Doing Business 2020 Croatia

Economy Profile
Croatia

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Doing Business 2020 Croatia

Economy Profile of Croatia

Doing Business 2020 Indicators
(in order of appearance in the document)

Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company

Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety
mechanisms in the construction permitting system

Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and
the transparency of tariffs

Registering property Procedures, time and cost to transfer a property and the quality of the land administration system

Getting credit Movable collateral laws and credit information systems

Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance

Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling
processes

Trading across borders Time and cost to export the product of comparative advantage and import auto parts

Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes

Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for
insolvency

Employing workers Flexibility in employment regulation and redundancy cost

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 Doing Business 2020 Croatia

About Doing Business

The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and
regional level.

The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life
cycle.

Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for
starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across
borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings
of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does
present the data for these indicators.

By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages
economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector
researchers and others interested in the business climate of each economy.

In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation.
These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected
cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked.

The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most
indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013
(Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data
for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from
feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the
regulatory environment for business around the world.

To learn more about Doing Business please visit doingbusiness.org

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 Doing Business 2020 Croatia

Ease of Doing Business in DB RANK DB SCORE

Region Europe & Central Asia

Croatia
Income Category High income
51
Population 4,089,400 73.6

City Covered Zagreb

Rankings on Doing Business topics - Croatia

27
37 38 37
49
63

104
114

150

Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving
a with Electricity Property Credit Minority Taxes across Contracts Insolvency
Business Construction Investors Borders
Permits

Topic Scores

85.3 57.8 86.8 77.4 50.0 70.0 81.8 100.0 70.6 56.5

Starting a Business (rank) 114 Getting Credit (rank) 104 Trading across Borders (rank) 1
Score of starting a business (0-100) 85.3 Score of getting credit (0-100) 50.0 Score of trading across borders (0-100) 100
Procedures (number) 7 Strength of legal rights index (0-12) 5 Time to export
Time (days) 19.5 Depth of credit information index (0-8) 5 Documentary compliance (hours) 1
Cost (number) 6.2 Credit registry coverage (% of adults) 0.0 Border compliance (hours) 0
Paid-in min. capital (% of income per capita) 5.5 Credit bureau coverage (% of adults) 6.1 Cost to export
Documentary compliance (USD) 0
Dealing with Construction Permits (rank) 150 Protecting Minority Investors (rank) 37 Border compliance (USD) 0
Score of dealing with construction permits (0-100) 57.8 Score of protecting minority investors (0-100) 70.0 Time to export
Procedures (number) 22 Extent of disclosure index (0-10) 5.0 Documentary compliance (hours) 1
Time (days) 146 Extent of director liability index (0-10) 6.0 Border compliance (hours) 0
Cost (% of warehouse value) 9.2 Ease of shareholder suits index (0-10) 6.0 Cost to export
Building quality control index (0-15) 12.0 Extent of shareholder rights index (0-6) 6.0 Documentary compliance (USD) 0
Extent of ownership and control index (0-7) 7.0 Border compliance (USD) 0
Getting Electricity (rank) 37 Extent of corporate transparency index (0-7) 5.0
Score of getting electricity (0-100) 86.8 Enforcing Contracts (rank) 27
Procedures (number) 4 Paying Taxes (rank) 49 Score of enforcing contracts (0-100) 70.6
Time (days) 65 Score of paying taxes (0-100) 81.8 Time (days) 650
Cost (% of income per capita) 261.4 Payments (number per year) 12 Cost (% of claim value) 15.2
Reliability of supply and transparency of tariff index (0-8) 7 Time (hours per year) 206 Quality of judicial processes index (0-18) 13.0
Total tax and contribution rate (% of profit) 20.5
Registering Property (rank) 38 Postfiling index (0-100) 66.7 Resolving Insolvency (rank) 63
Score of registering property (0-100) 77.4 Score of resolving insolvency (0-100) 56.5
Procedures (number) 5 Recovery rate (cents on the dollar) 35.2
Time (days) 33 Time (years) 3.1
Cost (% of property value) 3.0 Cost (% of estate) 14.5
Quality of the land administration index (0-30) 23.5 Outcome (0 as piecemeal sale and 1 as going 0
concern)
Strength of insolvency framework index (0-16) 12.0

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 Doing Business 2020 Croatia

Starting a Business

This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and
formally operate in each economy’s largest business city.

To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to
10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of
operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one
company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their
scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the
(number) procedures are used. It is assumed that any required information is readily available and that the
entrepreneur will pay no bribes.
• Preregistration (for example, name verification or reservation,
notarization)
The business:
• Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited
• Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is
company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the
statistical office.
• Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for
the home to register the company
the second largest business city.
• Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of
registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle
products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily
Time required to complete each procedure (calendar days) polluting production processes.
• Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits.
-Is 100% domestically owned.
• Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the
start on the same day)
company shares, two owners have 20% of shares each, and two owners have 15% of shares
• Procedures fully completed online are recorded as ½ day each.
-Is managed by one local director.
• Procedure is considered completed once final document is -Has between 10 and 50 employees one month after the commencement of operations, all of them
received
domestic nationals.
• No prior contact with officials -Has start-up capital of 10 times income per capita.
-Has an estimated turnover of at least 100 times income per capita.
Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate.
capita) -Has an annual lease for the office space equivalent to one income per capita.
• Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet).
-Has a company deed that is 10 pages long.
• No professional fees unless services required by law or
commonly used in practice The owners:

Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there
• Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old.
or up to 3 months after incorporation -Are in good health and have no criminal record.
-Are married, the marriage is monogamous and registered with the authorities.
-Where the answer differs according to the legal system applicable to the woman or man in
question (as may be the case in economies where there is legal plurality), the answer used will be
the one that applies to the majority of the population.

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 Doing Business 2020 Croatia

Starting a Business - Croatia

Standardized Company

Legal form Limited Liability Company, D.O.O.

Paid-in minimum capital requirement HRK 5,000

City Covered Zagreb

Indicator Croatia Europe & Central OECD high Best Regulatory

Asia income Performance

Procedure – Men (number) 7 5.2 4.9 1 (2 Economies)

Time – Men (days) 19.5 11.9 9.2 0.5 (New Zealand)

Cost – Men (% of income per capita) 6.2 4.0 3.0 0.0 (2 Economies)

Procedure – Women (number) 7 5.2 4.9 1 (2 Economies)

Time – Women (days) 19.5 11.9 9.2 0.5 (New Zealand)

Cost – Women (% of income per capita) 6.2 4.0 3.0 0.0 (2 Economies)

Paid-in min. capital (% of income per capita) 5.5 0.7 7.6 0.0 (120 Economies)

Figure – Starting a Business in Croatia – Score

64.7 80.9 96.9 98.6

Procedures Time Cost Paid-in min. capital

Figure – Starting a Business in Croatia and comparator economies – Ranking and Score

DB 2020 Starting a Business Score

0 100

91.8: Albania (Rank: 53)

90.5: Regional Average (Europe & Central Asia)

88.2: Hungary (Rank: 87)

86.8: Italy (Rank: 98)

85.3: Croatia (Rank: 114)

82.1: Czech Republic (Rank: 134)

Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of
the scores for each of the component indicators.

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 Doing Business 2020 Croatia

Figure – Starting a Business in Croatia – Procedure, Time and Cost

Time (days) Cost (% of income per capita)

7

Cost (% of income per capita)

15
5
Time (days)

4
10

2
5

0 0
1 2 3 *4 5 *6 *7
Procedures (number)

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
reflected here, see the summary below.

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 Doing Business 2020 Croatia

Details – Starting a Business in Croatia – Procedure, Time and Cost

No. Procedures Time to Complete Associated Costs

1 The notary prepares the memorandum of association 1 day included in procedure 3

Agency : Notary Public
Prior to incorporation, founders can check the availability of the company name at the court
register website (https://sudreg.pravosudje.hr) free of charge.

The Public Notary prepares the documentation, which is then signed by the business founders
and notarized.

The documents necessary for the registration of a company are:

1. Articles of Association
2. Decision on Appointment of the Director
3. Statement on the Acceptance of the Appointment
4. The director's signature specimen
5. The founders' statement on non-existence of debts
6. The application of registration of the company
7. List of shareholders and managers

2 Register the company with the Commercial Court 2 weeks see procedure details
Agency : Commercial Court
Documents that are required:

1. Form/application
2. Articles of association
3. Proof of deposit of paid-in capital (must be deposited using a temporary bank account)
4. Statement of declaration of the member of the association (according to article 48, members of
the association should not have unsettled obligation to the Republic of Croatia)
5. Decision of the members of the association who will be appointed for the director, CEO, etc.
6. Declaration of the CEO and Directors that they accept the appointment and not punished for
any criminal offenses.
7. Authorization of signatures of members of boards, CEO
8. List made by board members that contains name, address, OIB (tax number) of members of the
board
9. List of members of associations

After the incorporation is completed the court register will issue a resolution on incorporation
(incorporation certificate). This certificate is issued only upon registration of the company and is an
evidence of registration (incorporation). However, upon registration (incorporation) an extract from
the courts register can be also obtained. Extract from the register is a confirmation which can be
released anytime after the company has been incorporated. Incorporation certificate is the court
decision on incorporation, while the extract from the register is an extract provided by the court on
demand and confirming that LLC has been founded.

Commercial Court is required to issue decision about incorporation within 5 working days from
application. It takes around 24 hours to register company with the Commercial court electronically.
Companies have to obtain hard copy of incorporation certificate, which is typically provided in 2
weeks. The certificate is needed to prepare company seal, open a bank account, and can be
requested from different authorities (e.g., Tax Administration).

The following fees apply:

HRK 3400 + VAT + HRK 800 notary fee (drafting and notarizing the articles of association),
HRK 700 + VAT + HRK 10 notary fee, per director (drafting application for registration)
HRK 100 + 25% VAT + HRK 15 notary fee (drafting the statement of acceptance of appointment)
HRK 30 + 25% VAT + HRK 10 notary fee (notarizing founders’ statements of non-existence of
debts, only the certification of signature is necessary)
HRK 400 (court fees)

3 Order official seal 1 day HRK 169

Agency : Seal maker
Making a seal is not mandatory, but done in practice in most cases. Official seals can be ordered
at special seal-making shops. Decision on incorporation of Company should be presented in order
to have the seal made. The seal should be used on all official documents (including invoices,
receipts and so on) issued by the company. Seals can also be ordered through FINA offices. If
done through FINA, the entrepreneur can at the same time also apply for statistical registration.

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Doing Business 2020 Croatia

4 Apply for statistical registration number 1 day (simultaneous with no charge

Agency : Croatian Bureau of Statistics (cro. Državni zavod za statistiku) previous procedure)
Applying for a statistical file number can be done at the Croatian Bureau of Statistics or through
the One Stop Shop service, used by HITRO.HR officers. The Croatian Bureau of Statistics defines
the activity of the company per the European code so there will be 2 numbers issued from the
bureau (one for the type of company and one for the activity).

