From a digital nomad to a business owner
Amendments to the Aliens Act.
At the end of 2020, the Government of the Republic of Croatia passed amendments to the Law on Foreigners and the Law on Income Tax, thus enabling the so-called “Digital nomads” various benefits that will create an easier way for them to work remotely in the Republic of Croatia.
“Digital nomad” means a third-country national who is employed or performs business through communication technology for a company or own company that is not registered in the Republic of Croatia and does not perform business or provide services to employers in the Republic of Croatia. ”
With a one-year temporary residence visa and preferential tax treatment, “digital nomads” have been able to choose a place to work and live for the next year or even longer.
Also, the Ministry of Finance of the Republic of Croatia has already prescribed that profits will not be taxed in Croatia, followed by amendments to the Health Insurance Act and refinement of the application procedure for temporary residence in the Republic of Croatia.
The Republic of Croatia is one of the first EU countries to recognise this potential and make it easier for foreign workers to work remotely.
According to data from 2019, Croatia is one of the safest countries in the world, and the crime rate is below the European and even world average.
The main economic branches in Croatia are agriculture, food industry, textile industry, wood processing industry, metal processing industry, chemical industry, oil industry, electrical industry, construction, trade, shipbuilding, maritime and tourism.
Telecommunications and the IT sector have the highest growth and an increasing share in the economy from year to year, and this branch is expected to thrive in the future, and finding partners is easy.
On July 1, 2013, the Republic of Croatia became a full member of the European Union. This opened the free flow of capital, labour, technology and the like.
Road connectivity is one of the best in this part of Europe, and the total motorway network is 1,306.53 km. There are 7 airports in Croatia. The largest is in Zagreb, the capital, which is a political, cultural, scientific and economic centre.
Croatia has a preserved environment, many natural beauties and fantastic and varied food, which makes it a great place to live and work. There are 8 protected national parks and 11 nature parks in the Republic of Croatia, but the Adriatic Sea still occupies the main stage with about 1,200 islands, and cities such as Split, Zadar and Dubrovnik attract visitors and investors from all over the world.
Besides the above advantages and natural beauties, life in Croatia is quiet and discreet, and the population is kind and hardworking. The share of highly educated people is growing from year to year and finding highly qualified workers is not a problem. Starting your own business in Croatia with the various benefits mentioned in part 10 of the reasons why starting a business in the Republic of Croatia is a very simple and fast process.
The rules that apply to domestic residents also apply to foreign investors and company founders, depending on whether they are part of the European Economic Area. A foreigner may perform his / her activity in the Republic of Croatia only if he/she establishes a company in the Republic of Croatia or a foreign branch of a foreign company if foreigners and citizens of the European Economic Area can freely establish domestic companies in the Republic of Croatia. Company registration in the Republic of Croatia takes up to 10 days.
Citizens of a Member State of the European Economic Area (EEA) and their family members are equal in rights with citizens of the Republic of Croatia within the provisions of the Treaty on the Functioning of the EU7 and can work and provide services in the Republic of Croatia without a residence and work permit. Citizens of non-EU countries can work in the Republic of Croatia if they get a work permit.
What difference does it make?
By founding a company, a foreigner pays income tax:
10% if revenues up to HRK 7,500,000.00 were generated in the tax period, or
18% if the revenues generated in the tax period are equal to or greater than HRK 7,500,000.01.
This is much less than the salary contribution with the employer if he was registered as a “digital nomad” and it is possible to earn much more by opening his own company and working from that company as a freelancer for his employer.
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