Buying a Property in Croatia
The Czech or Slovak citizen is not limited in the purchase of real estate in Croatia and can be owned as a natural or legal person. This does not only apply to agricultural and forest land, which foreigners or foreign legal entities cannot buy.
Rezervační smlouva (rezervacejski ugovor) / Future Purchase Agreement (predugovor)
A person interested in buying a property, as an expression of will and genuine interest in the purchase, concludes a reservation contract (rezervjski ugovor) or a straightforward future purchase contract (predugovor). A reservation contract is now concluded practically only when the seller is a foreigner living outside Croatia, or a Croatian emigrant also living outside Croatia, and it is not possible to sign a future purchase agreement directly with the seller or agent. The reservation contract is concluded with a Croatian real estate agency authorized to do so by the seller and usually receives a small deposit of approximately EUR 5,000 in cash. The reservation contract anticipates the conclusion of a future purchase contract, exceptionally equal to the purchase contract.
The future purchase agreement deals with the exact purchase conditions, including the method of payment of the purchase price. When signing this agreement, the agreed first installment of the purchase price of the property, usually 10% of the price, shall be made directly to the seller, unless both parties agree otherwise. If the buyer withdraws from the pre-contract, the deposit is usually forfeited unless the reason for the withdrawal is a legal defect. If the seller withdraws, he is obliged to return to the buyer up to twice the amount paid by the buyer. This contract is not usually signed with verified signatures.
OIB (personal identification number)
For the purchase of real estate it is necessary that the buyer, natural or legal person, has an OIB – personal identification number, which is necessary for communication with the authorities, at the time of buying the property primarily with the tax office and department of the relevant district court and land registry. The OIB is processed while you wait (forms available online can also be sent in advance by mail and the OIB can be picked up at the counter of the relevant tax office), usually just before signing the purchase contract. Without the OIB, it cannot be registered as a new owner and the OIB must therefore be part of the sales contract.
Purchase contract (kupoprodajni ugovor), declaration of payment of the purchase price (tabular statement)
The purchase contract is concluded after the purchase has been formally approved by the buyer’s lawyer, who checks the necessary documentation for the property. By signing the purchase order, either the purchase price already paid is confirmed, or the purchase contract stipulates by which the rest of the purchase price must be paid. In the first case, the tabularna izjava (declaration of payment of the purchase price) is part of the contract; in the second case, this declaration is only signed after the actual payment of the purchase price. By paying the purchase price, the buyer becomes full owner in accordance with the provisions of the purchase contract.
Depositing, tax office
After its conclusion or payment of the purchase price, the purchase contract is handed over for deposit at the Land Register Department of the competent court (this department is similar to the Czech Land Register). Deployment takes from a few weeks to several months (normally more than half a year), depending on the speed and modern equipment of a particular department. Usually, urgency is given several times during this process. After depositing, either by filling in a special form or in more modern options, automatically by an in-house process, a formal notification of the change of owner to the respective land register (similar to the Czech Land Survey Office) is submitted.
No later than thirty days after the signing of the purchase contract and, where applicable, the declaration of payment of the purchase price, a real estate transfer tax return must be filed. The assessment and taxation have no causal link and the payment of the tax does not therefore depend on the completion of the taxation. Then within 90 days of filing the tax will be assessed by the Office (this is not the rule, but sometimes it will be inspected, usually the older property, inspection commission, which determines the tax base). The tax can be levied on land and apartments on agreement, while waiting at the counter, especially if it is a foreign buyer. The tax notice is sent to the buyer to the address of permanent residence or registered office.
The estimated cost of buying a property in Croatia is:
- real estate transfer tax (3%) – only for „second-hand“ real estate, for new buildings (not older than 2 years from final building approval and is not used yet) buyer does not pay tax-
- Legal fees and other fees associated with the purchase (approx. 1% + VAT on the price of real estate legal services + hundreds of HRK for stamps and verified notary signatures)
- provision 3% of the purchase price as a rule (at least 2000 EUR, VAT is not charged when using a Czech office)
- optionally translations by a sworn interpreter
- exchange differences, if the seller is a Croatian citizen (ie not a foreigner or a Croatian immigrant with dual citizenship), the purchase price, usually in EUR (formally expressed in HRK according to the central rate of the HNB) is paid to his account in Croatia, EUR, because it is the purchase of real estate will be forced exchange, when the incoming payment in EUR is transferred first to HRK and then back to EUR, the seller may demand a cash balance of the resulting exchange rate difference
- notarial custody is rarely used in Croatia, it is important to know that if the buyer insists on it, the buyer pays it (the price depends on the amount and time of custody) and also pays the exchange rate differences, because it is necessary to know that any amount sent to the notary’s account is always exchanged automatically to HRK and the notary sends the seller the amount in HRK
Costs related to the operation of the property in Croatia:
- property tax to local government
- municipal fees (0.5-2.5 EUR / m2 of usable area / year)
- service costs (electricity, water, telephone, cleaning, etc.)
- real estate insurance