The following documents should be submitted:

1) Copy of the Commercial Court’s Decision on the entry into Court Registry;
2) Copy of the Personal Identification Number (OIB) for the company;

In HITRO.HR office, the RPS form is to be completed. Submitting RPS request is required to
obtain a Notification of Classification pursuant to the National Classification of Activities of the
State Institute of Statistics (assignment of business identification number and the principal activity
code). After receiving a decision on the registration of the Company, HITRO.HR will automatically
obtain notification of the State Institute of Statistics electronically, within one business day.

5 Open a bank account 1 day no charge

Agency : Bank
When establishing a company, the founders have to open a temporary account right after signing
and the authentication of the articles of incorporation. This account is formally opened on behalf of
the founders as a future company's account for the purpose of payment of start-up capital (proof
of payment of at least a minimum amount is required for the registration with the Court Register).
When the Court inscribes the newly founded company into the Court Register and issues a ruling,
the bank transforms the existing temporary account into the company's transaction account.

Documents required to open a company bank account are:

1. Ruling on registration of a Company,
2. Statistical registration number of a Company,
3. Personal identification number (OIB) of a Company

In case of Ltd. Company establishment client signs: the Contract, signature cards, a statement of
the beneficial owner and the related parties, and must provide a copy of personal data, extract
from the Court Register and Information on classification of the business entity pursuant to the
National Classification of Activities.

6 Register for VAT and employee income tax withdrawals 1 day (simultaneous with no charge
Agency : Tax Authority (Porezna Uprava) previous procedure)
Upon registering with the Commercial Court Register and fulfilling its obligations with the State
Bureau of Statistics, the company must register with the competent tax authority. Once a company
is registered at the State Bureau of Statistics, company data is sent electronically to the tax
authority, which levies the annual company tax. The company must register for VAT at the Tax
Office, however, only after its first invoice (within 15 days of issuance). Once the company is
registered for VAT, all tax payments can be processed through an electronic system, e-VAT. If the
company’s total taxable annual income exceeds HRK 300,000, it must register itself as an entity in
the VAT system with the competent tax authority, based on the company's registered seat.
Starting from January 01, 2009 a revision of the existing Croatian Law on Companies came into
force (published in the Official Gazette no. 146/2008). The change involves inducing "OIB"
(personal identification number), that replaces tax number for legal entities. Personal identification
number is defined as identification mark of personal identification number that users of that
number use in their official evidences and with change of dates.

7 Register with the Croatian Institute for Pension Insurance (HZMO) and Croatian Institute for Less than one day no charge
Health Insurance (HZZO) (online procedure,
Agency : Croatian Institute for Pension Insurance (HZMO) and Croatian Institute for Health simultaneous with
Insurance (HZZO)
previous procedure)
The Company must register with the Croatian Institute for Pension Insurance within 24 hours from
the start of its business operation. The Company must also register each of its employees with the
Croatian Institute for Pension Insurance within 24 hours. Company with 3 or more employees will
be obligated from 1 April 2014 to register/deregister employees at Croatian Institute for Pension
Insurance exclusively online.
Currently the procedure may be completed before the competent HZZO office. Croatian Institute
for Pension Insurance and Croatian Health Insurance Fund are electronically connected, thus it is
only needed for company to register with Croatian Institute for Pension Insurance and registration
will be done automatically with Croatian Health Insurance Fund. The following documents should
be submitted:
• Decision about the registration into the Court Registry.
• Notice of classification from the National Institute for Statistics Application (to the Croatian Health
Insurance Fund).
• Proof of place of residence and the work contract.

All persons employed for the first time and age 40 are obliged to register in the second pillar of
retirement insurance. A person has to choose the obligatory pension fund within a month from
registering with the mandatory retirement insurance. If the fund is not chosen within that period,
REGOS (the Central Register of the Insured) itself chooses the obligatory pension fund that the
person will register with.

Takes place simultaneously with previous procedure.

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 Doing Business 2020 Croatia

Dealing with Construction Permits

This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications,
requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building
quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional
certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information

What the indicators measure Case study assumptions

Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction
company, the warehouse project and the utility connections are used.
• Submitting all relevant documents and obtaining all necessary
clearances, licenses, permits and certificates
The construction company (BuildCo):
• Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest
inspections
business city. For 11 economies the data are also collected for the second largest business city.
• Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a
licensed architect and a licensed engineer, both registered with the local association of architects
• Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed
Time required to complete each procedure (calendar days) experts, such as geological or topographical experts.
- Owns the land on which the warehouse will be built and will sell the warehouse upon its
• Does not include time spent gathering information completion.
• Each procedure starts on a separate day—though procedures
The warehouse:
that can be fully completed online are an exception to this rule
- Will be used for general storage activities, such as storage of books or stationery.
• Procedure is considered completed once final document is
received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6
square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be
• No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100%
owned by BuildCo, and the warehouse is valued at 50 times income per capita.
Cost required to complete each procedure (% of income per
- Will have complete architectural and technical plans prepared by a licensed architect. If
capita)
preparation of the plans requires such steps as obtaining further documentation or getting prior
• Official costs only, no bribes approvals from external agencies, these are counted as procedures.
- Will take 30 weeks to construct (excluding all delays due to administrative and regulatory
Building quality control index (0-15) requirements).

• Quality of building regulations (0-2) The water and sewerage connections:

• Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water
• Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage
infrastructure, a septic tank in the smallest size available will be installed or built.
• Quality control after construction (0-3)
- Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow
• Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and
• Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day.
- Will have a constant level of water demand and wastewater flow throughout the year; will be 1
inch in diameter for the water connection and 4 inches in diameter for the sewerage connection.

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 Doing Business 2020 Croatia

Dealing with Construction Permits - Croatia

Standardized Warehouse

Estimated value of warehouse HRK 4,555,159.80

City Covered Zagreb

Indicator Croatia Europe & Central OECD high Best Regulatory

Asia income Performance

Procedures (number) 22 16.2 12.7 None in 2018/19

Time (days) 146 170.1 152.3 None in 2018/19

Cost (% of warehouse value) 9.2 4.0 1.5 None in 2018/19

Building quality control index (0-15) 12.0 12.1 11.6 15.0 (6 Economies)

Figure – Dealing with Construction Permits in Croatia – Score

32.0 65.4 53.9 80.0

Procedures Time Cost Building quality control index

Figure – Dealing with Construction Permits in Croatia and comparator economies – Ranking and Score

DB 2020 Dealing with Construction Permits Score

0 100

69.0: Regional Average (Europe & Central Asia)

68.3: Italy (Rank: 97)

67.0: Hungary (Rank: 108)

57.8: Croatia (Rank: 150)

56.2: Czech Republic (Rank: 157)

52.7: Albania (Rank: 166)

Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores
are the simple average of the scores for each of the component indicators.

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 Doing Business 2020 Croatia

Figure – Dealing with Construction Permits in Croatia – Procedure, Time and Cost

Time (days) Cost (% of warehouse value)

7
140

Cost (% of warehouse value)

120

5
100
Time (days)

4
80

60 3

40 2

20 1

0 0
1 *2 *3 *4 *5 *6 7 *8 *9 * 10 * 11 * 12 13 14 * 15 * 16 17 * 18 19 * 20 21 22
Procedures (number)

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
reflected here, see the summary below.

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 Doing Business 2020 Croatia

Figure – Dealing with Construction Permits in Croatia and comparator economies – Measure of Quality

14 13.0 13.0
12.0 12.1
12 11.0
Index score

10
8.0
8
6
4
2
0

Croatia Albania Czech Hungary Italy Europe

Republic &
Central
Asia

Details – Dealing with Construction Permits in Croatia – Procedure, Time and Cost

No. Procedures Time to Complete Associated Costs

1 Obtain geomechanics study (soil study) 15 days HRK 25,000

Agency : Private agency
To test the soil for the underground a geomechanic engineer needs to prepare the soil study. The
architect needs to indicate to the engineer that the project needs 3 holes and give the position of
these 3 holes to the engineer. The engineer will test these 3 holes. It is a technical document.

2 Hire a geodetic engineer to produce a geodetic study 15 days HRK 10,000

Agency : Private agency
BuildCo needs to hire an external geodetic engineer. Geodetic engineer obtains all needed
documentation from Cadaster and Land Registry (parcel measures, a list of land owners adjacent
to the future construction site, etc.), and produces a geodetic study. Geodetic study is then verified
by the Cadaster, and becomes the part of the main project. After receiving the occupancy permit,
geodetic engineer is also responsible for dealing with registering the building with Cadaster office.

3 Obtain notification on conditions from the Inspectorate for Fire at the Ministry of Interior 15 days no charge
Affairs
Agency : Inspectorate for Fire at the Ministry of Interior Affairs
BuildCo must obtain technical conditions in order to develop the main project which complies with
all necessary requirements of the Inspectorate for Fire at the Ministry of Interior Affairs. Technical
conditions are issued based on the preliminary project design drawings and other documents.

4 Obtain notification on conditions from National Croatian Electric Grid 15 days no charge
Agency : HEP Distribution System Operator - Elektra Zagreb
BuildCo must obtain technical conditions in order to develop the main project which complies with
all necessary requirements of the National Croatian Electric Grid (HEP). Technical conditions are
issued based on the preliminary project design drawings and other documents.

5 Obtain notification on conditions from waste collection department 15 days no charge

Agency : Waste collection department
BuildCo must obtain technical conditions in order to develop the main project which complies with
all necessary requirements of the waste collection department. Technical conditions are issued
based on the preliminary project design drawings and other documents.

6 Obtain notification on conditions from the Local Water Authority 15 days no charge
Agency : Zagreb Holding d.o.o. - Water and sewerage
BuildCo must obtain technical conditions in order to develop the main project which complies with
all necessary requirements of the local water authority. Technical conditions are issued based on
the preliminary project design drawings and other documents.

7 Receive clearance from the waste collection department 30 days no charge

Agency : Waste Collection Department
BuildCo must obtain a clearance to ensure that the building has been constructed in accordance
with the conditions that were outlined for the building.

8 Receive clearance from the Inspectorate for Fire at the Ministry of Interior Affairs 25 days HRK 350
Agency : Inspectorate for Fire at the Ministry of Interior Affairs
Inspectorate for Fire at the Ministry of Interior Affairs is issuing a clearance to ensure that the
building has been constructed in accordance with the conditions that were outlined for the
building.
A request for this clearance must include fire protection study (if it is required by any regulation),
one copy of the main project, and evidence of payment of administrative fees.

After the main project is inspected for the fire protection, the Ministry of internal affairs or local
competent police station will issue the clearance.There is a clearance to ensure that the building
has been constructed in accordance with the conditions that were outlined for the building.

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Doing Business 2020 Croatia

9 Receive clearance from the Sanitary Inspectorate 24 days HRK 70

Agency : Sanitary Inspectorate
BuildCo needs to acquire a clearance from Sanitary Inspection to prove that the building has been
constructed in accordance with the conditions that were outlined for the building, especially
regarding health protection laws and regulations. This inspection also includes a noise inspection
clearance. Sanitary inspection representative will be present at the final inspection, before the
occupancy permit is issued, to check the building’s compliance with sanitary standards.

