the agreement should regulate this condition and its consequences.

• the obligation to pay the full price is due after consent
• part of the price has the function of earnest money or advance payment
• the remaining price remains on a separate account until the conditions are met
• the seller issues a registration consent (tabularna izjava) after receiving the price and approval
• the parties have the right to terminate the contract if consent is refused
• the seller returns the amount received within the agreed period
• the seller maintains the property and refrains from new dispositions during the procedure
• the buyer takes possession after fulfilling clearly defined conditions

Earnest money, an advance payment and a reservation fee have different legal effects. The agreement should identify the nature of each payment and the consequences of withdrawal, refusal of consent or breach.

Deadlines should be realistic. The duration of the procedure depends on the completeness of the application, any request for supplementary documents, verification of reciprocity and other circumstances.

The buyer's land-register position should be protected according to the structure of the transaction. Depending on the agreement and available documents, pre-registration, a notation or another appropriate form of security may be considered.

Agricultural land

In the case of agricultural land, ownership, location inside or outside the construction area, cadastral and land register records, spatial planning purpose, existing leases and special conditions for the buyer should be determined.

Since 1 July 2023, buyers from the EU and EEA may acquire privately owned agricultural land under equal-treatment rules. For Swiss buyers and buyers from third countries, the special legislation and international regime applicable to the particular buyer must be examined.

Agricultural land owned by the state is subject to a special system of disposal and is usually used through lease and other models provided for by law.

Maritime domain (pomorsko dobro)

Maritime domain (pomorsko dobro) is a public good of interest to the Republic of Croatia and cannot be privately owned.

For coastal property, the established or proposed maritime-domain boundary, any pending official procedure and the position of buildings, access and adjoining land should be reviewed. Economic use of maritime domain requires a concession, permit or another title prescribed by law.

Forests and forest land

Forests and forest land have a special regime of protection and management. Ownership, purpose, coverage of the forest management area and restrictions on use should be established before purchase.

State forests are subject to a separate regime. In the case of private forests, ownership is accompanied by obligations of management, protection and permitted use.

Cultural assets, protected nature and other restrictions

The property may itself be a protected cultural asset or form part of a protected historic ensemble. That status may entail a statutory right of first refusal, special maintenance requirements and prior approval for works.

The location in a national park, nature park, ecological network or other protected area can limit the construction, use and execution of interventions.

Additional restrictions may arise from the status of public water assets, public roads, infrastructure corridors, concessions, expropriations and special rules for individual island or border areas.

A foreign investor can establish or use a company based in Croatia, which then buys real estate. According to the general ownership legal regime, such a company is a domestic legal entity, regardless of the citizenship of its members.

The company becomes the owner of the property. The investor exercises rights indirectly through membership and governance of the company.

When this model may be appropriate

In the case of real estate intended mainly for private residence, direct ownership is often a simpler solution. The company incurs establishment, accounting, reporting, management and termination costs, even when it generates little revenue.

• investment and construction projects
• tourism or other economic activity
• management of a large number of properties
• joint ventures
• business financing
• later transfer of the project through the sale of business shares

Risks and special checks

Special regimes follow the real estate even when the buyer is a Croatian company. maritime domain (pomorsko dobro), cultural assets, forests, spatial planning restrictions and other rules retain the same status.

If an investor buys business shares in a company that already owns real estate, the object of the transaction becomes the entire company. The review then covers its contracts, liabilities, taxes, disputes, employees, financing and possible off-balance sheet risks.

In the case of Swiss control of a Croatian company and certain real estate companies, special bilateral provisions may require additional analysis. Investments from third countries in strategic activities may also be subject to foreign investment checks.

Individual

Marital or civil-partnership status and the intended ownership shares should be clarified before the agreement identifies the buyer or buyers, particularly where the purchase is financed with joint funds.

• valid passport or other identification document
• proof of citizenship, when required
• Croatian personal identification number — OIB
• residence-status information, where relevant
• power of attorney, if the buyer is represented by another person
• proof of registration of temporary residence when required by a special regime
• documentation on the source of funds and financing of the purchase

Legal entity

With complex ownership structures, documentation is collected for each relevant level of the ownership chain.

• current extract from the appropriate register
• articles of incorporation or articles of association when required to verify authority
• data on persons authorised for representation
• the decision of the competent authority on the purchase, when necessary
• Croatian OIB
• documentation of the ownership structure through to the beneficial owners
• identification data of representatives and beneficial owners
• documentation on the source of funds and financing
• appropriate power of attorney

Translation, authentication and power of attorney

As a rule, foreign documents used before Croatian authorities are translated into Croatian by an authorised court interpreter.

Depending on the issuing country, type of document and international rules, an apostille, full legalization or other form of authentication may be required. The regime should be checked before issuing the document.

The power of attorney should be tailored to the acts the representative must perform. It may cover negotiations, execution of agreements, submission of consent applications, payment, handover and land-register proceedings.

Real estate documentation

The documents should be cross-checked and compared with the property's physical condition.

