When it comes to citizens of the Republic of Croatia and citizens of the European Union, starting from date 01.02.2009, the Croatian government has removed all of its restrictions on citizens from the European Union buying property in the Republic of Croatia. The new law has ensured the same treatment as compared to Croatians.
For foreign citizens outside of the European Union, Real estate can only be acquired by nationals who have a reciprocity agreement with Croatia; that is when Croatian nationals can themselves freely buy property in the buyer´s home country, such as the EU countries (except Italy), the United States, Russia and Hungary. Information on reciprocity in the acquisition of real estate ownership rights between the Republic of Croatia and countries outside the European Union and the Swiss Confederation can be found on official website of Croatian Ministry of Justice.
For above – mentioned foreign citizens (outside of EU) Consent (in the form of an administrative act) must be secured from the Ministry of Foreign Affairs before the sale could be finalized. Securing the consent takes two to six months since the Ministry has to study the foreign laws (that of the applicant) to discern if a reciprocity agreement is in place. Foreigners, pursuant to the Law on Property Ownership and Other Real Rights, cannot acquire agricultural and forest land.
Common question from our clients, foreign nationals is whether they can get a loan for buying Real Estate in Croatia. Our answer is that this is possible in theory (with some conditions met), but in reality it is not so simple and the best possible course of action is for foreigners to check their creditworthiness and contact one of the international banks in their country, which has a branch and in Croatia.
The next step is to conclude a Pre-contract between the buyer and the seller. The buyer pays a down payment equivalent to 10% of the selling price, but this percentage may differ. The buyer then should apply for the consent from the Ministry of Foreign Affairs (MOFA).
A binding contract is then prepared by a lawyer and signed at the notary office. An official note of the contract should be made in the Land Registry. Once MOFA consent is granted, the contract needs to be registered in the Municipal Cadastral Department´s Land Books (Zemljišne Knjige), which the notary does by automatism, and then the purchase tax needs to be paid (3% on the achieved sales price of the property.
Real estate transfer tax of 3% of the market value is imposed on the transfer of real estate ownership. The transfer tax does not apply to the acquisition of new buildings, that is, first sale. Instead, the sale is subject to 25% VAT of the value of construction, i.e., the net construction value, but this cost is seller’s (developer’s) obligation to pay.
Added: 15.09.2020.
Category: CROATIA REAL ESTATE NEWS