Receive clearance from the National Croatian Electric Grid 15 days no charge
10 Agency : HEP Distribution System Operator - Elektra Zagreb
BuildCo must obtain clearance from the HEP Distribution System Operator. Each municipality/city
has a HEP Distribution System Operator local office which issues this clearance, free of charge. In
the case of Zagreb, that is HEP - Elektra Zagreb.

This clearance observes certain technical, economic, and other power connection and network
proficiencies of the construction.

11 Receive clearance from the Local Water Authority 14 days no charge

Agency : Zagreb Holding d.o.o. - Water and sewerage
BuildCo must obtain preliminary approvals for water supply and sewerage from Zagreb Holding
d.o.o. - Water and sewerage. Two clearances are issued - one for water supply and another one
for sewerage. Even though these clearances are issued by separate departments of the same
entity, customers use a single document and a single point of contact to acquire both clearances.

Zagreb Holding d.o.o. - Water and sewerage looks at the main project and its compliance with
technical aspects of water and sewerage networks’ standards and procedures.

Obtain excerpt from the Land Registry for subject and bordering lands 1 day HRK 20
12 Agency : Land Registry
The excerpt from the Land Registry is required for the building permit application as evidence of
the legal interest to build.
While the documents are currently available for viewing online, they are not accepted as official
documentation at this time.
If the investor in the construction is not the owner of the land, according to The Building Act of
2013, there are other newly acceptable ways to prove legal interest, including contracts and
written approval from the owner.

13 Request and receive building permit 30 days HRK 1,070

Agency : Municipal Authority
The construction of a building may commence only on the basis of a final and effective building
permit. After obtaining all needed documentation, BuildCo requests and obtains a building permit.
Building permit is issued by the municipal office responsible for physical planning and
construction. Before receiving a building permit, applicant has to submit an inquiry to the municipal
office responsible for physical planning and construction, with the main project enclosed, in order
to receive a list of all authorities that need to preliminary approve the project and issue various
clearances before the building permit application is submitted for approval.

The investor’s application for issuing the building permit shall be accompanied by:

1. The main design in electronic form;

2. A report on the preformed main audit design, if the audit is prescribed;
3. Evidence of legal interest for the issuance of the building permit;
4. Evidence that the person is the investor (concession, approval or other official act prescribed by
special regulation) in case of a construction work for which a special act prescribes who the
investor may be.

The building control authority will then, within five days of receipt of the notification of
commencement, notify the Ministry of Interior, building inspection, labor inspection, administrative
body of the local self-government unit competent for determining utility charges and body
competent for determining water charges.

14 Obtain decision from the Municipal Authority regarding utilities 22 days HRK 292,613
Agency : Municipal Authority
BuildCo must obtain a decision from the Municipal Authority on utility fees, based on the
construction permit. The amount of the fee depends on the building size (in cubic meters) and on
the location.

Buzin is located in Zone III for which the communal contribution fee is HRK 75 per m3 of building
volume. According to the Spatial Plan of the City of Zagreb, it is possible to construct production
buildings, including the warehouses, in the area of Buzin.

In the area of Sesvetski Kraljevec (eastern peripheral part of the city of Zagreb), the city has
reserved a zone for the construction of production and storage buildings. For this area, the
communal contribution fee is HRK 15 per m³ (Zone V). This decision came into force in March
2019. Construction of a warehouse is possible in both locations.

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Doing Business 2020 Croatia

Pay water contribution to the state company Croatian Waters (Hrvatske Vode) 15 days HRK 11,705
15 Agency : Croatian Waters (Hrvatske Vode)
The water contribution is paid to finance the management of water resources and protection from
floods. The cost is determined based on the following:
(i) The zone the new construction is in. Zone A is Zagreb and the protected coastal area, Zone B
is the rest of the country, and Zone C are areas subject to special Government care.
(ii) The purpose of the construction (residential, industrial, public interest).
(iii) The volume of the construction.

The cost for the case study warehouse is 3901.5 * HRK 3.00 according to the fee schedule of
Hrvatske Vode (www.voda.hr).

Hire an external supervising engineer to conduct inspections during construction 1 day HRK 68,327
16 Agency : Private Firm
Per Art. 50 & 56 of the Construction Law NN 153/ 13 , BuildCo must hire an external engineer to
supervise the construction work. The cost varies, as it depends on the negotiations between
BuildCo and external engineer, but the most usual cost calculation is 1.5% of the building value.

This is one of the key roles in the whole process, as external supervising engineer is responsible
for technical and expert supervision of the construction site from the commencement notice until
the occupancy permit is issued. External supervising engineer also has to participate in the final
inspection of the construction.

17 Submit commencement notice 1 day HRK 20

Agency : Municipal office for physical planning and construction
The investor must notify the building control authority eight days before the commencement of
construction. In the notification the builder must include:
• Building classification
• Register number
• Date of issue of the building permit
• List the contractor and supervising engineer
• Evidence that the building plot was formed in the cadastre if the building is subject to
specification of the building plot

The building control authority will then, within five days of receipt of the notification of
commencement, notify the Ministry of Interior, building inspection, labor inspection, administrative
body of the local self-government unit competent for determining utility charges and body
competent for determining water charges, while the building inspection shall also be notified
whether the notification is complete.

Receive random inspection from the Ministry of Construction and Physical Planning 1 day no charge
18 Agency : Ministry of Construction and Physical Planning - Building Inspection
Building Inspection, as a part of Ministry of Construction and Physical Planning, conducts
inspections of the construction site, in order to determine if the construction is in compliance with
the laws and regulations in the area of building and physical planning.

Inspections are random and may occur on multiple occasions throughout the construction
process.

19 Obtain water and sewage connection 20 days HRK 8,000

Agency : Zagreb Holding d.o.o. - Water and sewerage
BuildCo obtains water and sewerage connection from the Water & sewerage Authority of Zagreb.

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Doing Business 2020 Croatia

Apply for occupancy (use) permit 1 day HRK 20

20 Agency : Municipal office for physical planning and construction
The occupancy permit is mandatory for the use of a completed building. The following documents
must be submitted:
• Photocopy of the building permit or a copy of the main design for construction work
• Information on the participants in the construction (investor, designer, general contractor,
supervising engineer)
• Written statement of the contractor on works completed and the requirements for the
maintenance of the construction
• Final report of the supervising engineer
• Statement of the geodetic engineer that the construction work was built in accordance with the
surveying design
• Surveying study for entering the construction work in the cadaster or for change of information
on buildings and other construction works, if the construction work is not subject to developing the
surveying design, but is to be entered in the cadaster
• Statement of the authorized geodetic engineer that the construction work is located on the
building plot
• Energy certificate of the building, if applicable

The Municipality forms an evaluation committee within 30 days after the submission of the
application for the issuance of the occupancy permit, and determines the date of the on-site
inspection. The investor submits various documents which substantiate that the construction has
been conducted in accordance with the regulations (e.g., construction diary, licenses of the
construction firm which executed the works, technical certificates for the material used in the
construction, etc.) to the evaluation committee no later than one day after the site inspection. If
any of the members of the evaluation committee find that the building does not comply with a
specific requirement, the investor may be given an additional 90 days to make the necessary
corrections (if the error is, in fact, can be corrected). If all requirements have been met, the
Municipality should issue the occupancy permit within 30 days after the inspection.

21 Receive final inspection 1 day HRK 2,040

Agency : Municipal office for physical planning and construction
Within 15 to 30 days after receiving a request for the occupancy permit, a technical review team
from the municipality must conduct the final inspection. All entities that previously participated in
this process and issued permits or clearances, would participate in this final inspection.

22 Receive occupancy (use) permit 21 days HRK 1,070

Agency : Municipal office for physical planning and construction
After the on-site inspection, the municipality has up to 30 days to issue the occupancy certificate.

Takes place simultaneously with previous procedure.

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 Doing Business 2020 Croatia

Details – Dealing with Construction Permits in Croatia – Measure of Quality

Answer Score

Building quality control index (0-15) 12.0

Quality of building regulations index (0-2) 2.0

How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0
of charge.

Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0
accessible website, brochure or pamphlet? (0-1) documents; Fees to
be paid; Required
preapprovals.

Quality control before construction index (0-1) 0.0

Which third-party entities are required by law to verify that the building plans are in compliance with existing By law, there is no 0.0
building regulations? (0-1) need to verify plans
compliance; Civil
servant reviews
plans.

Quality control during construction index (0-3) 2.0

What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by 1.0
external engineer or
firm.

Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0
inspections are
always done in
practice.

Quality control after construction index (0-3) 3.0

Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0
plans and regulations? (0-2) is done by
government agency.

Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0
always occurs in
practice.

Liability and insurance regimes index (0-2) 1.0

Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0
(Latent Defect Liability or Decennial Liability)? (0-1) Professional in
charge of the
supervision;
Construction
company.

Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0
problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain
insurance .

Professional certifications index (0-4) 4.0

What are the qualification requirements for the professional responsible for verifying that the architectural plans Minimum number of 2.0
or drawings are in compliance with existing building regulations? (0-2) years of experience;
University degree in
architecture or
engineering; Being a
registered architect or
engineer.

What are the qualification requirements for the professional who supervises the construction on the ground? (0- Minimum number of 2.0
2) years of experience;
University degree in
engineering,
construction or
construction
management; Being
a registered architect
or engineer.

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 Doing Business 2020 Croatia

Getting Electricity

This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally,
the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data
collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the
electricity connection and the monthly consumption are used.
• Submitting all relevant documents and obtaining all necessary
clearances and permits
The warehouse:
• Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods.
inspections
- Is located in the economy’s largest business city. For 11 economies the data are also collected for
• Obtaining external installation works and possibly purchasing the second largest business city.
material for these works - Is located in an area where similar warehouses are typically located and is in an area with no
physical constraints. For example, the property is not near a railway.
• Concluding any necessary supply contract and obtaining final - Is a new construction and is being connected to electricity for the first time.
supply
- Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square
Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet).

• Is at least 1 calendar day The electricity connection:

• Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140-
• Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW).
- Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution
• Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the
prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by
excavation or overhead lines) but are all carried out on public land. There is no crossing of other
Cost required to complete each procedure (% of income per
owners’ private property because the warehouse has access to a road.
capita)
- Does not require work to install the internal wiring of the warehouse. This has already been
• Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base.

• Value added tax excluded The monthly consumption:

The reliability of supply and transparency of tariffs index (0-8)
- It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours
• Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts
(assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours
• Tools to monitor power outages (0–1) (kWh); hourly consumption is 112 kWh.
• Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier.
- Tariffs effective in January of the current year are used for calculation of the price of electricity for
• Regulatory monitoring of utilities’ performance (0–1)
the warehouse. Although January has 31 days, for calculation purposes only 30 days are used.
• Financial deterrents limiting outages (0–1)
• Transparency and accessibility of tariffs (0–1)
Price of electricity (cents per kilowatt-hour)*

• Price based on monthly bill for commercial warehouse in case

study

*Note: Doing Business measures the price of electricity, but it is

not included in the ease of doing business score nor in the ranking
on the ease of getting electricity.

