Croatia is renowned for its diverse mainland, extensive archipelago, crystal-clear blue seas and a rich cultural heritage that lives beyond museums, churches and cathedrals. Croatia extends from the furthest eastern edges of the Alps in the northwest to the Pannonian lowlands and the banks of the Danube in the east. Its central region is covered by the Dinara mountain range, and its southern parts extend to the Adriatic Sea. The Country has an interesting crescent shape and borders Slovenia, Hungary, Serbia, Montenegro, Bosnia and Herzegovina, shares a maritime border with Italy and covers an area of 56,594 square kilometres.
Croatia has a population of 4.14 million comprises almost 90 per cent Croat and Serbian, Bosnian, Hungarian and Italian minorities. Its culture is unique having evolved from the many different ethnicities that have occupied the area as well as assimilations that have taken place among various cultures. Croatia’s capital and largest city is Zagreb with a population of 1.2 million, including the urban agglomeration.
Croatia is a parliamentary democracy, with most executive powers being concentrated in the hands of the Prime Minister and Cabinet. Aside from the central and local levels of government, Croatia also has a system of regional government, with 20 counties plus the City of Zagreb which counts as both the capital city and a county. Each county has its own assembly and executive.
Croatia’s membership of the EU in 2013, has enhanced stability and has provided new opportunities for trade and investment. In 2018, Croatia continued its fourth year of positive economic growth supported by public consumption and the export of goods and services. Tourism in particular, continues to be a significant source of revenue and contributed 25 per cent to GDP in 2018. Wages are rising, employment is rising, and inflation remains benign. Over the next few years, growth is expected to moderate as the economy moves closer to its potential, according to the IMF. The current account is projected to decline but remain in surplus while external debt is expected to continue to decline.
Economic Indicators – 2018
Foreign Direct Investment (FDI) in Croatia
Croatia is open to foreign investment and the Croatian government continues to prioritise attracting foreign investors by offering incentives and improving the Country’s business environment:
- All investors, both foreign and domestic, are guaranteed equal treatment under all forms of market-related legislation and free transfer of return on equity from the country upon completion of investment;
- Croatian law allows for all entities, both foreign and domestic, to establish and own businesses and to engage in all forms of remunerative activities;
- The Government’s e-government initiative ‘Hitro.hr’ provides 24-hour on-line business registration;
- Croatia has signed investment protection treaties or agreements with over 60 countries and bilateral (double) taxation treaties with EU countries and 27 other countries;
- The government has committed to simplifying the tax system in order to facilitate better business conditions and more investment;
- The standard corporate income tax rate is 18 per cent with a 12 per cent rate introduced for companies with revenues of up to HRK 3 million (EUR 404,630). This standard rate may be reduced by 50 per cent, 75 per cent or 100 per cent subject to certain investment related incentives or if the company is located in a free zone or a special support area, provided conditions are met;
- Personal income tax rates for 2018 are progressive – 24 per cent up to EUR 27,300 and 36 per cent above EUR 27,300;
- Croatia recognises binding international arbitration which may be defined in investment agreements as a means of dispute resolution;
- The Investment Promotion Act (IPA), amended in 2018, offers incentives to investment projects in manufacturing and processing activities, development and innovation activities, business support activities and high added value services. The incentives are either tax refunds or cash grants;
- The Ownership and Property Rights Act establishes procedures for foreigners to acquire property by inheritance as well as legal transactions such as purchases, deeds, and trusts;
- The Agency for Investment and Competitiveness, a Croatian government entity, provides investors with various services intended to help with implementation of investment projects;
- The Strategic Investment Act helps investors streamline large projects by gathering all necessary information the investor needs to implement the project and then fast-tracking the necessary procedures for implementation of the project, including acquiring permits and help with location.
Tourism in Croatia
Croatia is a competitive and dynamic tourist destination with the clear strategic objective of establishing a stronger brand for different typology of tourism, leveraging Croatia’s historical heritage, the touristic development of inland cities and natural beauties including eight famous National Parks, the development of gastronomic and wellness and health tourism. The Government is implementing the Croatian Tourism Development Strategy 2013-20 with the aim of increasing the attractiveness and competitiveness of tourism by 2020.
The terrain of Croatia is varied with plains, lakes and rolling hills in the continental areas, densely wooded mountains in Lika and Gorski Kotor, which are part of the Dinaric Alps, and in the Adriatic region, a narrow coastal belt with rocky coastlines. A Croatian cruise provides the opportunity to discover the Adriatic coast, one of the most indented in the world with over 1,200 islands and islets of which only 48 are inhabited. Research shows that more endangered species (on a European level) breed in Croatia than any other small or medium-sized European country.
Rich in cultural and historical heritage, there are 15 intangible cultural heritage and 10 cultural and natural heritage sites included in UNESCO’s World Heritage lists. The most famous and most visited of these sites is Dubrovnik, a unique Renaissance city in the Mediterranean with preserved city walls built between the thirteenth and the seventeenth century. The historic ruins of Diocletian’s Palace in Split built in the early 300s AD, is also very popular. It was essentially the retirement home of Emperor Diocletian and a surrounding garrison. Pula’s Roman Amphitheatre is one of the finest of its kind with a complete ring of the outer wall still intact, it is the best preserved of Croatia’s ancient monuments and very much in use today.
Croatian cuisine is known as ‘the cuisine of regions’ which has gastronomical tourists travelling all over the country to experience it. Mainland cuisine resembles Hungarian, Viennese and Turkish – while the coastal region bears the influences of the Greek, Roman and Illyrian, as well as Italian and French cultures. Croatia is also famous for its excellent wines which are a product of long held winery traditions in the regions.
The topography of Croatia creates endless opportunities for adventure sports. They range from hiking and trail biking in the national parks, mountain climbing, zipling, skraping, kayaking to white-water rafting, and extreme diving at Imotski Red Lake. Glide through the air hot air ballooning or parachuting and paragliding in the mountains of Biokovo and Vidora Gora. Ten snow ski resorts operate in Croatia with the largest ones providing up to 6 kilometres of slopes. On the sea there is – sailing, kite surfing, wakeboarding, scuba diving and much more.
Tourist Arrivals and Overnight Stays over past 5 Years
Profile of Accommodation by Tourist Destinations – 2016 and 2017