Legal Advices

Dear clients,
It is our pleasure in answering any questions which you might have regarding the realization of purchasing real estate and assisting you in a professional and expeditious manner.
 
Listed below are some of the most often asked questions:
 
What is land-registry?
What is real estate?
How is the value of real estate established?
Who may purchase real estate in the Republic of Croatia?
Are foreigners allowed to purchase real estate in the Republic of Croatia?
Who is allowed to sell real estate in the Republic of Croatia?
Which obligations do the buyer and seller have by law?
What amount of down payment is required of the buyer?
Where and by whom is the sales contract certified?
What is a tabulated declaration?
What is a « fiduciary»?
What is the amount of real estate tax the buyer needs to pay when purchasing property?
Is it necessary to pay real estate tax if a property owner is exchanging real estate with another owner?
What is the deadline for property tax registration and payment?
Is the buyer allowed to register his real estate in the land-registry before paying property tax?
Who is responsible for paying tax on additional value when purchasing real estate?
Are buyers and property owners responsible to pay additional taxes apart from property tax?
How is leasing on real estate taxed?
What is the real estate agent's sales provision?
Which specific laws are related to the purchase of real estate?
 
WHAT IS LAND-REGISTRY?
Land registry is a system by which the ownership of land is recorded and registered in order to provide evidence and to facilitate dealing.
 
WHAT IS REAL ESTATE?
Real estate is a piece of land including the air above it, and the ground below it, and any buildings or structures on it.
 
HOW IS THE VALUE OF REAL ESTATE ESTABLISHED?
The price of real estate is established by the owner with regard to the actual prices of real estate on the market. The minimum market price for real estate is defined by the government, but when seeking the estimate of real estate for credit from any bank, then a licensed appraiser is used.
 
WHO MAY PURCHASE REAL ESTATE IN THE REPUBLIC OF CROATIA?
There are no obstacles or sanctions in purchasing real estate in Croatia, although the buyer is obliged to present proof of Croatian citizenship when defining ownership in the land-registry office.
 
ARE FOREIGNERS ALLOWED TO PURCHASE REAL ESTATE IN THE REPUBLIC OF CROATIA?
Yes, but they must first receive permission from the Ministry of Foreign Affairs to be able to purchase real estate and then with that consent they will be able to present their proposal for enlistment in the land-registry department. The consent for the purchase of real estate subject to reciprocity is issued by the Ministry of Foreign Affairs based on the previous consent from the Ministry of Justice. In any event, there are other possible options for foreigners interested in purchasing real estate.
 
WHO IS ALLOWED TO SELL REAL ESTATE IN THE REPUBLIC OF CROATIA?
Each and every owner of property whose ownership is listed in the land- registry office, and is able to transfer ownership to an interested buyer. Property owners not listed in the land-registry are also able to sell property but the buyer is not listed in the land registry and has to present legal concession in order to be able to list the real estate in his name in the land registry.
 
WHAT OBLIGATIONS DO THE BUYER AND SELLER HAVE BY LAW?
The buyer is under obligation to pay the seller the full price as agreed upon in the contract, and the seller is obliged to turn over the real estate in question and allow the new owner to sign the real estate in his or her name in the land-registry.
 
WHAT AMOUNT OF DOWNPAYMENT IS REQUIRED OF THE BUYER?
By agreement with the seller the down payment is usually 10% of the price for the real estate in question, and in congruence to the legal maximum.
 
WHERE AND BY WHOM IS THE SALES CONTRACT CERTIFIED?
The seller is required to certify his signature on the sales contract by a licensed notary office in the Republic of Croatia, and when abroad the seller is able to certify the sales contract in a licensed notary office or Croatian Embassy, but the seller is still required to apostate the sales contract in front of an authorized court.
 
WHAT IS A TABULATED DECLARATION?
A declaration stating that the seller of the real estate received the full amount as requested in the sales contract and allows the transfer of ownership in the land-registry for the property declared in the sales contract between the two parties.
 
WHAT IS A FIDUCIARY?
An individual, corporation or an association holding assets for another party, often with legal authority and duty to make decisions regarding financial matters on behalf of the other party.
 
