10 July 2024
Setting up a Sole Trader in Croatia
Find out how to set up a sole proprietorship (obrt), the simplest business form in Croatia, and how our lawyers can assist you during the registration.
The sole proprietorship is the simplest business form available on the Croatian market and it can be established in a fast and reliable manner with complete assistance offered by our team of lawyers in Croatia. The Crafts Act and the Companies Act are the main set of laws which oversee the activities of Croatian sole traders. Legal advice can be offered on request by our team of advisors who can guide foreigners in different types of company structures available for business in this state.
The Crafts Act in Croatia
Sole traders in Croatia can perform varied independent activities as long as they respect the Crafts Act or the Handicraft Act in Croatia. This law comprises several provisions which observe the operations of sole proprietorships on the market from a legal point of view. The Crafts Act stipulates that a sole trader is a natural person (national or foreigner) who may carry out different activities in his/her own name and who can have the possibility of hiring staff at any time.
Sole traders or craftsmen as they are mentioned in the Handicraft Act in Croatia can run seasonal activities for up to 9 months per calendar year, in line with the Crafts Act and the Croatian Chamber of Trades. The legal aspects of how a sole proprietorshipis established in Croatia can be entirely explained by our attorneys in Croatia.
The tax benefits of sole traders in Croatia
Placing the activities in Croatia through a sole proprietorship may represent the suitable form of doing business in a competitive and appealing market. It is good to know that sole traders are subject to low taxes compared to medium and large companies in Croatia. For example, if a sole proprietorship registers profits, they are taxed as personal income at the local progressive rates (15%–23% up to EUR 60,000 a year and 25%–33% above), unless it opts for lump-sum taxation (annual receipts up to EUR 60,000). Moreover, sole proprietorships in Croatia must register for VAT once their annual supplies exceed EUR 60,000, the rate being set at the moment to 25%, but with lower rates imposed on certain goods and services. A sole trader in Croatia can temporarily close the activities without having to pay such taxes. The good part is that the operations can be reestablished at any time the owners consider.
If you want more details about setting up a sole trader in Croatia, do not hesitate to contact our Croatian law firm.