The house was purchased for recreation, and the possibility of moving (immigration to Croatia) was not considered. But with retirement approaching, this issue has come to the forefront. Since at the time of purchasing the house, Croatian legislation did not allow citizens of Russia (as well as citizens of other non-EU countries) to acquire real estate as individuals, the house was purchased through a company that does not conduct any actual business activity and is simply a holder of the asset. This dormant company submits zero reports. So, what are the options?
Option One
1. Work permit and temporary residence permit / temporary residence in Croatia.
2. Requirements. In accordance with the Law on Foreigners (Article 76, Section 1, Paragraph 5), a foreigner may be granted a work permit under the following conditions:
• The applicant holds at least 51% of the shares in a company in Croatia;
• This company has at least HRK 200,000 in capital. If the company does not have sufficient capital, property owned by the company may be accepted instead. In this case, the company must have at least half of the prescribed required capital, i.e., HRK 100,000 (approximately EUR 13,333). All HRK 200,000 can be accepted as the value of the real estate. To do this, he must obtain an extract from the land registry as proof that the company is the owner of the property, as well as an accountant's statement on the value of the real estate;
• At least three Croatians must work in the company;
• The applicant's salary must equal the average gross salary in Croatia, from HRK 8,055 (approximately EUR 1,075);
• The company must have no losses or debts to the budget of the Republic of Croatia.
3. Form. If the above requirements are met, it is necessary to fill out form 1a (a questionnaire) to obtain a work permit and residence permit in Croatia.
4. Place of application submission. Since Russian citizens require a visa to enter Croatia, the applicant must submit a request for a temporary residence permit in Croatia to the nearest Croatian consulate in Russia.
5. Required documentation. The following documents must be attached to the residence permit application:
• A passport valid for more than 6 months;
• The applicant's educational documents;
• Proof that the applicant is the owner of the company (extract from the company register);
• Employment contracts for three Croatian employees;
• Health insurance (travel insurance valid for at least 90 days will be accepted);
• Proof that the applicant has sufficient means to support himself. The gross salary must be at least HRK 8,055 (approximately EUR 1,075). Note that the salary must not be reduced subsequently (after obtaining temporary residence in Croatia), as this will be checked by tax authorities;
• Proof that the company has no debts. Confirmation from the tax authorities and the so-called BON 1 or BON 2 form from the bank where the company holds an account must be obtained.
Please note that for each of the above documents, a confirmation from the consulate that the documents correspond to the originals must be obtained. To obtain this confirmation, the originals must be presented at the consulate.
If the applicant does not create a job for himself (self-employed), then a work permit in Croatia may be issued only if he falls within the annual quota for entry of foreigners set by the ministry.
6. Temporary residence in Croatia for family members. Residence permits for a spouse and children can be requested on the same form 1a. The basis for requesting a temporary residence permit should be stated as "family reunification" in the application. The place of submission is the nearest Croatian consulate in Russia. Required documents:
• marriage certificate;
• birth certificates for children;
• passports valid for another 6 months;
• health insurance (travel insurance valid for at least 90 days).
7. Confirmation of temporary work. If the applicant is a director of the company, it should be noted that he cannot sign any employment contracts until he obtains a work permit. The applicant cannot obtain a work permit if the company does not have at least three employees. If the applicant is to be a director, and in order to have the right to sign employment contracts and perform any activity, he must first submit an application for a confirmation of temporary work, which is issued for a period of 90 days. The place of submission is the Croatian police service at the applicant's place of residence. Approval is issued within two to three days. Required documents:
• recent extracts from the company register;
• a passport valid for another 6 months.
It should be noted that after the work permit is approved, the embassy will notify local authorities, and they in turn will notify the health insurance service. Therefore, after the travel insurance contract expires, the applicant will be obligated to pay a monthly amount from HRK 300 to 400 (from EUR 40 to 55) for health insurance for himself and for each family member.
When choosing the above-described method of immigration to Croatia, the company Elma Global can assist the applicant at all stages: obtaining temporary work confirmation, obtaining confirmation from tax authorities that the company has no debts, obtaining BON 1 or BON 2 from the bank, extracts from the company register, extracts from the land cadastre, etc. We can also help with additional registration of the share capital, prepare employment contracts, and provide all necessary legal assistance in obtaining a residence permit in Croatia on a turnkey basis.
Option Two
As we can see from the option described above, it involves actual business activity in Croatia and hiring three employees who need to be paid a salary. If the applicant does not plan to engage in business and simply wants to live quietly on a pension, then of course this option is not suitable and the following remains.
If the applicant owns a house in Croatia, they can apply for temporary residence for up to one year. Essentially, this is the same residence permit. Since in the case under consideration the house is owned by a company, the applicant must transfer the ownership to their own name. Upon such transfer, a tax of 5% of the property value must be paid if the house is not a new building (if the house is in a new building, the tax is 25%). Once the client becomes the owner of the house, they can apply for temporary residence. The residence permit will be granted for one year. The application is the same as described above – Form 1a.
After one year, the applicant must leave Croatia for 6 months. During these 6 months, they can enter Croatia as a tourist with a tourist visa for a total stay of up to 3 months. After 6 months, they can reapply for temporary residence for another year.
This living arrangement can be repeated for many years. The application for a residence permit in Croatia for the applicant and their family members is also submitted to the Croatian consulate in the country of residence. Family members receive a residence permit on the grounds of "family reunification".
As we can see, this method of immigration to Croatia (unlike the first method) does not lead to obtaining permanent residence and Croatian citizenship over time. Permanent residence can be obtained after 5 years of continuous residence in the status of a residence permit, but in this case, the residence permit is interrupted after each year.
Option Three
This option is not very different from option two, as it also transfers ownership from a legal entity to an individual. And the grounds for applying for a residence permit are exactly the same as in the already considered second option. Nevertheless, this option allows saving on tax payment, so we will mention it separately.
If the applicant does not plan to do business through a Croatian company in any case, they can file for liquidation of the company. Liquidation proceedings can last up to approximately 18 months. After liquidation, the applicant becomes the owner of the house and can apply for temporary residence in accordance with the procedure already described. This path to obtaining a residence permit will take longer, but the client will not pay the tax.
Conclusions and Comparisons
As we can see, Croatia's immigration legislation is not particularly favorable. To obtain a residence permit through business, one must actually run the business and create three new jobs for Croats. If running a business is not the goal, as in most cases, then the only possible option for relocation is purchasing real estate.
But, unlike many other countries where holders of a residence permit obtained through property purchase can apply for permanent residence and even citizenship (Portugal, Spain, Cyprus, Greece, Hungary), Croatian laws do not provide such an opportunity. In Croatia, real estate buyers can count on an eternal residence permit, without the prospect of converting it into permanent residence or citizenship.
Material provided by ELMA GLOBAL.
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