WHAT IS THE AMOUNT OF REAL ESTATE TAX THE BUYER NEEDS TO PAY WHEN PURCHASING PROPERTY?
The buyer is responsible for paying real estate tax in the amount of 5% of the market value for the property purchased. There are other special conditions for allowing certain buyers in various conditions based on Croatian laws which may free him of this real estate tax, and the real estate agent can further inform each buyer of his rights.
 
IS IT NECCESSARY TO PAY REAL ESTATE TAX IF A PROPERTY OWNER IS EXCHANGING REAL ESTATE WITH ANOTHER OWNER?
Yes, but when property is only exchanged then the owners have the right to seek exemption from paying real estate tax on newly acquired property and be able to receive a legal title.
 
WHAT IS THE DEADLINE FOR PROPERTY TAX REGISTRATION AND PAYMENT?
The buyer is required to report the amount of the sales contract to the Tax department within 30 days. When the official document stating the real estate tax is received, then the buyer must pay within 15 days.
 
IS THE BUYER ALLOWED TO REGISTER HIS REAL ESTATE IN THE LAND REGISTRY BEFORE PAYING PROPERTY TAX?
Yes, the buyer may register his property because the Croatian law changed thus not making it a requirement to have a «green stamp» on the document for the Tax department.
 
WHO IS RESPONSIBLE FOR PAYING TAX ON ADDITIONAL VALUE WHEN PURCHASING REAL ESTATE?
The buyer is required to pay tax on additional value of newly built real estate which is included in the total price stated in the sales contract, which frees him of paying the usual 5% property tax on purchased real estate. Unfortunately based on the Croatian Tax manual the buyer is not exempt from paying the property tax of 5% on the land underneath and surrounding the building in which he purchased realty.
 
ARE BUYERS AND PROPERTY OWNERS RESPONSIBLE FOR PAYING ADDITIONAL TAXES APART FROM PROPERTY TAX?
Property owners are required to pay tax on personal income if they sell real estate that was acquired within three years of a new sales contract for the same property. The difference on the purchased and selling price is only taxed, but it is also possible to free the buyer of these obligations in some circumstances.
 
HOW IS RENT ON REAL ESTATE TAXED?
Leased or rented real estate is taxed the same as personal income by Croatian law, as income on property or property rights and the law acknowledges out of pocket expenses up to 30% of total rent realized. Estimated advance tax is paid up upon official decision of the Department of taxation at the end of each month for the current month. Before establishing the estimated tax the property owner's personal income is not taken into regard. The estimated advance tax is 15% and is considered to be the final tax sum, which frees the taxpayer from having to include it in his or her yearly tax form when filing other personal income.
As personal income gained from renting apartments, rooms, or beds to tourists or any individuals which are paying residence tax then the out of pocket expenses are acknowledged up to 50% of total rent realized. Estimated advance tax is paid by the tax payer in this case the direct renter of property each month in the amount of 15%, and this is considered to be the total sum. The renter is also not required to file this personal income in his or her yearly tax return.
 
WHAT IS THE REAL ESTATE AGENT'S SALES PROVISION?
The buyer who has signed a sales contract with a licensed real estate agent is required to pay a 3% provision of the total selling price for the specific property listed.
 
WHICH SPECIFIC CROATIAN LAWS ARE RELATED TO THE PURCHASE OF REAL ESTATE?
The laws which are listed below were published in the Croatian law manual called “Narodne Novine”, and relate to various situations which a client may need to know about when purchasing real estate in the Republic of Croatia.
ZBPO Marriage and Family Law (NN, 51/89, revised statute, 59/90)
ZJB Status of a notary public Law (NN, 78/93, 29/94)
ZN Inheritance Law (NN 52/71, 47/78)
ZNS Rental of property Law (NN 91/96)
ZOO Liability Law (NN 53/91, 73/91, 3/94, 7/96, 91/96)
ZV Proprietary Law (NN, 91/96)
ZZK Land-registry Law (NN, 91/96)