Page 18
 Doing Business 2020 Croatia

Getting Electricity - Croatia

Standardized Connection

Name of utility HEP ODS

Price of electricity (US cents per kWh) 16.8

City Covered Zagreb

Indicator Croatia Europe & Central OECD high Best Regulatory

Asia income Performance

Procedures (number) 4 5.1 4.4 3 (28 Economies)

Time (days) 65 99.6 74.8 18 (3 Economies)

Cost (% of income per capita) 261.4 271.9 61.0 0.0 (3 Economies)

Reliability of supply and transparency of tariff index (0-8) 7 6.2 7.4 8 (26 Economies)

Figure – Getting Electricity in Croatia – Score

83.3 79.6 96.8 87.5

Reliability of supply and transparency of

Procedures Time Cost
tariff index

Figure – Getting Electricity in Croatia and comparator economies – Ranking and Score

DB 2020 Getting Electricity Score

0 100

95.6: Czech Republic (Rank: 11)

86.8: Croatia (Rank: 37)

86.1: Italy (Rank: 38)

75.6: Regional Average (Europe & Central Asia)

71.0: Albania (Rank: 107)

63.3: Hungary (Rank: 125)

Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the
scores for all the component indicators except the price of electricity.

Figure – Getting Electricity in Croatia – Procedure, Time and Cost

Time (days) Cost (% of income per capita)

300
60
Cost (% of income per capita)

250
50

200
Time (days)

40

150
30

100
20

10 50

0 0
1 2 3 4
Procedures (number)

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
Page 19
 Doing Business 2020 Croatia

reflected here, see the summary below.

Figure – Getting Electricity in Croatia and comparator economies – Measure of Quality

9 8
8 7 7 7
7 6.2
Index score

6 5
5
4
3
2
1
0

Croatia Albania Czech Hungary Italy Europe

Republic &
Central
Asia

Page 20
 Doing Business 2020 Croatia

Details – Getting Electricity in Croatia – Procedure, Time and Cost

No. Procedures Time to Complete Associated Costs

1 Submit application and receive preliminary connection approval and contract 25 calendar days HRK 0
Agency : HEP Distribution System Operator (HEP ODS)
The applicant starts the process by requesting a provisional connection authorization from HEP
ODS, the national electricity distributor. This request is regulated by the “General conditions of
electricity supply” (Official Gazette, No. 14/06), article 7. The applicant needs to provide
information about the location and the type of construction, as well as the basic characteristics of
the requested connection (e.g. the type of connection, the capacity needed, the category of
consumption, and the estimated annual electricity consumption). The applicant also needs to
enclose a set of documents, such as the excerpt from cadastral plan, the description or
conceptual design of the construction, and a list the power consumption equipment with technical
characteristics and nominal power.

HEP ODS assesses the feasibility of the connection and determines the technical and economic
conditions for connecting the building to the grid. If the connection is approved, HEP ODS sends a
connection contract to the client, together with the technical and economic conditions and the
approved provisional connection authorization.

2 Accept estimate and await completion of external works by utility 30 calendar days HRK 238,184.43
Agency : HEP ODS
The customer signs and returns the connection contract to HEP ODS. At least 50% of the
connection fee must be paid within 8 days after signing the contract. Upon the payment of 50% of
the fee, the construction works can start. The external connection construction, carried out by HEP
ODS, includes the installation of a connection cubicle, of a meter, of a tariff switch unit or a time-
switch and a limiter switch or other demand controller. According to the “Rulebook on charges for
connection to the power grid and for increasing the connection power” and to the “Decision on the
amount of the fee for connecting to the power grid and for increasing the power”, the connection
fees in Zagreb are HRK 1,700 per kVA.

In most cases in Zagreb, for a new connection with a subscribed capacity of 140 kVA, the
installation of a transformer is not needed.

3 Submit internal wiring certificate to utility and request final connection 9 calendar days HRK 0
Agency : HEP ODS
Once the connection is ready, the customer has to submit the “Request for electricity power
supply and conclusion of the network agreement”. The application form is available online on HEP
ODS website. Together with this form, the customer has to submit the internal wiring certificate, a
statement on final inspection and testing of electrical installation, a certificate on electric
installations usage, a proof that the connection fees have been paid in full, and the building permit
of the construction. The documents pertaining to the electrical installation can be prepared by the
client's electrician - or a third party firm if the client's electrician does not have the required
qualifications. If this documentation is satisfactory, HEP ODS issues a final connection approval
and a network usage contract that the customer needs to sign.

4 Receive visit by utility to open the meter 1 calendar day HRK 0

Agency : HEP ODS
After receiving the final connection approval and signing the network usage contract, an
authorized person from HEP ODS comes to switch on the meter and electricity starts flowing. In
terms of the supply contract, the customer has the option to sign a supply agreement with a
private supplier in the liberalized market but this is typically done once connected as HEP is the
default supplier.

Takes place simultaneously with previous procedure.

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 Doing Business 2020 Croatia

Details – Getting Electricity in Croatia – Measure of Quality

Answer

Reliability of supply and transparency of tariff index (0-8) 7

Total duration and frequency of outages per customer a year (0-3) 2

System average interruption duration index (SAIDI) 3.3

System average interruption frequency index (SAIFI) 1.6

What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0

Mechanisms for monitoring outages (0-1) 1

Does the distribution utility use automated tools to monitor outages? Yes

Mechanisms for restoring service (0-1) 1

Does the distribution utility use automated tools to restore service? Yes

Regulatory monitoring (0-1) 1

Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes

Financial deterrents aimed at limiting outages (0-1) 1

Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes

Communication of tariffs and tariff changes (0-1) 1

Are effective tariffs available online? Yes

Link to the website, if available online http://www.hep.hr/ods/kup

ci-154/kucanstvo/tarifni-
modeli/34 https://narodne-
novine.nn.hr/clanci/sluzbe
ni/2015_12_134_2533.ht
ml

Are customers notified of a change in tariff ahead of the billing cycle? Yes

Note:

If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index.

If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index.

If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index.

Page 22
 Doing Business 2020 Croatia

Registering Property

This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a
building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality
of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access
to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the
(number) transaction, the property and the procedures are used.

• Preregistration procedures (for example, checking for liens, The parties (buyer and seller):
notarizing sales agreement, paying property transfer taxes)
- Are limited liability companies (or the legal equivalent).
• Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits)
• Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the
municipality) second largest business city.
- Are 100% domestically and privately owned.
Time required to complete each procedure (calendar days) - Perform general commercial activities.

• Does not include time spent gathering information The property (fully owned by the seller):
• Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price.
that can be fully completed online are an exception to this rule
- Is fully owned by the seller.
• Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years.
received - Is registered in the land registry or cadastre, or both, and is free of title disputes.
• No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its
official limits), and no rezoning is required.
Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two-
value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse
is 10 years old, is in good condition, has no heating system and complies with all safety standards,
• Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be
taxes).
transferred in its entirety.
• Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase.
excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind.
- Will not be used for special purposes, and no special permits, such as for residential use,
Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required.
- Has no occupants, and no other party holds a legal interest in it.
• Reliability of infrastructure index (0-8)
• Transparency of information index (0–6)
• Geographic coverage index (0–8)
• Land dispute resolution index (0–8)
• Equal access to property rights index (-2–0)

Page 23
 Doing Business 2020 Croatia

Registering Property - Croatia

Indicator Croatia Europe & Central OECD high Best Regulatory

Asia income Performance

Procedures (number) 5 5.5 4.7 1 (5 Economies)

Time (days) 33 20.8 23.6 1 (2 Economies)

Cost (% of property value) 3.0 2.7 4.2 0.0 (Saudi Arabia)

Quality of the land administration index (0-30) 23.5 20.4 23.2 None in 2018/19

Figure – Registering Property in Croatia – Score

66.7 84.7 80.0 78.3

Procedures Time Cost

Quality of the land administration index

Figure – Registering Property in Croatia and comparator economies – Ranking and Score

DB 2020 Registering Property Score

0 100

81.7: Italy (Rank: 26)

80.1: Hungary (Rank: 29)

79.7: Czech Republic (Rank: 32)

77.4: Croatia (Rank: 38)

75.8: Regional Average (Europe & Central Asia)

63.4: Albania (Rank: 98)

Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of
the scores for each of the component indicators.

Page 24
 Doing Business 2020 Croatia

Figure – Registering Property in Croatia – Procedure, Time and Cost

Time (days) Cost (% of property value)

3.5

30
3

Cost (% of property value)

25
2.5
Time (days)

20
2

15
1.5

10 1

5 0.5

0 0
1 2 3 *4 5
Procedures (number)

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
reflected here, see the summary below.

Page 25
 Doing Business 2020 Croatia

Figure – Registering Property in Croatia and comparator economies – Measure of Quality

30 26.5
25.0 26.0
25 23.5
20.4
Index score

20 16.5
15

10

Croatia Albania Czech Hungary Italy Europe

Republic &
Central
Asia

Details – Registering Property in Croatia – Procedure, Time and Cost

No. Procedures Time to Complete Associated Costs

1 Obtain the land registry extract from the competent land register court 1 day HRK 20; (HRK 20 per
Agency : Municipal Court Zagreb, Land Registry Office extract)
As part of the due diligence process, the buyer needs to know the status of the property. For
transaction involving large sale amount as in the case scenario, the buyer, or their representative
would go personally to the land registry to look at the documents and make sure everything is
aligned. An unofficial land registry extract, without legal power, can be obtained online by anyone
at any time, via internet page of the Ministry of Justice. Since November, 30, 2015 notary with the
certificate from Croatian Notary Chamber and Financial Agency can issue the formal extract from
any land registry office of any Municipal.

2 Notary notarizes the sale contract 1 day HRK 40; (HRK 40.0 (VAT
Agency : Notary not included) (47.5 VAT
Land Registry Department of the Municipal Court will allow registration of ownership right only included) per signature
based on public documents or private documents with a notarized signature of at least a person
verified by public notary)
whose right is going to be restricted, encumbered, terminated or conveyed. Thus, the Land
Registry Department of the Municipal Court will allow registration of ownership right based on the
sale contact if a public notary verified / notarized the signature of the seller (a party whose
property right will be restricted, encumbered, terminated or conveyed).

3 Submit the sale contract to the municipal tax administration to receive an estimate of the 30 days Taxes paid in Procedure 5
land transfer taxes
Agency : Municipal Tax Administration
The buyer submits the sale contract to the municipal tax administration (although the notary is
legally mandated to do the same as well) to receive an estimate of the land transfer taxes to be
paid. Pursuant to Article 19 of the new Real Estate Transfer Tax Act (Official Gazette No.
115/2016) in force as of January 1, 2017, a person is obligated to pay the real estate transfer tax,
and is exceptionally obligated to submit a real estate transfer tax application if documents on the
acquisition of the real estate were not notarized by the notary public, issued by the competent
court or other public authority. A person is obligated to submit a real estate transfer application to
the Municipal Tax Administration where the real estate is located within 30 days.

Likewise, a public notary is obligated to electronically deliver one copy of a document which is a
legal base for real estate transfer, together with the personal identification number PIN ("OIB") of
the parties, within 30 days to the Municipal Tax Administration where the real estate is located.
(Pursuant to Article 18 of the new Real Estate Transfer Tax Act (Official Gazette No. 115/2016) in
force as of January 1, 2017).

