A short guide to types of business in Croatia

Starting a business in Croatia is both quick and relatively simple. Yet, one has to be familiar with types of business in Croatia in order to choose the one that best suits your needs and your business model. Let’s get familiar with them!

Limited liability company or a d.o.o.

The most frequent type of company is roughly equivalent to an LLC or Ltd., as its abbreviation ‘d.o.o.’ translates to ‘limited liability company’. Its minimum start-up capital is 2,500 euros, and it has to name at least one responsible person (manager) who has to either be employed in another company or be an employee of this newly established company. The gross minimum wage for the responsible manager is just over 1,000 euros per month, all included.

There are no limits to the number of owners for this type of company. As it carries the term ‘limited liability’ in its name, its owners are not responsible for the company’s debts with their own private assets. It is ideal for most small to mid-sized business ventures.

Simple limited liability company or a j.d.o.o.

Another version of the ‘limited liability company’ concept is the simple limited liability company or a ‘j.d.o.o.’ It is roughly the same thing as its bigger brother, but the key difference is in its minimum start-up capital of only 1.00 euro. It also has to name at least one responsible person (manager) who has to either be employed in this company or another one. The gross minimum wage for the responsible manager is the same.

This type of company can have up to five co-owners only. It is ideal for small service businesses with low capital investment.

Sole proprietorship (obrt)

One does not have to set up a company in order to start doing business in Croatia. There are also sole proprietorships, which are ideal for designers, developers, craftsmen who plan to earn up to 40,000 euros a year. It is similar to being an individual specialist and issuing receipts to multiple clients. The taxation is low, and the rules are simpler, but one has to choose a rather limited number of business activities with their sole proprietorship.

Certain types of business do not require a professional qualification, others do. A few of them even require special licences, such as fishermen or gun-related services. There is no start-up capital required for this type of business, and the process of closing it down is simple. Yet the person that registers a sole proprietorship is personally liable for all incurred debts.

Joint stock company (d.d.)

Entrepreneurs who wish to start larger companies with an unlimited number of shareholders and an easier access to capital may choose to establish a joint stock company. Its minimum start-up capital is 25,000 euros, and it can be established by only one person. Joint stock companies can have a two‑tier corporate governance structure (a separate management and supervisory board) or single corporate governance structure (only a management board, based on a statutory provision).

In a two‑tier corporate governance structure, the members of the supervisory board are elected at the shareholders’ assembly. The supervisory board supervises the management of the company. Members of the supervisory board oversee the management of the company and its performance. However, if the company uses a single governance structure, the members of the board of directors are elected at the shareholders’ assembly. Then the elected board of directors appoints one or more executive directors. If there are more of them, one is appointed as the CEO.

The shares of a joint stock company can be listed on the stock exchange and traded, sold or gifted. The company may choose to declare the nominal value of its shares, with a minimum of 1.00 euro if it decides to do so.

As in many other countries, company shares may be regular or preference shares, while the latter can be cumulative or participating. This type of business is ideal for business people who want to start a larger project, who want to attract a larger number of investors or need a more flexible exit strategy once they achieve their goals.

What is the best approach to starting business in Croatia?

If you need more advice on which business type is ideal for your next business venture in Croatia, please book an online meeting, and we will assist you throughout the process.