CROATIA Law and Practice Contributed by: Marko Paulinović and Dino Vukoša, Buterin & Partneri
5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Pursuant to the Ownership and Other Proprietary Rights Act, both natural persons and legal entities may hold ownership rights over real estate. The limited liability company (d.o.o.) is the most commonly used and market-preferred vehicle for the acquisition and holding of real estate. Its advantages include relatively simple corporate governance, flex - ibility in financing and tax predictability. The joint-stock company (d.d.) is used less frequently, and typically for larger projects or portfolios where a larger number of investors or more complex financ - ing structures are required, as it is subject to stricter regulation and higher administrative costs. Investment funds (particularly alternative investment funds – AIFs) are primarily used for institutional invest - ments and are subject to specific regulatory require - ments and supervision. Foreign natural and legal persons may acquire real estate directly (particularly entities from the EU) under the conditions described in 2.11 Legal Restrictions on Foreign Investors ; however, in practice a Croatian limited liability company is most often established in order to achieve greater legal and tax certainty. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Limited Liability Company (d.o.o.) This is established with a minimum share capital of EUR2,500 and has a relatively flexible corporate gov - ernance structure. Joint-Stock Company (d.d.) This requires a higher minimum share capital of EUR25,000 and has a more complex governance structure, including a management board and a supervisory board. Investment Funds These are subject to specific regulatory frameworks and supervisory requirements.
• the General Urban Plan; and • the Urban Development Plan.
For most development activities affecting real estate, it is necessary to obtain a location permit and a build - ing permit, both of which are issued in administrative proceedings. The authorities responsible for issuing location per - mits and other planning acts, as well as building and use permits, are the Ministry of Physical Planning, Construction and State Assets and the competent administrative departments of the counties. 4.2 Development Process, Challenges and Enforcement Larger and more complex development projects require the issuance of a location permit, while in most cases the construction itself requires a building permit. In the procedure for issuing a location permit, the applicant must demonstrate compliance with specif - ic conditions prescribed by various regulations, such as environmental protection requirements, fire safety regulations, water supply conditions, traffic access and connection to electricity supply. Persons holding rights over the property concerned, as well as owners of neighbouring properties, are par - ties to the proceedings for the issuance of location and building permits. Their consent is not required; however, they may lodge appeals in order to protect their rights. In addition, any person may submit com - ments or proposals during the public consultation pro - cess conducted in the course of the preparation and adoption of spatial planning documents. Planning and zoning restrictions are enforced primar - ily by refusing to issue permits where a proposed development is not in accordance with applicable spatial planning documentation, as well as through construction inspections. Competent authorities may suspend unlawful construction, impose fines or order the removal of illegally constructed buildings. Further - more, a building may not be lawfully used without a previously issued use permit.
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