4 Request for property registration/title transfer is submitted 25 days Registration fee is paid in
Agency : Municipal Court Zagreb, Land Registry Office Procedure 5
The request for property registration/title transfer approval is submitted to Land Registry Office at
the Municipal Court. The Registry conducts the registration procedure and renders the decision
issuing the property title. The process of recording the sale agreement with the competent land
register court takes around 20-30 days. Although the date of application for registration will be
marked in the Registry as the moment of transferring the ownership, Only the final decision, the
one allowing the registration has the full legal effect.

The documentation to be submitted shall include:

(i) Notarized sale agreement
(ii) Application form
(iii) Certified copy of an ID or a passport
(iv) Personal Identification Number (OIB) (required since January 1, 2009, Land registry Act of
December 18, 2009).

5 Pay land transfer taxes, registration fee and stamp duty at the commercial bank or post 1 day HRK 136,904.79; (3% of
office property value (real
Agency : Commercial Bank or Post Office property transfer tax) +
The fees and taxes can be paid in the post offices or in the commercial banks, but only to the
HRK 200 (registration fee)
indicated State Budget bank account number.
+ HRK 50 stamp duty)

Takes place simultaneously with previous procedure.

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 Doing Business 2020 Croatia

Details – Registering Property in Croatia – Measure of Quality

Answer Score

Quality of the land administration index (0-30) 23.5

Reliability of infrastructure index (0-8) 6.0

Type of land registration system in the economy: Title Registration

System

What is the institution in charge of immovable property registration? Municipal Court

Zagreb, Land
Registry Department

In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Fully digital 2.0
business city of the economy —in a paper format or in a computerized format (scanned or fully digital)?

Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, Yes 1.0
restrictions and the like)?

Institution in charge of the plans showing legal boundaries in the largest business city: Zagreb City Office for
Cadastre and
Geodetic Affairs

In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Computer/Scanned 1.0
city of the economy—in a paper format or in a computerized format (scanned or fully digital)?

Is there an electronic database for recording boundaries, checking plans and providing cadastral information Yes 1.0
(geographic information system)?

Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Different databases 1.0
kept in a single database, in different but linked databases or in separate databases? but linked

Do the immovable property registration agency and cadastral or mapping agency use the same identification No 0.0
number for properties?

Transparency of information index (0–6) 3.5

Who is able to obtain information on land ownership at the agency in charge of immovable property registration Anyone who pays the 1.0
in the largest business city? official fee

Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5
and if so, how?

Link for online access: https://gov.hr/moja-

uprava/stanovanje-i-
okolis/vlasnicka-
prava/upis-prava-
vlasnistva/1855

Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable Yes, online 0.5
property registration in the largest business city made publicly available–and if so, how?

Link for online access: http://sudovi.pravosu

dje.hr/ogszg/index.ph
p?linkID=38

Does the agency in charge of immovable property registration agency formally commit to deliver a legally No 0.0
binding document that proves property ownership within a specific timeframe –and if so, how does it
communicate the service standard?

Link for online access:

Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0
in charge of immovable property registration?

Contact information:

Are there publicly available official statistics tracking the number of transactions at the immovable property Yes 0.5
registration agency?

Number of property transfers in the largest business city in 2018: 18,331 (Based on
purchase sale
contracts)

Who is able to consult maps of land plots in the largest business city? Freely accessible by 0.5
anyone

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Doing Business 2020 Croatia

Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, online 0.5

Link for online access: http://sudovi.pravosu

dje.hr/ogszg/img/File/
ZOSP_i_ZZK,_sudsk
e_pristojbe.pdf

Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and No 0.0
if so, how does it communicate the service standard?

Link for online access:

Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0
cadastral or mapping agency?

Contact information:

Geographic coverage index (0–8) 8.0

Are all privately held land plots in the largest business city formally registered at the immovable property Yes 2.0
registry?

Are all privately held land plots in the economy formally registered at the immovable property registry? Yes 2.0

Are all privately held land plots in the largest business city mapped? Yes 2.0

Are all privately held land plots in the economy mapped? Yes 2.0

Land dispute resolution index (0–8) 6.0

Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5
them opposable to third parties?

Legal basis: Act on Ownership

and Other Real
Rights (Official
Gazette 91/1996,
68/1998, 137/1999,
22/2000, 73/2000,
114/2001, 79/2006,
141/2006, 146/2008,
38/2009, 153/2009,
90/2010, 143/2012,
152/2014)

Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5

Type of guarantee: State guarantee

Legal basis: Art. 209. of the Land

Registry Act
(published in the
Official Gazette No.
91/96, 68/98, 137/99,
114/01, 100/04,
107/07, 152/08,
126/10, 55/13, 60/13,
108/2017)

Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who Yes 0.5
engaged in good faith in a property transaction based on erroneous information certified by the immovable
property registry?

Legal basis: The Judiciary Act

(Official Gazette No.
28/13, 33/15, 82/15,
82/16, 67/18); the
Civil Servants Act
(Official Gazett No.
92/05, 140/05,
142/06, 77/07,
107/07, 27/08, 34/11,
49/11, 150/11, 34/12,
49/12, 37/13, 38/13,
01/15, 138/15, 61/17)
The Civil Obligations
Act (Official Gazette
No. 35/05, 41/08,
125/11, 78/15, 29/18).

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Doing Business 2020 Croatia

Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5
checking the compliance of contracts with requirements of the law)?

If yes, who is responsible for checking the legality of the documents? Registrar;

Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5

If yes, who is responsible for verifying the identity of the parties? Registrar; Notary;

Is there a national database to verify the accuracy of government issued identity documents? No 0.0

What is the Court of first instance in charge of a case involving a standard land dispute between two local Municipal civil court
businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located Zagreb, Land
in the largest business city? Registry department

How long does it take on average to obtain a decision from the first-instance court for such a case (without Between 1 and 2 2.0
appeal)? years

Are there publicly available statistics on the number of land disputes at the economy level in the first instance Yes 0.5
court?

Number of land disputes in the economy in 2018: 8018.0

Equal access to property rights index (-2–0) 0.0

Do unmarried men and unmarried women have equal ownership rights to property? Yes

Do married men and married women have equal ownership rights to property? Yes 0.0

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 Doing Business 2020 Croatia

Getting Credit

This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most
recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and
lenders with respect to secured transactions through 2 sets of indicators. The depth of credit
• Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of
• Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights
(0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers
and lenders and thus facilitate lending. For each economy it is first determined whether a unitary
Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to
• Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to
credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security
interests is possible). The case scenarios involve a secured borrower, company ABC, and a
Credit bureau coverage (% of adults) secured lender, BizBank.

• Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B
as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of
movable collateral.
Credit registry coverage (% of adults)

• Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used:
percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent).
- ABC has up to 50 employees.
- ABC has its headquarters and only base of operations in the economy’s largest business city. For
11 economies the data are also collected for the second largest business city.
- Both ABC and BizBank are 100% domestically owned.

The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants
BizBank a nonpossessory security interest in one category of movable assets, for example, its
machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In
economies where the law does not allow nonpossessory security interests in movable property,
ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for
nonpossessory security interests).

In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any
charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of
ABC’s movable assets as possible). ABC keeps ownership and possession of the assets.

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 Doing Business 2020 Croatia

Getting Credit - Croatia

Indicator Croatia Europe & Central OECD high Best Regulatory

Asia income Performance

Strength of legal rights index (0-12) 5 7.8 6.1 12 (5 Economies)

Depth of credit information index (0-8) 5 6.7 6.8 8 (53 Economies)

Credit registry coverage (% of adults) 0.0 24.0 24.4 100.0 (2 Economies)

Credit bureau coverage (% of adults) 6.1 41.7 66.7 100.0 (14 Economies)

Figure – Getting Credit in Croatia – Score

50.0

Score - Getting Credit

Figure – Getting Credit in Croatia and comparator economies – Ranking and Score

DB 2020 Getting Credit Score

0 100

75.0: Hungary (Rank: 37)

72.2: Regional Average (Europe & Central Asia)

70.0: Albania (Rank: 48)

70.0: Czech Republic (Rank: 48)

50.0: Croatia (Rank: 104)

45.0: Italy (Rank: 119)

Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the
strength of legal rights index and the depth of credit information index.

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 Doing Business 2020 Croatia

Figure – Legal Rights in Croatia and comparator economies

10 9
9 8 7.8
8 7
Index Score

7
6 5
5
4
3 2
2
1
0

Croatia Albania Czech Hungary Italy Europe

Republic &
Central
Asia

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 Doing Business 2020 Croatia

Details – Legal Rights in Croatia

Strength of legal rights index (0-12) 5

Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No
to security interests in movable assets exist in the economy?

Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description No
of collateral?

Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes
collateral?

May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the No
original assets?

Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes
and can the collateral agreement include a maximum amount for which the assets are encumbered?

Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an Yes
electronic database indexed by debtor's name?

Does a notice-based collateral registry exist in which all functional equivalents can be registered? No

Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No
party?

Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? No

Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes

Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No
protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it?

Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes
the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?

Figure – Credit Information in Croatia and comparator economies

8
7 7 6.7
7
6 6
Index Score

6
5
5
4
3
2
1
0

Croatia Albania Czech Hungary Italy Europe

Republic &
Central
Asia

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 Doing Business 2020 Croatia

Details – Credit Information in Croatia

Depth of credit information index (0-8) Credit bureau Credit registry Score

Are data on both firms and individuals distributed? No No 0

Are both positive and negative credit data distributed? Yes No 1

Are data from retailers or utility companies - in addition to data from banks and No No 0
financial institutions - distributed?

Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1
that distribute more than 10 years of negative data or erase data on defaults as
soon as they are repaid obtain a score of 0 for this component.)

Are data on loan amounts below 1% of income per capita distributed? Yes No 1

By law, do borrowers have the right to access their data in the credit bureau or Yes No 1
credit registry?

Can banks and financial institutions access borrowers’ credit information online Yes No 1
(for example, through an online platform, a system-to-system connection or
both)?

Are bureau or registry credit scores offered as a value-added service to help No No 0

banks and financial institutions assess the creditworthiness of borrowers?

Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult
population, the total score on the depth of credit information index is 0.

