Doing Business in Croatia: Culture, Traps, Investor Advice

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Doing business in Croatia has brought heartache to countless foreign investors. There are many horror stories, but success is possible. Here’s how.

An anecdote about doing business in Croatia to set the scene

I decided to make this section about doing business in Croatia as real as possible. By telling things how they really are, potential investors may perhaps approach Croatia with eyes a little more open. Yes, there is opportunity here – lots of it – but also plenty of pitfalls.

My favourite story about doing business in Croatia concerns an Englishman who wanted to invest a couple of million in real estate construction. He went to see a highly recommended business lawyer in Split.

The lawyer’s fee for the initial consultation was 500 euro, which the Englishman handed over in cash.

“My best advice,” the lawyer began, “to ensure you suffer only minimal financial loss is to take a taxi to the airport and fly back to London. That way, you will only have lost the cost of travel and this consultancy.”

Outraged, the Englishman stormed out of the office. He went on to invest – and lose – a 7-figure sum.

Of course, there are success stories doing business in Croatia. It just seems that they are few and far between. Hopefully, the tips below will help guide you on a more successful course.

A land of connections and jobs for the cousins

When Croatia emerged victorious from the Homeland War in 1995, it was a time for hope for all.

The hope was short-lived for the majority, as corruption took hold. The spoils were shared among the favoured cronies, as state companies went into private ownership for a fraction of their value.

It is said that Croatia is effectively run by 200 families. One thing is for sure – everything happens in Croatia through connections (‘preko veze’).

Jobs for the cousins became standard procedure. Positions were filled (and new ones created) based on patronage, not ability. A country of cronynism known as Uhljebistan emerged from within Croatia. You can learn more about Uhljebistan and the Cult of the Uhljeb in this TCN appreciation from 2017.

The implications for foreign investors were clear. There were two ways of doing business. Through official channels where things would get done, but you would have to remember every official along the way. More than one official became known unofficially as ‘Mr 10%’.

Or trying to do things without paying bribes and following the law. Yeah, good luck with that one!

A land of entrepreneurs and hope

And yet things are changing. At least I believe so. A new generation of Croatian entrepreneur is emerging. EU entry has brought at least some accountability to Croatian institutions, and that can only be a good thing.

The digital age has also helped immensely, and now Croatian companies in the IT sector in particular are doing great things on the global stage.

Entrepreneurs are learning how to navigate the system and to effectively do business with minimal contact with official institutions. The corrupt old system cannot continue for ever, and technology will play a part in accelerating its decline. Perhaps I am in the minority, but I am actually quite hopeful for the future of business in Croatia. But with no thanks to official institutions. Business succeeds in this country in spite of the official bodies designed to promote it, not because of them.

Starting a business in Croatia – are you mad?

Starting a business in Croatia may seem like a great idea from distance, but I seriously advise you to take a much closer look at expectations, goals and the daily realities before taking the plunge.

Yes, you can be successful here, but only a small percentage of foreign businesses make it. Reaonsable expectations in a normal country should go straight out the window. The general advice is to expect the investment to cost at least three times as much, and the results three times as long as you planned.

But if you have a good concept, patience and go into the venture with eyes wide open, you can succeed. To give you a little hope, TCN did a series on foreign entrepreneurs in Croatia. Some of their stories and businesses were fascinating, and it was a very popular series.

Setting up a company in Croatia

Croatia is now in the EU, and that means that having a business in Croatia run by a company outside the country is now much easier. I know of several Croatian businessmen who have moved their business to countries such as Bulgaria. The savings in tax are immense.

If you do want to set up a company in Croatia, here is some excellent advice from a longterm expat here.

The accountant and the company stamp

Two of the most important aspects of a Croatian company are the accountant and the company stamp.

Without the company stamp, you are nothing. Want to do a transaction in the bank, but forgot your company stamp? Go home with no cash. There was a major change last year, where finally invoices could be issued digitally. Previously all had to be signed and stamped or they were not valid.

