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Running a company as an e-Resident in Croatia

Running a company as an e-Resident in Croatia

Talk given at:

Estonian e–Residency Week Zagreb – 28.11.2019.

Dražen Lučanin

November 28, 2019

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  1. Running a company
    as an e-Resident
    in Croatia
    Dražen Lučanin

    e-Resident & founder of Punk Rock Dev


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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-
    • 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

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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

    • 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

    • 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!

    • 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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