Coverage Credit bureau Credit registry

Number of individuals 0 0

Number of firms 162,782 0

Total 162,782 0

Percentage of adult population 6.1 0.0

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 Doing Business 2020 Croatia

Protecting Minority Investors

This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights,
governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed
in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

• Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about
approval requirements for related-party transactions the business and the transaction.
• Extent of director liability index (0–10): Ability of minority
shareholders to sue and hold interested directors liable for The business (Buyer):
prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange.
remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of
from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law.
the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James
appointed 60% of the shareholder-elected members.
• Ease of shareholder suits index (0–10): Access to internal
- Has not adopted bylaws or articles of association that go beyond the minimum requirements.
corporate documents; Evidence obtainable during trial and
allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory.
- Is a manufacturing company with its own distribution network.
• Extent of conflict of interest regulation index (0-30): Sum of
the extent of disclosure, extent of director liability and ease of The transaction involves the following details:
shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to
• Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board.
and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores.
Seller recently closed a large number of its stores.
• Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s
safeguards protecting shareholders from undue board control
distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of
and entrenchment
Buyer’s assets and is higher than the market value.
• Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the
transparency on ownership stakes, compensation, audits and authority of the company.
financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures
made—that is, the transaction was not entered into fraudulently.
• Extent of shareholder governance index (0–20): Sum of the - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and
extent of shareholders rights, extent of ownership and control
directors that approved the transaction.
and extent of corporate transparency indices

• Strength of minority investor protection index (0–50): Sum

of the extent of conflict of interest regulation and extent of
shareholder governance indices

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 Doing Business 2020 Croatia

Protecting Minority Investors - Croatia

Stock exchange information

Stock exchange Zagreb Stock Exchange

Stock exchange URL http://www.zse.hr

Listed firms with equity securities 232

City Covered Zagreb

Indicator Croatia Europe & Central OECD high Best Regulatory

Asia income Performance

Extent of disclosure index (0-10) 5.0 7.5 6.5 10 (13 Economies)

Extent of director liability index (0-10) 6.0 5.0 5.3 10 (3 Economies)

Ease of shareholder suits index (0-10) 6.0 6.8 7.3 10 (Djibouti)

Extent of shareholder rights index (0-6) 6.0 3.4 4.7 6 (19 Economies)

Extent of ownership and control index (0-7) 7.0 3.7 4.5 7 (9 Economies)

Extent of corporate transparency index (0-7) 5.0 4.1 5.7 7 (13 Economies)

Figure – Protecting Minority in Croatia – Score

70.0

Score - Protecting Minority Investors

Figure – Protecting Minority Investors in Croatia and comparator economies – Ranking and Score

DB 2020 Protecting Minority Investors Score

0 100

70.0: Croatia (Rank: 37)

66.0: Italy (Rank: 51)

62.0: Czech Republic (Rank: 61)

61.0: Regional Average (Europe & Central Asia)

54.0: Hungary (Rank: 97)

46.0: Albania (Rank: 111)

Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are
the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index.

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 Doing Business 2020 Croatia

Figure – Protecting Minority Investors in Croatia and comparator economies – Measure of Quality

Croatia 5 6 5 7 6 6

Albania 0 7 9 0 7

Czech Republic 4 6 2 5 5 9

Hungary 5 4 2 5 4 7

Italy 7 4 7 4 5 6

OECD high income 5.6 5.6 6.6 4.3 4.5 7.4

Europe & Central Asia 4.1 4.8 7.2 3.6 3.4 6.8

0 5 10 15 20 25 30 35 40
Sub-Indicator Score

Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7)
Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10)

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 Doing Business 2020 Croatia

Details – Protecting Minority Investors in Croatia – Measure of Quality

Answer Score

Extent of conflict of interest regulation index (0-30)

Extent of disclosure index (0-10) 5.0

Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders or 1.0
board of directors
including interested
parties

Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0

Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0
material facts

Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0
transaction and on
the conflict of interest

Must Buyer immediately disclose the transaction to the public? (0-2) No disclosure 0.0
obligation

Extent of director liability index (0-10) 6.0

Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0
Buyer? (0-1)

Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0

Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0

Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0

Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) Yes 1.0

Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0

Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if negligently 1.0
concluded

Ease of shareholder suits index (0-10) 6.0

Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0
(0-1)

Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Documents that the 1.0
defendant relied on

Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0

Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0

Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0

Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0

Extent of shareholder governance index (0-20)

Extent of shareholder rights index (0-6) 6.0

Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0

Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0

Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0

Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0

Do shareholders elect and dismiss the external auditor? Yes 1.0

Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0

Extent of ownership and control index (0-7) 7.0

Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? Yes 1.0
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Doing Business 2020 Croatia

Must the board of directors include independent and nonexecutive board members? Yes 1.0

Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0

Must the board of directors include a separate audit committee exclusively comprising board members? Yes 1.0

Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? Yes 1.0

Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0

Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0

Extent of corporate transparency index (0-7) 5.0

Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0

Must Buyer disclose information about board members’ primary employment and directorships in other No 0.0
companies?

Must Buyer disclose the compensation of individual managers? No 0.0

Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0

Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0

Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0

Must Buyer disclose its audit reports to the public? Yes 1.0

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 Doing Business 2020 Croatia

Paying Taxes

This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of
paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was
completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information.

What the indicators measure Case study assumptions

Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size
per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes,
contributions and dealing with postfiling processes. Information is also compiled on frequency of
• Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the
including consumption taxes (value added tax, sales tax or
requirements of postfiling processes and time waiting.
goods and service tax)

• Method and frequency of filing and payment To make data comparable across economies, several assumptions are used:
- TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces
Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the
second year of operation (calendar year 2018). Taxes and mandatory contributions are measured
• Collecting information, computing tax payable
at all levels of government.
• Preparing separate tax accounting books, if required
• Completing tax return, filing with agencies The VAT refund process:
- In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times
• Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per
capita divided by 12) and cost of goods sold are equally expensed per month (875 times income
Total tax and contribution rate (% of commercial profits)
per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred
• Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs,
sales and the machine and the tax reporting period is every month. Input VAT will exceed Output
• Social contributions, labor taxes paid by employer VAT in June 2018.
• Property and property transfer taxes
The corporate income tax audit process:
• Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates,
• Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a
corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the
Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax
• Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual
tax return, but within the tax assessment period.
• Time to obtain VAT refund (weeks)
• Time to comply with a corporate income tax correction (hours)
• Time to complete a corporate income tax correction (weeks)

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 Doing Business 2020 Croatia

Paying Taxes - Croatia

Indicator Croatia Europe & Central OECD high Best Regulatory

Asia income Performance

Payments (number per year) 12 14.4 10.3 3 (2 Economies)

Time (hours per year) 206 213.1 158.8 49 (3 Economies)

Total tax and contribution rate (% of profit) 20.5 31.7 39.9 26.1 (33 Economies)

Postfiling index (0-100) 66.7 68.2 86.7 None in 2018/19

Figure – Paying Taxes in Croatia – Score

85.0 75.7 100.0 66.7

Payments Time Total tax and contribution rate Postfiling index

Figure – Paying Taxes in Croatia and comparator economies – Ranking and Score

DB 2020 Paying Taxes Score

0 100

81.8: Croatia (Rank: 49)

81.4: Czech Republic (Rank: 53)

80.6: Hungary (Rank: 56)

77.9: Regional Average (Europe & Central Asia)

65.2: Albania (Rank: 123)

64.0: Italy (Rank: 128)

Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for
each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The
threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing
Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold.

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 Doing Business 2020 Croatia

Figure – Paying Taxes in Croatia and comparator economies – Measure of Quality

100 90.5 87.5

90
80 68.2
Index score

70
66.7
60.1
60 52.4
50
40
30
20
10
0

Croatia Albania Czech Hungary Italy Europe

Republic &
Central
Asia

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 Doing Business 2020 Croatia

Details – Paying Taxes in Croatia

Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR
mandatory (number) Payments rate contribution
contribution rate (% of
profit)

Social security 1.0 online 96.0 17.2% gross salaries 19.40

contributions

Forest 5.0 0.0265% total income 0.47

contribution

Tourist fee 1.0 online 0.01938% total turnover 0.34

Chamber of 1.0 online HRK 1,083 per fixed fee 0.29

Economy fee month

Radio and 1.0 online HRK 80 per Every TV and 0.02

Television fee month radio receiver

Corporate 1.0 online 58.0 18% taxable profit 0.00

income tax

Employee paid - 0.0 online and jointly 20% gross salaries 0.00 withheld
Social security
contributions

Fuel tax 1.0 included into fuel 0.00 small amount

price

Value added tax 1.0 online 52.0 25% value added 0.00 not included
(VAT)

Totals 12 206 20.5

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 Doing Business 2020 Croatia

Details – Paying Taxes in Croatia – Tax by Type

Taxes by type Answer

Profit tax (% of profit) 0.0

Labor tax and contributions (% of profit) 19.4

Other taxes (% of profit) 1.1

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 Doing Business 2020 Croatia

Details – Paying Taxes in Croatia – Measure of Quality

Answer Score

Postfiling index (0-100) 66.7

VAT refunds

Does VAT exist? Yes

Does a VAT refund process exist per the case study? Yes

Restrictions on VAT refund process none

Percentage of cases exposed to a VAT audit (%) 25% - 49%

Is there a mandatory carry forward period? No

Time to comply with VAT refund (hours) 0.0 100

Time to obtain VAT refund (weeks) 6.0 94.3

Corporate income tax audits

Does corporate income tax exist? Yes

Percentage of cases exposed to a corporate income tax audit (%) 25% - 49%

Time to comply with a corporate income tax correction (hours) 36.5 35.8

Time to complete a corporate income tax correction (weeks) 20.3 36.6

Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table.
The hours for VAT include all the VAT and sales taxes applicable.
The hours for Social Security include all the hours for labor taxes and mandatory contributions in general.
The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction
and time to complete a corporate income tax correction.
N/A = Not applicable.

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 Doing Business 2020 Croatia

Trading across Borders

Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding
tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or
importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded
goods and the transactions:
• Obtaining, preparing and submitting documents during
transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as
origin economy
22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively,
• Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and
destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as
24 hours because the actual procedure took 24 hours.
• Covers all documents required by law and in practice, including
electronic submissions of information
Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the
Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency
into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire.
• Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about
exchange rates.
• Inspections by other agencies (if applied to more than 20% of
shipments)
Assumptions of the case study:
• Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in
or border the largest business city of the exporting economy and travels to a warehouse in the largest
business city of the importing economy.
Domestic transport
- It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from
• Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times
port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative
advantage (defined by the largest export value) to its natural export partner—the economy that is
• Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000.
• Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and
route the trading partner, as is the seaport or land border crossing.
- All electronic information submissions requested by any government agency in connection with
the shipment are considered to be documents obtained, prepared and submitted during the export
or import process.
- A port or border is a place (seaport or land border crossing) where merchandise can enter or
leave an economy.
- Relevant government agencies include customs, port authorities, road police, border guards,
standardization agencies, ministries or departments of agriculture or industry, national security
agencies and any other government authorities.

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 Doing Business 2020 Croatia

Trading across Borders - Croatia

Indicator Croatia Europe & Central OECD high Best Regulatory

Asia income Performance

Time to export: Border compliance (hours) 0 16.1 12.7 1 (19 Economies)

Cost to export: Border compliance (USD) 0 150.0 136.8 0 (19 Economies)

Time to export: Documentary compliance (hours) 1 25.1 2.3 1 (26 Economies)

Cost to export: Documentary compliance (USD) 0 87.6 33.4 0 (20 Economies)

Time to import: Border compliance (hours) 0 20.4 8.5 1 (25 Economies)

Cost to import: Border compliance (USD) 0 158.8 98.1 0 (28 Economies)

Time to import: Documentary compliance (hours) 1 23.4 3.4 1 (30 Economies)

Cost to import: Documentary compliance (USD) 0 85.9 23.5 0 (30 Economies)

Figure – Trading across Borders in Croatia – Score

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Time Cost Time Cost Time Cost Time Cost

to to to to to to to to
export: export: export: export: import: import: import: import:
Border Border Documentary Documentary Border Border Documentary Documentary
compliance compliance compliance compliance compliance compliance compliance compliance

Figure – Trading across Borders in Croatia and comparator economies – Ranking and Score

DB 2020 Trading Across Borders Score

0 100

96.3: Albania (Rank: 25)

87.3: Regional Average (Europe & Central Asia)

100: Czech Republic (Rank: 1)

100: Croatia (Rank: 1)

100: Hungary (Rank: 1)

100: Italy (Rank: 1)

Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple
average of the scores for the time and cost for documentary compliance and border compliance to export and import.

