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1. Political and Economic
Croatia proclaimed independence in 1991 and has made significant progress in overcoming the characteristic difficulties of a country in transition and legacy issues associated with the war, which ended in 1995. Croatia was given EU candidacy status in 2005. The accession negotiations were completed in June 2011 and Croatia officially joined the EU on 1 July 2013. Croatia has also been a NATO member since April 2009.
Croatia’s legal framework is based on a continental Europe model. Acquis Communitaire has been fully transposed into Croatia’s legal system. The Constitution of the Republic of Croatia guarantees free transfer of capital and free profit repatriation to investors and Croatian laws guarantee equal rights for domestic and foreign private and legal entities.
The political environment is relatively stable. A centre-right led coalition government has been in power since October 2016. Local municipal elections will take place in May 2020 and the next general election is scheduled for Autumn 2020. The Croatian economy is amongst the most developed economies in Southeast Europe. The Croatian National Bank (CNB) operates a fixed exchange rate regime pegged to €; the local currency is stable and the inflation rate has been low. Banking which is mostly owned by Italian and Austrian banks continues to be stable and well capitalised. Having been badly hit by the global financial crisis amid 6 straight years of recession Croatia’s recovery is continuing with relatively strong growth. In 2017 growth was 2.9%. Forecasts for 2018 point to similar growth figures.However growth is still below similar economies in the neighborhood and is heavily reliant on external demand. Croatia continues to suffer from major structural imbalances and requires major reforms which successive governments have been reluctant to embark upon.
The economy is dominated by the service sector, primarily through a well developed tourism sector which remains the main economic driver (contributing up to 20% of GDP). In 2017 Croatia’s tourism sector recorded 18. million visitors (90% of whom are foreign visitors). Tourism receipts in 2017 were € 11 billion. Other key target sectors include Energy, Pharmaceuticals and Life Sciences, Advanced Engineering, Security and Services, Marine. The IT Sector is very vibrant but the infrastructure is still relatively poor. The EU has earmarked around €1billion per annum for Croatia from EU Structural and Cohesion Funds envelope 2014-2020. Utilization of EU funds remains relatively low despite significant efforts in the past two years.
2. Business and Human Rights
In Croatia, human rights are protected by the Constitution of the Republic of Croatia and international treaties to which Croatia is a signatory. Despite challenges by some on issues such as same sex marriages, the Government’s commitment to the protection of human and minority rights is strong.
Employees have the right to join trade unions of their choice without prior authorisation and union representatives are protected against anti-union discrimination. The right to strike is recognised by law.
Although gender balance in leading positions in the economic and political sphere remains unsatisfactory, the number of women in these areas has been on the increase and institutional mechanisms for gender equality at government levels are developing. The incumbent President of the Republic (elected in 2015) is the first female president in the history of Croatia. Minority representation in public administration is relatively well respected, but still remains below 5% while positive discrimination in public sector recruitment has still not fully developed. Some positive steps in terms of Roma access to education and the labour market also reflects Government efforts to improve Roma integration.
Despite an existing legal framework, tax evasion remains a problem. Successive Governments have tried to tackle the issue by deploying naming and shaming campaigns, publicly disclosing businesses that are not paying salaries or not declaring them according to the law. But the effects so far have been limited.
3. Bribery and Corruption
Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anyone anywhere in the world.
In addition, a commercial organisation carrying on business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
The Business Anti-corruption Portal reports that, “Small and medium-sized enterprises (SMEs) have the perception that the majority of civil servants expect to be bribed when meeting with companies, but in most cases SMEs do not report actual occurrences of bribery” and “Although foreign investors are legally entitled to national treatment, Croatia’s ineffective legal system and a lack of transparency within both private and public sectors have presented the greatest challenges to investors. Transparency in developing legislation and regulations is often hampered by an inefficient public administration and a lack of intra-governmental coordination. The significant backlog of cases has made dispute resolution via the courts an undesirable option for companies. As a result of the very long timeframes involved in obtaining judgments in court, companies often try to resolve disputes without seeking judicial remedies.”
According to Transparency International’s corruption perception index (CPI) Croatia ranked 55 out of 176 countries surveyed in 2016.
Visit the Business Anti-Corruption portal page providing advice and guidance about corruption in Croatia and some basic effective procedures you can establish to protect your company from them.
Read the information provided on our Bribery and corruption page.
4. Terrorism Threat
There is a low threat from terrorism.
Read the information provided on the terrorism page of the FCO Travel Advice.
5. Protective Security Advice
Croatia has a low crime rate compared to EU levels. Violent crime is rare.
Read the information provided on our Protective security advice page.
6. Intellectual Property
Intellectual Property Rights are territorial, that is they only give protection in the countries where they are granted or registered. If you are thinking about trading internationally, you should consider registering your IP rights in your export markets.
For information on registering your trademark or patent in Croatia you should contact the State Intellectual Property Office of the Republic of Croatia (DZIV). Their web page www.dziv.hr has an English language version.
Read the information provided on our Intellectual Property page.
7. Organised Crime
Organised crime with strong regional component exists in Croatia. Businesses and individuals unconnected with such groups have not been specifically targeted by serious organised crime. Businesses should carefully check the background of any potential partners.
Read the information on our Organised Crime.
8. Useful information
9. Department for International Trade contact
Contact the DIT team in Croatia for more information and advice on opportunities for doing business in Croatia.