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There is a growing interest in investing in property in Croatia. Popular areas for foreigners are:
  1. Istria, in the northwest, frequently touted as the new Tuscany
  2. the various islands, from Cres, Krk and Pag, through Vis, Brač and Hvar, down to Korčula and Mljet
  3. the central Dalmatian coast
  4. the southern coast, around Dubrovnik
Foreign nationals are able to purchase and sell a property in Croatia but it is conditional upon consent being granted by the Ministry of legal affairs and the Ministry of foreign affairs. These statements on consent are issued to citizens of those countries Croatia signed a contract on reciprocity with and in extraordinary cases, to citizens of other countries. Most EU countries have this agreement with Croatia.
The procedure for obtaining the statement on consent is as follows:
When a foreign citizen decides to purchase real estate in Croatia, a sales contract is signed with the selling party. This contract, together with other relevant documents is sent to the Ministry of foreign affairs in Zagreb. When the Ministry issues to the customer its statement on consent, the foreign citizen is entitled to register the real estate onto his name at the Municipal court. This consent from the Ministry normally takes between 6 months to 2 years to obtain.>
There is a real estate purchase tax of 5% on all types of property. The tax charged is based on the price of the property in the sales contract. As a rule this tax is paid by the purchaser. It is paid after conclusion of the sales contract when the customer is obliged to register the purchase at the authorized tax authority within 30 days from the day of conclusion of the contract. Public notaries do also submit one copy of the sales contract to the tax authorities. The customer is obliged to pay respective real estate purchase tax within 15 days from the day of reception of the decision received from the tax authorities on the exact tax amount. If this tax is not paid within this term, interest on arrears is charged for every day of delayed payment.
A seller will only pay taxes on the sale when the property is sold within a three year period and also if sold at a higher price than originally purchased. In such a case the seller must pay a 35% income tax on the difference in value of the property (purchase and sales price).
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