But the company stamp is needed is so many situations still. Keep it somewhere very safe, because it will be as necessary as your passport.

Finding a good accountant is key to success in doing business in Croatia. Find a good one and you can stop stressing about the constantly changing laws and fines for non-compliance.

Accountants play a much bigger role in Croatian companies than other countries, in my opinion. Mine is absolutely fabulous. Fluent in English, young Gordana deals with all the official stuff, handles all payments from the bank, advises me of changes and things to do, and issues all the company invoices. Please don’t tell her, but I would be totally lost without her. (And I think she has a little capacity for new clients, so if you are looking for an accountant, let me know and I will put you in touch.)

Keeping an industry alive – feeding the inspectors and their families

One aspect of doing business in Croatia which does not attract many column inches is the subject of inspectors.

Inspectors are a classic example of why Croatia is struggling to move forward. Rather than encouraging entrepreneurs to help grow the economy, private businesses are seen as a source of income to feed the uhljeb state.

Visits from inspectors are a fairly regular occurrence, and an inspection rarely results in anything but a fine for some misdemeanour. Even if the business has done nothing wrong.

One restaurant owner friend, for example, emerged 2,000 kuna poorer from an inspection. Everything he had was totally correct, but with one exception. The sign with the opening hours stated until 00:00 and not 24:00. A costly error.

Factor in the inspector factor in your financial planning.

The diaspora and doing business in Croatia

Despite the slow economic situation, Croatia does have a very dedicated and wealthy potential source of investment – its diaspora.

The population of Croatia is around 4 million these days, with more than 3 million also living abroad as part of the Croatian diaspora. The love for the homeland is real, as is the desire to invest.

Unfortunately, many investors from the diaspora sent money to the newly independent Croatia in the 1990s, investing generously. A lot of that cash went missing, and the diaspora is naturally a little more reserved and suspicious about investing.

Things are beginning to change, however, and there are now greater ties between the diaspora business community and Croatia’s entrepreneurs. Networks are being built, and ther are several diaspora business conferences each year. Here are my impressions from the 2018 G2.4 conference in Zagreb, for example.

The Croatia Chamber of Economy or Commerce: Does it do anything?

Croatia has its official bodies to promote business, of course. The biggest is the Croatian Chamber of Economy, formerly known as the Croatian Chamber of Commerce.

Membership is compulsory for all businesses in Croatia (although this looks set to change finally). Small businesses must pay 42 kuna a month for membership, and it is not clear what they get in return.

My experiences of dealing with the Chamber of Economy over the years are explained in this article.

Things may be improving a little, however. I have met some of the new people at the top of the Chamber of Economy, and there seems to be an appetite for change. It remains a big task, however. You can see how progress pans out by checking the official Croatian Chamber of Economy website.

Are there any useful official institutions to help do business in Croatia?

If you have one to recommend, please contact me with details, and I will update this section. I have none to recommend.

Where to find investment projects in Croatia?

The official Agency for Investment in Croatia will no longer exist in 2019. A reflection, perhaps, on its usefulness…

It does maintain a database of flagship investment projects in Croatia. Some of them have been around for some time…

If you are seriously looking to invest in Croatia, want to know what the opportunities are, and want to find reliable partners, I am happy to help. I have met a lot of people during my time here, and there are many I would not recommend. And several I would. I am happy to help serious investors, so contact me on if you need any help.

Where to find business news in Croatia?

For an overview of the business climate in Croatia, here is the World Bank Report on Doing Business in Croatia 2019.

The best source of business news in Croatia is the portal, which is unfortunately only in Croatian.

For the latest business news in Croatia, keep tabs on the TCN business section. The business section is updated 3-4 times daily.

Trying to do business in Croatia and looking for contacts?

You can, of course, try the official channels. The Chamber of Economy is the logical place to start.

Alternatively, if you would like to save some time (and money) and reach serious projects and partners, contact me at for more information.

Whatever route you choose to do business in Croatia, good luck!

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