Meeting Recap: “Your Business Is Fine – Until It's Not”
Legal expert Šime Jozipović shared actionable insights into the most common mistakes foreign entrepreneurs make in Croatia, and how to avoid them before they become costly.
About the Speaker
Prof. dr. Šime Jozipović is a distinguished legal advisor specializing in international business law, corporate structures, and tax optimization. He has advised global clients on market entry, EU acquisitions, and complex dispute resolution. He is also a Jean Monnet professor, with research spanning innovation law and finance. His work includes collaborations with Harvard Law School and the European Court of Human Rights, and he currently supports young entrepreneurs in Croatia as a pro bono advisor.
Here are the key takeaways from the talk:
Top Legal & Operational Pitfalls
1. Choosing the Wrong Business Structure
Many foreigners jump into opening a d.o.o. (limited liability company) with VAT registration without fully understanding the tax implications.
If you’re just starting and operating on a small scale with low liability risk, a pausalni obrt might be better. But remember, you are the business and fully liable for everything.
2. Going Into Business Without Clear Agreements
Don’t wait until a problem arises. Set clear roles, decision-making authority, and ownership terms from day one.
A 50/50 partnership without defined responsibilities or exit options is a recipe for conflict.
Having hard conversations while everything is going well can prevent major issues later.
3. Choosing the Right Structure for Joint Investments
If you plan to buy land or build property with others, forming a d.o.o. is best to keep ownership and responsibilities clean.
Be mindful of tax implications when forming partnerships—especially if you plan to invest together as foreigners or with Croatian citizens.
4. Avoiding Common Tax Misconceptions
Croatia’s tax system isn’t bad for everyone; if you don’t have many employees, it can be quite favorable.
A d.o.o. can deduct business-related costs, including up to 50% of rent if the space is also your workspace.
5. Underestimating the Role of a Good Accountant
Not all accountants are equally reliable. Ask questions and schedule regular check-ins.
A good accountant can help you optimize within the law, know what you can deduct and where the line is.
Avoid fines by staying proactive. Even small mistakes (like missed employee paperwork) can trigger penalties.
Advice on Partnerships and Funding
Foreigners often partner with Croatians to establish companies, but protections can be unequal in practice. Always structure your agreements carefully.
Prof. Jozipović shared examples of real cases where miscommunication or lack of structure led to legal and financial complications.
When investing with others, Croatians tend to give money to the person they believe will handle it best, not necessarily based on equal ownership.
On Funding & Business Growth
Grants are available for early-stage funding: through HZZ, EU funds, and great local initiatives like Digitalna Dalmacija.
When it comes to investments, the Croatian market is less developed than some western markets. This makes it harder but not impossible to find reasonable investors. Companies should look for experienced business owners in the niche they want to be active in, but ensure they have a clear contract in place.
On Legal Boundaries & Peace of Mind
Tax evasion can be treated as a misdemeanor or a serious crime; it’s not worth the risk.
Investing in professional help (legal and financial) is worth the peace of mind, especially while setting everything up in the first place or making key business decisions
Final Reminders
Don’t delay setting up proper structures.
Don’t rely solely on handshake deals. Trust is important, but especially when building long-term relationships, it's essential to have key agreements in writing.
Always understand the consequences of staying inactive.
Talk to professionals before problems arise.
Stay informed, stay protected, and never underestimate the value of asking the right questions early.
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