Croatia is one of those places that might not be at the top of the list in the mind of a budding freelancer in search of a place to set up shop. However, a closer look is needed. This is a scenic country with plenty of inspiring coastal views of the ocean. It was so picturesque that it got selected as the scenery and backdrop in the film, “Game of Thrones.” Freelancers may decide to set up a physical business in Croatia, but there are also options for remote work as well. This guide covers everything you need to know to get started, and become a freelancer in Croatia.
What is it Like to Freelance in Croatia?
Freelancers in Croatia are valued because of their ability to bring specialized skills into existing companies and businesses. This includes skills like web design, translation services, graphic design, content writing, software developers and other services requiring specialized knowledge. When you work as a freelancer in Croatia, expect a welcoming business environment. You might want to become a freelancer in Croatia because companies will hire independent contractors regularly for short-term projects or even long-term contracts.
If you open a business in Croatia, you will have many opportunities in a labor market that has lots of vacancies. The economy of Croatia relies on foreigners to bring valuable skills to the table. This happened because of the exodus of young people seeking employment in the EU. When you decide to work as a freelancer in Croatia, you will be filling this gap in the country’s labor pool.
Register to Become a Freelancer in Croatia
Freelancers are not required to register in order to work as a freelancer in Croatia legally. There is a system in place in Croatia called ugovor o djelu, which means a contract for performing a specific type of work. The government also instituted an open quota system for immigrants interested in working or freelancing in Croatia. If you plan to open a business in Croatia, this could be a viable stepping stone.
There is also arrangement for artists or copyright transfer contracts that are commonly used by freelancers. This covers a wide range of projects that freelancers often do. Tax deductions apply to the costs involved in performing this work. To register as a freelancer in Croatia, you can take advantage of the option to become a sole trader. Although it isn’t necessary, you might still want to register as a sole trader and apply for the digital nomad visa.
Applying for a digital nomad visa is a straightforward process. The digital nomad visa was introduced in 2020 and became available in 2021. Croatia now welcomes freelancers to work and reside in the country. This visa makes it possible to remain in Croatia for extended periods of time. According to Croatian law, digital nomads work using technology and remote technologies and reside in another country outside of the EU. The digital nomad visa allows you to stay for an entire year. After that time has expired, you can apply again to stay another six months.
Related read: List of 41 countries offering Digital Nomad Visas
Legal Obligations of Working as a Freelancer in Croatia
Croatia maintains a friendly atmosphere towards freelancers. However, if you freelance in Croatia, you still need to meet various legal obligations. Learn how to open business in Croatia without any legal issues. Once you know what these obligations required, it’s surprisingly easy to become a freelancer in Croatia. Taxation is the first thing you need to know to work as a freelancer in Croatia.
Ensure you meet your obligations for taxes and VAT to successfully become a freelancer in Croatia:
To manage a business in Croatia, you must be prepared to pay taxes. If you were an employee, the employer would pay 24% of the total income tax owed; however, the rate for freelancers is calculated by using several variables. For example, the copyright transfer process for artists can affect the effective tax rate. If the artist has a copyright transfer, 30% of the gross amount is affected. If it’s just a contract with the artist with no copyright transfer, 55% of the gross amount is affected.
Breakdown of taxes for those who want to work as a freelancer in Croatia:
- Freelancers are responsible for paying 10% into pension and social funds.
- If the freelancer earns less than 300,000 HRK per year, the preferred option of self-employment tax can be taken.
- Freelancers with full-time employment do not bear the full cost of the required social contributions.
VAT Obligations for Freelancers in Croatia
Freelancers in Croatia are called sole proprietors, and it’s required to pay VAT if your income is above a certain amount every year. However, there are reduced rates if certain types of goods and services are involved. In addition, sole proprietors, or sole traders, are allowed to close down all business activities on a temporary basis without being responsible for these taxes.
- The tax rate for sole proprietors, or freelancers, is set at 25%.
- The reduced rate applies to specific goods and services; it is either 13% or 5%.
- The zero VAT rate must still be recorded to remain compliant.
- Freelancers who earn less than 3,500 EUR, or 26,400 HRK per year only pay a 12 percent rate on their income tax.
Getting Paid as a Freelancer in Croatia
Getting paid as a freelancer will generally require you to send invoices to clients. However, these invoices need to comply with VAT and any other applicable regulations. Sending invoices requires you to fill out your company information on the invoice form along with your client’s details, and send it electronically. The format of the email will be determined by the type of invoicing service you use. Xolo Leap products design invoices specifically for freelancers interested in remaining compliant with Croatian VAT laws. Xolo Leap is especially useful to keep track of your finances as well run your business legally from anywhere.
Finding Freelance Gigs in Croatia
There are many ways to freelance in Croatia; none of them are right or wrong. Depending on why you want to become a freelancer in Croatia, you might discover a method that works best for you. For example, some people use social media to boost their presence. This can be used to promote your open business in Croatia. You can also find work as a freelancer in Croatia through other networks, professional associations, marketplaces, job agencies and even just informal conversations with locals.
How to Open Business in Croatia
Freelancers will most likely set up their business in Croatia under the classification of a sole trader. This is the easiest way to get started, and this is true for foreign freelancers as well as locals. Most freelancers should refer to the Crafts Act, which details what types of self-employment activities are allowed in Croatia.
To get started, and open business in Croatia as a freelancer, do the following things:
- Fill out the registration form given by the local business registration office.
- Provide your personal information to the Croatian Craft Register. This includes details like name, address, national ID, passport, trade licenses, certifications, etc.
- Draft up a business plan for your freelance operations. This includes the total cost of supplies, equipment and tools necessary to conduct your business.
- Be prepared to pay any startup costs including the registration fees, rental costs for office space, etc. Obtain documents that prove you have the right to use the space.
- Contact the State Administration Office to apply for an official stamp.
- Open a business bank account.
- Start marketing to clients, and set up bookkeeping.
To simplify the processes and burden of starting and running a freelance business, Xolo Leap will help you launch and set up a fully-remote EU solo business with Estonian e-Residency and provide you with tools so that you can manage it from anywhere you wish.
Government Resources for Freelancers in Croatia
The taxation system of Croatia is subject to change. In times when the government seeks to attract foreign workers to change their tax residency to Croatian, the possibility of new tax incentives is likely. One current policy already excludes freelancers from taxation in Croatia if they work as freelancers for a foreign company, for example. Tax benefits aren’t applied uniformly, so the best way to assess the tax benefits of working as a freelancer in Croatia is to speak with a tax accountant.
Conclusion
Croatia offers a range of benefits to freelancers interested in coming to the small, picturesque country to set up a business. The scenery is amazing, and the people are friendly. The workforce is skilled, and this bodes well for freelancers looking to expand in the future. However, there are also options for freelancers who prefer to work remotely. Get your solo business established with Xolo Leap!