• current land register extract and cadastral data
• the document on the basis of which the seller acquired the real estate
• building and use permits or other evidence of lawful status
• floor plan, in the case of a separately owned unit
• energy certificate when prescribed
• information on tenancies, commercial leases, encumbrances, disputes and administrative proceedings
• documentation for the cancellation of a mortgage or other encumbrance
• documents related to the right of first refusal or a special regime

Real estate transfer tax

When VAT is not calculated on the transaction, the buyer generally pays real estate transaction tax at a rate of 3% of the real estate's market value.

The notary public submits the contract to the Tax Administration. In other cases, the taxpayer reports the transaction within the prescribed period. The tax administration can determine a market value different from the price specified in the contract.

VAT

VAT can be applied, among other things, to the delivery of construction land and new buildings and buildings where no more than two years have passed since the first occupancy or use, when the seller acts as a taxpayer.

When VAT is calculated on the transaction, as a rule, real estate transaction tax is not paid on the same transaction. The possibility of deducting input tax when buying through a company depends on the business purpose of the real estate and the tax status of the buyer.

Other costs

The buyer pays an estate agency fee where it has engaged the agent under an appropriate agreement.

Annual property tax, utility fee, common reserve and other local or regular charges may apply after purchase. Their amount depends on the property, the way of use and the decision of the competent local self-government unit.

• legal services and legal verification
• notary expenses and court fees
• certified translations and authentication of documents
• geodetic, architectural and technical checks
• valuation, bank charges and financing charges
• brokerage fee, insurance and handover costs

The purchase price is usually agreed and paid in euros. The contract should determine the total price, the amounts and terms of individual payments, the recipient's account, the conditions for the release of funds, the consequences of delay and the relationship of payment to the handover of possession and the issuance of a registration consent (tabularna izjava).

When paying in multiple stages, each payment should be linked to a clear event, for example, the issuance of a consent, cancellation of a mortgage, delivery of a registration consent (tabularna izjava) or handover.

Mortgage, source of funds and credit

If there is a mortgage on the property, a part of the price can be paid directly to the creditor in order to close the debt and issue a cancellation declaration. The order of payment, cancellation of the mortgage and registration of the buyer must be precisely coordinated.

Banks and other obliged entities verify the customer, beneficial owner and source of funds. The buyer should prepare bank statements, loan agreements and documents evidencing a sale of other property, inheritance, profit distribution or another source of funds in good time.

When a loan is used, the bank's conditions, property valuation, mortgage registration, payment of the price and transfer of title must be coordinated. The agreement should also address the consequences if financing is refused.

Preliminary agreement and sale and purchase agreement

A preliminary agreement is used where the parties undertake to enter into the principal agreement after specified conditions have been met. It should regulate the essential terms of the future agreement, deadlines, earnest money, required documents and the consequences of breach.

The sale and purchase agreement should precisely define the parties, the property and its appurtenances, the price, payment method, status of encumbrances, seller's warranties, handover, allocation of costs, registration consent (tabularna izjava) and the consequences of breach and termination.

In the case of a bilingual contract, the authoritative language version should be determined and the terminological consistency of both texts should be ensured.

Registration consent (tabularna izjava) and land register entry

The registration consent (tabularna izjava) contains the express permission of the seller for the buyer to be registered as the owner. It can be an integral part of the contract or a separate document issued after payment of the price and performance of other conditions.

The buyer acquires ownership by registration in the land register. Signing the contract, paying the price and taking possession are separate stages of the transaction.

The land-register application is submitted electronically through an attorney-at-law or notary public. Priority is determined by the time the application is received, so it should be filed as soon as the conditions are met.

Before payment and submission of the proposal, a fresh extract from the land register is checked. If the document does not yet meet all the requirements for registration, pre-registration can temporarily protect the priority order with a later justification.

Handover

It is desirable to attach photos and a list of movables that remain in the property to the handover report.

• date of delivery and condition of the property
• list of keys, devices and equipment
• meter readings
• known damages or defects
• submitted documentation
• status of utilities and other charges
• agreement on the transfer of contracts with suppliers

The new owner of a separately owned unit must inform the co-owners' representative of the change of ownership within the statutory period.

Ownership of real estate in itself does not give a foreign citizen the right to reside or work in Croatia. Residence status is regulated according to regulations on foreigners, depending on citizenship and purpose of stay.

A long-term lease requires an appropriate agreement, tax treatment and income reporting. Short-term tourist accommodation must comply with hospitality, building-management, categorisation and local rules.

Adaptation, reconstruction, extension and change of use may require a project, the consent of the co-owner, conservation conditions or an appropriate building act. The scope of the permitted intervention should be determined before the start of the works.

• check the completed land register entry and download the final decision
• transfer utility accounts
• notify the co-owners' representative and the building manager
• arrange real estate insurance
• check tax and local obligations
• keep the contract, payment receipts and real estate documentation

Final checklist

1. confirm the status of the buyer and the applicable acquisition regime
2. check reciprocity and the need for consent
3. verify the seller's ownership and authority to sell
4. identify encumbrances, pending applications, disputes and third-party rights
5. compare the cadastral, land register and real situation
6. check the legality of the building and the permitted purpose
7. establish a special legal regime for real estate
8. determine tax treatment and total costs
9. document the source of funds and the method of financing
10. align the terms of payment, handover and registration