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Under the European Green Deal, Croatia is aligning with EU-wide climate goals. The Green Deal is the EU’s roadmap to becoming climate-neutral by 2050, and one of its main tools for reducing emissions from buildings and road transport is ETS2 (Emissions Trading System 2). ETS2 can be thought of as a market-based carbon tax.

ETS2 is the EU’s carbon pricing system for heating fuels and road transport fuels. It extends the existing EU Emissions Trading System (ETS), which already covers large industrial emitters.

As of 2026. 2026,fuel suppliers only need to monitor and report how much CO₂ is emitted from the fuels they sell. 2028. Starting in 2028, they are expected to buy ETS2 allowances at EU auctions. Each allowance gives the right to emit 1 tonne of CO₂. Because these allowances can be traded and their price fluctuates, they are considered a financial instrument, similar to stocks or bonds.

Suppliers will pass the cost of allowances on to consumers, so eventually the price of heating and transport fuels will increase. In 2026, ETS2 does not yet affect household bills for heating or transport fuel, but by 2028 it is expected to add hundreds of euros per year on respective bills per household.

The goal of carbon pricing is to encourage the transition to clean energy and reduce emissions. To support this, incentives and funding will be available for households and businesses that invest in renewable energy systems.

Krešimir Jelaković

In Croatia, real estate transactions are most commonly structured as either asset deals or share deals, each offering distinct strategic and financial advantages for investors. In addition to these standard approaches, alternative structures—such as development agreements, joint ventures, and building right or long-term lease arrangements—are increasingly used, particularly in sectors like renewable energy, where large-scale solar and wind farms require significant land use and regulatory alignment.

An asset deal involves the direct acquisition of real property, including land, buildings, and any fixed installations. Once the purchase agreement is executed, ownership must be formally registered in the Croatian Land Register. This structure offers clarity in asset ownership and may be preferable for greenfield investments or when the investor wants a clean title without corporate liabilities.

A share deal, by contrast, involves the acquisition of a company, usually an SPV, that holds the real estate. By purchasing a controlling stake—often 100%—the investor gains indirect ownership of the property while maintaining the existing corporate vehicle. This can be strategically advantageous, allowing investors to leverage the existing corporate structure for tax planning, accounting efficiency, and liability management.

From a fiscal perspective, share deals often provide a more favorable tax outcome. Asset transactions are typically subject to a 3% real estate transfer tax or 25% VAT, depending on the nature of the transaction, where in a share deal taxes may be mitigated or entirely avoided, which can significantly enhance overall investment returns.
For investors considering entry into the Croatian real estate market, understanding the nuances between these structures is essential for optimizing transaction value, managing risk, and aligning with long-term investment strategies.

If you decide to buy a residential property in the Republic of Croatia, you should take into account that in addition to the tax that you pay when purchasing a property (real estate transfer tax at a rate of 3% where the buyer and seller are individuals, and where an entrepreneur sells the real estate, the rules get a bit more complex), every property owner in the Republic of Croatia is obliged to pay annual property tax (cro. porez na nekretnine).

Property tax ranges from 0.60 to 8.00 EUR/m2 of usable area of the property, depending on the decision of the municipality or city in which the property is located, so for example, for a 250.00 m2 house on the Adriatic coast the annual property tax will be – in the city of Zadar 150.00 EUR, and – in the city of Umag 2,000.00 EUR.

Below you can see an overview of property taxes in certain popular tourist locations on the Adriatic coast.

Property Tax	Year 2025
City of Zadar	0.60 EUR/m2
City of Split	1.99 EUR/m2
City of Korčula (Island of Korčula)	4.00 EUR/m2
City of Šibenik	5.00 EUR/m2
City of Dubrovnik	5.00 EUR/m2 – Zone I 4.00 EUR/m2 – Zone II 3.00 EUR/m2 – Zone III 2.00 EUR/m2 – Zone VI 0.60 EUR/m2 – Zone V
City of Rovinj	6.25 EUR/m2
Municipality of Bol (Island of Brač)	7.50 EUR/m2
City of Vis (Island of Vis)	8.00 EUR/m2
City of Umag	8.00 EUR/m2

Property tax is not paid if you use the respective property for permanent residence, or if you rent it out under a lease agreement for permanent residence with a duration of at least ten months. This means that if residential property is rented out on a long-term basis to third parties for example, for business purposes, and not for permanent residence, it is possible that in addition to the tax liability based on the lease agreement, a tax liability for property tax will also arise, however it remains to be seen what the practice of the tax authority will be in this case.

If it is a newly built property, the obligation to pay property tax arises a little bit later, on the day of enforceabiltiy of the use permit, or where and when the newly built property is being used without a respective use permit, on the day of the start of the respectiv use thereof.

Exemptions from payment are also prescribed for municipalities and cities, and in certain cases where and when the residential purpose of the real estate is not functionally possible, as well as in other cases prescribed by law.

For example, a short-term exemption from property tax exists for real estate that is recorded in the company’s business books as property intended for sale, when and if less than six months have passed from the date of entry thereof in the business books until 31 March of the tax relevant year, as well as for property taken over in exchange for unpaid receivables, when and if less than six months have passed from the date of taking over ownership over the respective real estate until 31 March of the tax relevant year.