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 Doing Business 2020 Croatia

Figure – Trading across Borders in Croatia – Time and Cost

Time (hours) Cost (USD)

1.2 1.2
1 1
1 1
Time (hours)

Cost (USD)
0.8 0.8

0.6 0.6

0.4 0.4

0.2 0.2
0 0 0 0 0 0
0 0

Export Export Import Import

- - - -
Border Documentary Border Documentary
Compliance Compliance Compliance Compliance

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 Doing Business 2020 Croatia

Details – Trading across Borders in Croatia

Characteristics Export Import

Product HS 85 : Electrical machinery and equipment and HS 8708: Parts and accessories of motor vehicles
parts thereof; sound recorders and reproducers,
television image and sound recorders and
reproducers, and parts and accessories of such
articles

Trade partner Austria Germany

Border Croatia- Slovenia border crossing Croatia-Slovenia border crossing

Distance (km) 76 76

Domestic transport time (hours) 2 2

Domestic transport cost (USD) 135 135

Details – Trading across Borders in Croatia – Components of Border Compliance

Time to Complete (hours) Associated Costs (USD)

Export: Clearance and inspections required by 0.0 0.0

customs authorities

Export: Clearance and inspections required by 0.1 0.0

agencies other than customs

Export: Port or border handling 0.1 0.0

Import: Clearance and inspections required by 0.0 0.0

customs authorities

Import: Clearance and inspections required by 0.1 0.0

agencies other than customs

Import: Port or border handling 0.1 0.0

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 Doing Business 2020 Croatia

Details – Trading across Borders in Croatia – Trade Documents

Export Import

CMR waybill CMR waybill

Commercial invoice Commercial invoice

Packing list Packing list

Intrastat Intrastat

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 Doing Business 2020 Croatia

Enforcing Contracts

The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes
index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data
collection was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic
(calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in
dispute. This distinguishes the case from simple debt enforcement.
• Time to file and serve the case
• Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the
case are used:
• Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both
Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the
claim value) second largest business city.
- The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of
• Average attorney fees adequate quality.
- The value of the dispute is 200% of the income per capita or the equivalent in local currency of
• Court costs
USD 5,000, whichever is greater.
• Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of
income per capita or $5,000 whichever is greater.
Quality of judicial processes index (0-18)
- The Seller requests the pretrial attachment of the defendant’s movable assets to secure the
• Court structure and proceedings (-1-5) claim.
- The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods
• Case management (0-6) was not adequate.
• Court automation (0-4) - The judge decides in favor of the seller; there is no appeal.
- The Seller enforces the judgment through a public sale of the Buyer’s movable assets.
• Alternative dispute resolution (0-3)

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 Doing Business 2020 Croatia

Enforcing Contracts - Croatia

Standardized Case

Claim value HRK 172,195

Court name Zagreb Commercial Court

City Covered Zagreb

Indicator Croatia Europe & Central OECD high Best Regulatory

Asia income Performance

Time (days) 650 496.4 589.6 120 (Singapore)

Cost (% of claim value) 15.2 26.6 21.5 0.1 (Bhutan)

Quality of judicial processes index (0-18) 13.0 10.3 11.7 None in 2018/19

Figure – Enforcing Contracts in Croatia – Score

56.6 83.0 72.2

Time Cost Quality of judicial processes index

Figure – Enforcing Contracts in Croatia and comparator economies – Ranking and Score

DB 2020 Enforcing Contracts Score

0 100

71.0: Hungary (Rank: 25)

70.6: Croatia (Rank: 27)

65.5: Regional Average (Europe & Central Asia)

56.4: Czech Republic (Rank: 103)

53.5: Albania (Rank: 120)

53.1: Italy (Rank: 122)

Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of
the scores for each of the component indicators.

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 Doing Business 2020 Croatia

Figure – Enforcing Contracts in Croatia – Time and Cost

Time (days) Cost (% of claim value)

1200 42.7 1120 45

Cost (% of claim value)

40
1000 33.8
35
Time (days)

800 26.6 27.6 30

650 678
605 589.6 21.5 25
600 525 496.4 20
15.2 15.0
400 15
10
200
5
0 0

Albania Croatia Czech Europe Hungary Italy OECD

Republic & high
Central income
Asia

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 Doing Business 2020 Croatia

Figure – Enforcing Contracts in Croatia and comparator economies – Measure of Quality

Croatia 2.5 3.5 2 5

Albania 1.5 1.5 1 3.5

Czech Republic 2 3 3 1.5

Hungary 3 4 2.5 3

Italy 3 4 3 3

OECD high income 2.5 3.2 2.4 3.6

Europe & Central Asia 2.3 2.8 1.3 3.6

0 2 4 6 8 10 12 14
Sub-Indicator Score

Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5)

Details – Enforcing Contracts in Croatia

Indicator

Time (days) 650

Filing and service 50

Trial and judgment 365

Enforcement of judgment 235

Cost (% of claim value) 15.2

Attorney fees 8.6

Court fees 4

Enforcement fees 2.6

Quality of judicial processes index (0-18) 13.0

Court structure and proceedings (-1-5) 5.0

Case management (0-6) 3.5

Court automation (0-4) 2.0

Alternative dispute resolution (0-3) 2.5

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 Doing Business 2020 Croatia

Details – Enforcing Contracts in Croatia – Measure of Quality

Answer Score

Quality of judicial processes index (0-18) 13.0

Court structure and proceedings (-1-5) 5.0

1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5

2. Small claims court 1.5

2.a. Is there a small claims court or a fast-track procedure for small claims? Yes

2.b. If yes, is self-representation allowed? Yes

3. Is pretrial attachment available? Yes 1.0

4. Are new cases assigned randomly to judges? Yes, automatic 1.0

5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0

Case management (0-6) 3.5

1. Time standards 1.0

1.a. Are there laws setting overall time standards for key court events in a civil case? Yes

1.b. If yes, are the time standards set for at least three court events? Yes

1.c. Are these time standards respected in more than 50% of cases? Yes

2. Adjournments 0.5

2.a. Does the law regulate the maximum number of adjournments that can be granted? No

2.b. Are adjournments limited to unforeseen and exceptional circumstances? Yes

2.c. If rules on adjournments exist, are they respected in more than 50% of cases? Yes

3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) Yes 1.0
clearance rate report; (iii) age of pending cases report; and (iv) single case progress report?

4. Is a pretrial conference among the case management techniques used before the competent court? Yes 1.0

5. Are there any electronic case management tools in place within the competent court for use by judges? No 0.0

6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0

Court automation (0-4) 2.0

1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0

2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0

3. Can court fees be paid electronically within the competent court? Yes 1.0

4. Publication of judgments 1.0

4.a Are judgments rendered in commercial cases at all levels made available to the general public Yes
through publication in official gazettes, in newspapers or on the internet or court website?

4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made Yes
available to the general public through publication in official gazettes, in newspapers or on the internet
or court website?

Alternative dispute resolution (0-3) 2.5

1. Arbitration 1.5

1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes
section of the applicable code of civil procedure encompassing substantially all its aspects?

1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No
that cannot be submitted to arbitration?

1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes

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Doing Business 2020 Croatia

2. Mediation/Conciliation 1.0

2.a. Is voluntary mediation or conciliation available? Yes

2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes
section of the applicable code of civil procedure encompassing substantially all their aspects (for
example, definition, aim and scope of application, desig

2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No
conciliation is successful, a refund of court filing fees, income tax credits or the like)?

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 Doing Business 2020 Croatia

Resolving Insolvency

Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate,
which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings.
To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with
data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more
information.

What the indicators measure Case study assumptions

Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several
assumptions about the business and the case are used:
• Measured in calendar years
• Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel
experiences financial difficulties.
Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD
200,000, whichever is greater.
• Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate.
• Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise.
• Fees of insolvency administrators
In addition, Doing Business evaluates the quality of legal framework applicable to judicial
• Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have
• Assessors’ and auctioneers’ fees been implemented in each economy covered.

• Other related fees

Outcome

• Whether business continues operating as a going concern or

business assets are sold piecemeal

Recovery rate for creditors

• Measures the cents on the dollar recovered by secured

creditors

• Outcome for the business (survival or not) determines the

maximum value that can be recovered

• Official costs of the insolvency proceedings are deducted

• Depreciation of furniture is taken into account
• Present value of debt recovered
Strength of insolvency framework index (0- 16)

• Sum of the scores of four component indices:

• Commencement of proceedings index (0-3)
• Management of debtor’s assets index (0-6)
• Reorganization proceedings index (0-3)
• Creditor participation index (0-4)

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 Doing Business 2020 Croatia

Resolving Insolvency - Croatia

Indicator Croatia Europe & Central OECD high Best Regulatory

Asia income Performance

Recovery rate (cents on the dollar) 35.2 38.5 70.2 92.9 (Norway)

Time (years) 3.1 2.3 1.7 0.4 (Ireland)

Cost (% of estate) 14.5 13.3 9.3 1.0 (Norway)

Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. ..

Strength of insolvency framework index (0-16) 12.0 11.2 11.9 None in 2018/19

Figure – Resolving Insolvency in Croatia – Score

37.9 75.0

Recovery rate Strength of insolvency framework index

Figure – Resolving Insolvency in Croatia and comparator economies – Ranking and Score

DB 2020 Resolving Insolvency Score

0 100

80.1: Czech Republic (Rank: 16)

77.5: Italy (Rank: 21)

67.7: Albania (Rank: 39)

56.5: Croatia (Rank: 63)

55.7: Regional Average (Europe & Central Asia)

55.0: Hungary (Rank: 66)

Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average
of the scores for the recovery rate and the strength of insolvency framework index.

