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/
   

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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
   

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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)
   

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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
   

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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
   

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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
   

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7. Comparison
   1000€ total paid out
   3000€ total paid out
   

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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
   

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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
   

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10. Administration in
    Croatia
    

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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
    

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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
    

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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
    

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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
    

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15. Tax advisor help
    • Knjigovodstvo “Ledine”
    
    • http://ledine.hr/
    

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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
    

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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
    

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