Croatia - Buyers Guide

We pride ourselves on our ability to make investing in property in Croatia simple and straightforward.  Spread Agency in association with IMG can guide you through every step of the buying process. For Further information on investing in Croatia, inspection trips, details of properties and off plan opportunities – please contact: Joseph McGeehan on 028 9070 1424 or joseph@spreadagency.com

Choosing Your Property

Details of properties are available on our website www.spreadagency.com  or at our regular local exhibitions.  The choice is wide but possibly not as extensive as some other companies in the market.  We firmly believe in offering quality rather than quantity and have therefore chosen a select range of properties to bring to the Northern Ireland market. 

Viewing Trip

Buying a property in Croatia is a big decision for you.  We understand this and recognise that there is no substitute for visiting Croatia to see the location, the development and the property for yourself.  We can assist with arranging a viewing trip to Istria to allow you to see the region and view as many properties as you like until you find the one which best suits your needs.  You may prefer to be accompanied by a member of Spread Agency or to travel independently and meet with representatives from IMG during your time in Croatia.   Whatever your preference your trip can be tailored to suit your individual timescale and budget. 

Reserving Your Property

When you have found the right property for you, you can complete a Purchase Option Agreement Form, which gives details of the property and the agreed price, and pay a holding deposit of £1,000 to Spread Agency.  The property will then be taken off our sales list for the next 30 days.  The holding deposit will be deducted from your first instalment on the property.

How to Purchase the Property

There are 2 ways of buying property in Croatia if you are a foreign national; as a private person or by forming a limited company.  If you wish to buy the property as an individual it is essential to obtain the authorisation from the Ministry of Foreign Affairs of the Republic of Croatia.  This is a straightforward procedure that usually takes 6 months but can take longer.  During this period it is possible to complete the purchase and an official entry noting the purchase of the property is made by your appointed solicitor in the Land Registry Office.  While awaiting approval you can take up residence or sell the property if you wish to do so.

The second method of buying a property in Croatia is to establish a limited company.  This company will have the same rights, obligations and legal status as any domestic company and it will be entirely owned and controlled by you.  Your solicitor will form a limited company on your behalf and your company can then purchase property without authorisation from the Ministry of Foreign Affairs.  This procedure takes up to four weeks but it does incur costs of forming and later on of maintaining the company.  Purchasing a property via a company will also impose tax implications which should be carefully considered and expert advice should be sought.

The Preliminary Contract

The next stage is similar to purchasing a property in the UK.  You and the developer sign and exchange a preliminary contract.  This clearly sets out the price, payment arrangements, timescales, building guarantees and any penalties for late completion – it obliges them to build the property and you to buy it and sets out those obligations in detail.  Spread Agency can put you in touch with a reputable English speaking solicitor in Istria to act on your behalf in the purchase of your property.  The solicitor will formalise the preliminary contract, final contract, deposit and completion date and any other conditions deemed necessary.

After signing the preliminary contract you will generally have 10 days in which to transfer to the developer your initial payment, which is typically around 10% to 15% of the agreed price of the property.  If after signing the preliminary contract the vendor does not proceed you are entitled to a refund of twice your deposit. 

Completion

On an agreed date the two parties will meet to sign the final contract.  The signatures must be witnessed by a notary.

During the course of construction you will pay one or more instalments, followed by a final payment. 

The documentation will then be sent to the local Land Registry and a request is made for the property to be registered in your name.  The application for approval from the Ministry of Foreign Affairs will also be made.

Within 30 days from the conclusion of the contract the purchase must be registered at the authorised tax authority.  A unified tax rate of 5% of purchase price for all types of real estate is charged based on the price of the property in the sales contract and the value estimate by the authorised tax authority in charge of the local area.  The purchaser is obliged to pay respective real estate purchase tax within 15 days from the day of receipt of the decision from the tax authorities on the exact tax amount due.

Initial Purchase Costs

• 5% Real Estate Transfer Tax
• 1.5% to 2% Solicitor’s Fees
• Minimal Notary Fee c. £75 (since the Notary only has to certify the signatures)

Annual On-going Costs

• Non-resident’s tax currently charged @ c.€1.25 per m2 of internal property floor area
• Ground tax @ c.20 cents per m2
• Waste disposal charges @ c. €40
• Average house and contents insurance costs c. €400

Taxes Following Purchase

The UK and Croatia have a double taxation agreement under which tax paid in Croatia can be allowed as a credit against tax payable in the UK.

Rental Income

If you wish to rent out your property you would need to notify the Croatian Tax Service. Tax is payable at 25% of the declared profit. This applies to owners renting out their property as an individual rather than a company.

Capital Gains

If the property is in private ownership and sold within three years of purchase then there is a capital gains tax of 35% of the difference between the purchase and the selling price. However, if the property is sold after three years there is no capital gains tax in Croatia.