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 Doing Business 2020 Croatia

Figure – Resolving Insolvency in Croatia – Time and Cost

Time (years) Cost (% of estate)

3.5 25
3.1 22.0

Cost (% of estate)
3
20
17.0
Time (years)

2.5 2.3
2.0 14.5 2.1 2.0 14.5
2 13.3 1.8 15
1.7
1.5
10.0 9.3 10
1
5
0.5
0 0

Albania Croatia Czech Europe Hungary Italy OECD

Republic & high
Central income
Asia

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 Doing Business 2020 Croatia

Figure – Resolving Insolvency in Croatia and comparator economies – Measure of Quality

Croatia 4 3 2 3

Albania 6 3 2 3

Czech Republic 5.5 2.5 3 3

Hungary 5 2.5 2 0.5

Italy 5.5 3 2 3

OECD high income 5.3 2.8 2.1 1.9

Europe & Central Asia 4.5 2.5 2.3 1.7

0 2 4 6 8 10 12 14 16
Sub-Indicator Score

Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3)

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the
strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Figure – Resolving Insolvency in Croatia and comparator economies – Recovery Rate

Recovery rate(cents on the dollar)

80
70 67.5 65.6
60
50 44.6 44.2
38.5
40 35.2
30
20
10
0

Croatia Albania Czech Republic Hungary Italy Europe & Central Asia

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 Doing Business 2020 Croatia

Details – Resolving Insolvency in Croatia

Indicator Answer Score

Proceeding foreclosure Mirage will apply for the pre-bankruptcy settlement procedure under the Bankruptcy Act. But, it is likely that BizBank
would not be interested to reach a settlement on restructuring in that procedure, because, if agreement is settled,
Bizbank would not get the payment for, at least, few years. As Bizbank owns 74% of Mirage's debt, the agreement on
restructuring plan depends only on the BizBank decision. Instead of agreeing with the Miracle's plan of reorganization
in pre-bankruptcy procedure, it is likely that BizBank will initiate foreclosure proceedings requiring sale of the hotel
property As a creditor with a registered pledge, BizBank could enforce its interest in separated foreclosure process,
even if Insolvency proceedings is opened.

Outcome piecemeal sale Even if Mirage management initiates pre-insolvency or insolvency proceedings, the hotel will not be able to operate if
its acts would be done at the expense of the bankruptcy estate. It will have to reduce its working power and cut
expenses. And after the bank enforces its security interest, and it can do that outside the insolvency proceedings
framework, the hotel will stop operating and its assets will be sold piecemeal.

Time (in years) 3.1 It will take 37 months to complete an unsuccessful pre-bankruptcy settlement procedure, which is followed by
foreclosure, when BizBank enforces its security interest in Mirage's assets.

Cost (% of estate) 14.5 Major expenses in foreclosure include attorneys' fees (8%) and fees of accountants and other professionals involved in
the proceedings, especially the insolvency representative (5-6%), the rest will cover court fees and sale of the assets.

Recovery rate 35.2

(cents on the dollar)

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 Doing Business 2020 Croatia

Details – Resolving Insolvency in Croatia – Measure of Quality

Answer Score

Strength of insolvency framework index (0-16) 12.0

Commencement of proceedings index (0-3) 3.0

What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0
both liquidation and
reorganization

Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (a) Yes, a creditor 1.0
may file for both
liquidation and
reorganization

What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (c) Both (a) and (b) 1.0
Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value options are available,
of its assets but only one of them
needs to be complied
with

Management of debtor's assets index (0-6) 4.0

Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0
debtor?

Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0

Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0

Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0

Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of No 0.0
insolvency proceedings?

Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0
assigned to post-
commencement
creditors

Reorganization proceedings index (0-3) 3.0

Which creditors vote on the proposed reorganization plan? (b) Only creditors 1.0
whose rights are
affected by the
proposed plan

Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as Yes 1.0
what they would obtain in a liquidation?

Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote Yes 1.0
separately and are creditors in the same class treated equally?

Creditor participation index (0-4) 2.0

Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency Yes 1.0
representative?

Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0

Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0
representative?

Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting Yes 1.0
creditors' claims?

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the
strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

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 Doing Business 2020 Croatia

Employing Workers

Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present
rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business.

The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure Case study assumptions

Hiring To make the data comparable across economies, several assumptions about the worker and the
(i) whether fixed-term contracts are prohibited for permanent business are used.
tasks; (ii) maximum cumulative duration of fixed-term contracts;
(iii) length of the maximum probationary period; (iv) minimum The worker:
wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience.
worker. - Is a full-time employee.
- Is not a member of the labor union, unless membership is mandatory.
Working hours
(i) maximum number of working days allowed per week; (ii) The business:
premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy).
(iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11
weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city.
leave. - Has 60 employees.
- Is subject to collective bargaining agreements if such agreements cover more than 50% of the
Redundancy rules food retail sector and they apply even to firms that are not party to them.
(i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those
whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements.
party to terminate 1 redundant worker and a group of 9 redundant
workers; (iii) whether the law requires employer to reassign or
retrain a worker before making worker redundant; (iv) whether
priority rules apply for redundancies and reemployment.

Redundancy cost
(i) notice period for redundancy dismissal; (ii) severance
payments, and (iii) penalties due when terminating a redundant
worker. Data on the availability of unemployment protection for a
worker with one year of employment is also collected.

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 Doing Business 2020 Croatia

Employing Workers - Croatia

Details – Employing Workers in Croatia

Answer

Hiring

Fixed-term contracts prohibited for permanent tasks? Yes

Maximum length of a single fixed-term contract (months) No limit

Maximum length of fixed-term contracts, including renewals (months) No limit

Minimum wage applicable to the worker assumed in the case study (US$/month) 569.3

Ratio of minimum wage to value added per worker 0.3

Maximum length of probationary period (months) 6.0

Working hours

Standard workday 8.0

Maximum number of working days per week 6.0

Premium for night work (% of hourly pay) 0.0

Premium for work on weekly rest day (% of hourly pay) 0.0

Premium for overtime work (% of hourly pay) 0.0

Restrictions on night work? Yes

Restrictions on weekly holiday? Yes

Restrictions on overtime work? No

Paid annual leave for a worker with 1 year of tenure (working days) 20.0

Paid annual leave for a worker with 5 years of tenure (working days) 20.0

Paid annual leave for a worker with 10 years of tenure (working days) 20.0

Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 20.0

Redundancy rules

Dismissal due to redundancy allowed by law? Yes

Third-party notification if one worker is dismissed? Yes

Third-party approval if one worker is dismissed? No

Third-party notification if nine workers are dismissed? Yes

Third-party approval if nine workers are dismissed? No

Retraining or reassignment obligation before redundancy? No

Priority rules for redundancies? Yes

Priority rules for reemployment? Yes

Redundancy cost

Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3

Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 8.7

Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 10.7

Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 7.9

Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 0.0

Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 7.2
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Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 14.4

Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 7.2

Unemployment protection after one year of employment? Yes

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 Doing Business 2020 Croatia

Business Reforms in Croatia

From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by
Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008.

=Doing Business reform making it easier to do business. = Change making it more difficult to do business.

DB2020

Starting a Business: Croatia made starting a business easier by abolishing the requirements to reserve the company name and obtain director signatures for company
registration, and by reducing the paid-in minimum capital requirement.

Dealing with Construction Permits: Croatia made dealing with construction permits less costly by reducing the water contribution for building a warehouse.

Registering Property: Croatia made it easier to transfer property by decreasing the real estate transfer tax and by reducing the time to register property title
transfers.

Getting Credit: Croatia made accessing credit information more difficult by ending the distribution of individual credit data.

DB2019

Registering Property: Croatia made transferring property more efficient by digitizing its land registry.

DB2018

Dealing with Construction Permits: Croatia made dealing with construction permits more costly by increasing the administrative fees for building and occupancy
permits.

Getting Electricity: Croatia improved the reliability of power supply by introducing financial deterrence mechanisms aimed at limiting power outages.

Registering Property: Croatia made it less costly to transfer property by lowering the real estate transfer tax.

DB2017

Starting a Business: Croatia made starting a business more difficult by increasing notary fees.

Protecting Minority Investors: Croatia strengthened minority investor protections by requiring detailed internal disclosure of conflicts of interest by directors.

Paying Taxes: Croatia made paying taxes more complicated by introducing a radio and television fee, and eliminating the reduction of the Chamber of Economy fee for
new companies.

DB2016

Enforcing Contracts: Croatia made enforcing contracts easier by introducing an electronic system to handle public sales of movable assets and by streamlining the
enforcement process as a whole.

Employing Workers: 1) Croatia eliminated the requirement to retrain or reassign employees before they can be made redundant. 2) In accordance with the Minimal Wage
Act, Art. 1, published in Official Gazette No.151/2014, the minimum wage has been increased from 3.017,61 Kuna/month to 3.029,55 Croatian Kuna/month gross salary, in
force for the period of January 1, 2015 to December 31, 2015.

DB2015

Starting a Business: Croatia made starting a business easier by reducing notary fees.

Dealing with Construction Permits: Croatia made dealing with construction permits easier by reducing the requirements and fees for building permits and carrying out
the final building inspection more promptly.

Paying Taxes: Croatia made paying taxes more complicated for companies by raising the health insurance contribution rate, increasing the Croatian Chamber of
Commerce fees and introducing more detailed filing requirements for VAT. On the other hand, it abolished the contribution to the Croatian Chamber of Commerce.

Trading across Borders: Croatia made trading across borders easier by implementing a new electronic customs system.

Employing Workers: Croatia lifted the 3-year limit on the duration of first-time fixed-term contracts.

DB2014

Paying Taxes: Croatia made paying taxes easier for companies by introducing an electronic system for social security contributions and promoting e-banking for the
chamber of commerce fee and the radio and television fee. Croatia also made paying taxes less costly by reducing the rates for the forest and Chamber of Commerce
contributions.

Trading across Borders: Croatia made trading across borders easier by improving the physical and information system infrastructure at the port of Rijeka and by
streamlining export customs procedures in preparation for accession to the Common Transit Convention of the European Union.

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Enforcing Contracts: Croatia made enforcing contracts easier by streamlining litigation proceedings and transferring certain enforcement procedures from the courts
 Doing Business 2020 Croatia

DB2013

Paying Taxes: Croatia made paying taxes less costly for companies by reducing the health insurance contribution rate.

DB2012

Getting Credit: In Croatia the private credit bureau started to collect and distribute information on firms, improving the credit information system.

DB2011

Starting a Business: Croatia eased business start-up by allowing limited liability companies to file their registration application with the court registries electronically
through the notary public.

Dealing with Construction Permits: Croatia replaced the location permit and project design confirmation with a single certificate, simplifying and speeding up the
construction permitting process.

Paying Taxes: Croatia made paying taxes more difficult and costly for companies by introducting a tourist fee.

Employing Workers: Croatia increased the mandatory paid annual leave.

DB2010

Dealing with Construction Permits: Croatia improved its construction permitting process through the operation of a one-stop shop and enforcement of the building
code.

DB2009

Dealing with Construction Permits: Croatia made dealing with construction permits easier through a new building code that eliminated several procedures for
obtaining a building permit—though other changes caused an administrative backlog for building and occupancy permits that increased the overall time required.

Paying Taxes: Croatia made paying taxes easier for companies by encouraging online filing.

Trading across Borders: Croatia reduced the time for exporting and importing through ongoing improvements in port infrastructure.

DB2008

Starting a Business: Croatia made starting a business easier by enhancing the services of the one-stop shop.

Registering Property: Croatia reduced the time required to register property through ongoing improvements at the land registry.

Getting Credit: Croatia strengthened its secured transactions system by launching a unified and geographically centralized collateral registry and improved access to
credit information by setting up a new private credit bureau, HROK.

Resolving Insolvency: Croatia made resolving insolvency easier through amendments to its insolvency act regulating the profession of bankruptcy administrators.

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