Running a company as an e-Resident in Croatia

Talk given at:

Estonian e–Residency Week Zagreb – 28.11.2019.
https://www.meetup.com/Zagreb-Freelancers/events/266380557/

Transcript

1. Running a company as an e-Resident in Croatia Dražen Lučanin e-Resident & founder of Punk Rock Dev https://punkrockdev.com/
2. Background • Punk Rock Dev – https://punkrockdev.com/
 Web development & data science studio • Osaühing (OÜ) company through the e-Residency
 (Limited liability / d.o.o.) • I was living in Austria at the time & had to shut down my sole proprietorship anyway when I moved to Croatia • Decided to separate my business from my whereabouts
3. Why I chose the e- Residency? • Everything online • Fast & gets out of your way • Eurozone • Better tax system under some circumstances • e.g. for saving money within the company for future personal projects (investing in my own products)
4. Business taxes • 0% corporate tax until you pay out dividends • 0% tax in Estonia when you’re paying yourself a salary • (assuming, of course, that you don’t live in Estonia) • 20% corporate income tax in Estonia on the amount you pay out as a dividend to yourself
5. Personal taxes • You don’t have to be employed • If you are employed • Same taxes & social insurance • As if you are a d.o.o. employee • Some people also open a “paušalni” in Croatia
6. Paying yourself • Invoice the Estonian company from another legal entity in Croatia (e.g. a sole proprietorship / “obrt") • Pay out dividends • Pay yourself a salary
7. Comparison 1000€ total paid out 3000€ total paid out
8. Benefits • All the usual Ltd stuff (limited liability, business expenses, dividends) • Good online system • ID card works on macOS • SmartID mobile app – you don't even need your ID card most of the time • Accounting (I use xolo.io) • Drag'n'drop or email invoices / bills • Professional and fast tax / legal advice • Banking (I use LHV) • Corporate card • Payments automatically imported as expenses • Very convenient for travel expenses • Xolo generates tax payment drafts – I just sign it online
9. Limitations • Somewhat limited business expenses • Trips only across border • Luxury tax on food / drinks • No car / apartment (only in Estonia) • Office max 6 months in a single country (outside Estonia) • No employees outside Estonia • d.o.o. much better if you want a classical company with an office, employees & take all of your money out as dividends
10. Administration in Croatia
11. Steps to register your incoming dividend payments • Submit tax forms • RPO form – one time • JOPPD form – every month or once a year by 15.1. • In your local tax authority office (područni ured porezne uprave) • Or via Croatia's e-Citizen • In Estonia, your service provider will prepare a bank transaction draft that you just need to sign to pay the corporate income tax
12. Steps for your Estonian company to hire yourself in Croatia • OBVEZE POREZA NA POREZ NA DOHODAK I DOPRINOSA S OSNOVE RADA ZA POSLODAVCE SA SJEDIŠTEM ILI MJESTOM POSLOVANJA U DRUGIM DRŽAVAMA ČLANICAMA EU • http://bit.ly/EU-poslodavci • Somewhat complicated procedure • Croatian government agencies were very helpful
13. One-time steps • 1. Create a Croatian ID (OIB) for your Estonian company • Sudski tumač – ovjereni prijevod na hrvatski izvatka iz Trgovačkog registra • 2. Agreement to take over financial obligations of your company • “Sporazum o preuzimanju obveze doprinosa" • Croatian tax authority (Porezna uprava – središnji ured u Zagrebu) • 3. Report your employment status to the Croatian pension insurance (HZMO) • Walked in there with all the papers • Filled out a form • Got asked for a work contract, but they agreed that I don’t need one if I’m working for myself • 4. RPO form – one time
14. Each month • Two JOPPD forms – in your local tax authority office or via Croatia’s e-Citizen • Doprinosi – OIB firme • Porez na dohodak • Third JOPPD when you pay out dividends
15. Tax advisor help • Knjigovodstvo “Ledine” • http://ledine.hr/
16. Conclusion • Good online-first system • Not a tax haven • d.o.o. better for employees, maxing out immediate payout • OÜ – perfect for reinvesting in your personal projects
17. Thank you!
 Aitäh! • Start your e-Residency – http://bit.ly/estonian-e-residency • Raffle for a free trip to Tallinn if you do it this year • Join our Facebook group! • http://bit.ly/e-residents-hr