CROATIA Law and Practice Contributed by: Marko Paulinović and Dino Vukoša, Buterin & Partneri
General All companies are subject to corporate income tax at a rate of 10% if their annual revenue does not exceed EUR1 million, or 18% if this threshold is exceeded. They are also subject to VAT if their annual turnover exceeds EUR60,000. Investment funds are generally exempt from corporate Croatian law, as part of the continental civil law legal tradition, does not recognise the concept of a trust; therefore, it is not used within the Croatian legal sys - tem. As a potential alternative, closed-end AIFs with a pub - lic offering for investment in real estate may be estab - lished; however, these have not yet become widely used in the domestic market. 5.4 Minimum Capital Requirement See 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity . 5.5 Applicable Governance Requirements Limited Liability Company A limited liability company is managed by a manage - ment board consisting of one or more members. A supervisory board is generally not required, the share - holders adopt resolutions at the general meeting and the company must maintain statutory corporate docu - mentation and prepare annual financial statements. Shareholders are not liable for the obligations of the company. Joint-Stock Company income tax. 5.3 REITs For a joint-stock company, the governance struc - ture is more formal and consists of a management board, a supervisory board and the general meeting of shareholders. Stricter rules apply regarding report - ing obligations, disclosure of financial statements and corporate decision-making Limited Partnership A limited partnership ( komanditno društvo – k.d.) is managed by the general partner, while limited partners do not have management rights. The general partner
bears unlimited liability, meaning that they assume personal risk, whereas the liability of a limited partner is limited to the amount of their capital contribution. Investment Funds For AIFs and undertakings for collective investment in transferable securities (UCITS), governance and operations are subject to strict regulatory supervi - sion by the Croatian Financial Services Supervisory Agency (HANFA), including the appointment of a fund manager and compliance with regulatory reporting obligations Foreign Branch Offices Branch offices do not possess separate legal per - sonality; rights and obligations are assumed by the founding entity. The branch must maintain account - ing records in accordance with Croatian accounting regulations. 5.6 Annual Entity Maintenance and Accounting Compliance The annual entity maintenance and accounting com - pliance cost primarily depends on the size of the com - pany, the number of employees and the scope of its business activities. Indicative annual cost ranges for certain types of enti - ties are as follows: • limited liability company (d.o.o.)/limited partnership (k.d.) – approximately EUR150 to EUR 1,000; and • joint-stock company (d.d.) – approximately EUR1,000 (or more). In addition, these costs should be supplemented by expenses related to the registered office of the entity (leasing business premises), which depend on the size and location of the premises or, alternatively, on the costs of maintaining a virtual office. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time In Croatia, the use of real estate without acquiring ownership may be established through contractual
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