Summer in Croatia brings new business conduct obligations for the banks regarding consumer lending.

KYC investment profile for consumers will now be more regulated in Croatia from 1 July 2025 i.e. it could be harder to get a loan from the bank as a consumer wanting to buy a new flat, appartment or a house, or even to get non-housing loans.

The amount of new consumer debt is now limited so that, when a new loan is granted:

• the ratio of monthly total debt service to income (debt service to income, DSTI) may not exceed 45% for housing loans and 40% for non-housing loans;
• the ratio of the amount of consumer loan to the value of pledged immovable property (loan to value, LTV) may not exceed 90%.
• the maturity of housing loans and non-housing loans to consumers collateralised by immovable property is limited to 30 years, while the maturity of other non-housing loans is limited to 10 years (with exceptions depending on collateral).

The functionality of the capital market is nevertheless protected by certain exemptions, where the banks will still be allowed to grant quarterly 20% of the amount of consumer housing loans and 10% of the amount of other loans to consumers beyond the aforementioned DSTI limits, as well as 20% of loans to consumers beyond the LTV limits, based on their own assessment.

Exemptions also protect the consumers, so when granting housing loans, exemptions may primarily be applied to consumers addressing their housing needs by the loan, with the aim of mitigating a possible unfavourable effect on consumers who are purchasing their first home or a home that more adequately meets their family needs.

In Croatia severance payment is used in most cases as monetary help that employer pays to the employees when cancelling their employment contract.

Nevertheless, a severance payment may also be a monetary reward for the loyalty of the employees to the employer, which is being paid when the employees are retiring.

Severance payment may be also paid in case where employees contracts are being cancelled as a result of accidents at work or occurrence of occupational diseases.

Right of the employees to severance payment is usually stipulated within provisions of the Collective Agreement (if any) and the Work Regulations (if any) and in the provisions of the of the Labour Act.

The employees are eligible for severance payment in three different situations:

• severance payment for retiring – when employees are retiring in cases of “old-age” retirement, early retirement and/or disability retirement
• severance payment for cancellation of employment contracts – for employees whose employment contracts have been cancelled by the employer through either a personally conditioned cancellation, or through a business conditioned cancellation
• severance payment for employees who suffered accidents at work or occupational diseases – and their employment contracts were cancelled as a result of subsequent inability to work.

All payments that may be paid tax-exempt to the employee are foreseen in the Income Tax Regulations, and hereunder you may see the relevant info for tax-exempt severance payment for retirement.

No.	Description	Coefficient	Amount in EUR – 2025 max tax exempt
14.	Severance payment for retirement	2,5	up to 1.500,00

No.	Description	Coefficient	Amount in EUR – 2025 max tax exempt
15.	1,6	Severance payment for cancelation of employment contract – through a personally conditioned cancellation and through a business conditioned cancellation , compliant with Labour Act	up to 960,00 EUR for each completed year of employment with that employer

No.	Description	Coefficient	Amount in EUR – 2025 max tax exempt
16.	2,0	Severance payment due to accidents at work or occupational diseases	up to 1.200,00 EUR for each completed year of employment with that employer

The answer is simple. Startups need business law advice in order to avoid legal hiccups which would distract them from their core business. Jelakovic & Partners helps you to understand the legal requirements for your business startup, so you may work faster, better and smarter.
Below are critical aspects of business law for startups

1. Legal Structure
   Business law ensures that startups are structured properly, whether as sole proprietorships, partnerships, or corporations. Choosing the right business structure ensures legal compliance and protects personal assets (e.g. LLC). A solid legal foundation further supports growth of the core business, attracts investors, and ensures business longevity of a startup.
2. Employment Law Compliance
   Drafting fair and clear intercompany regulations and employment contracts protects both employees and the business.​
3. Business Contracts
   Understanding off the shelf business contracts provided by international partners and clients may be challenging without legal assistance. Well-drafted contracts with partners and clients prevent misunderstandings and legal disputes.
4. Dispute Resolution Mechanisms
   Establishing clear procedures for resolving conflicts between contractual parties (amicably, before court or ADR) helps minimize conflicts which may endanger business continuity.​ The goal is to settle disputes as speedily as possible to save time and money.
5. Data Privacy & Consumer Protection
   Compliance with data protection laws (GDPR) is now a legal standard and avoids legal penalties.​
   Consumer protection minimum requirements are usually common knowledge among consumers so legal hiccups in that area do not help in business longevity of the startup.
6. Intellectual Property Protection
   Securing trademarks, patents, and copyrights before or after hitting the market may safeguard unique ideas and brands. Nevertheless, in many situations well drafted rules about trade secret can be the best and only solution for protection against competition.
7. Tax Obligations
   Proper legal advice ensures adequate business decisions re. tax and financial compliance.​
8. Investor Relations
   As businesses grow and evolve, the need for legal protection and guidance becomes increasingly important. Legal guidance from Jelakovic & Partners through M&A and financing ensures fair equity distribution and compliance with relevant laws.​

In September 2010, Kresimir Jelakovic founded his own law firm in Varaždin, Croatia, now Jelaković & Partners.

Jelaković & Partners is a business law firm located at Zagrebacka 61/III in Varazdin on the whole third floor of the business venue, and its second address will be soon at Slavonska Avenija 1A in Zagreb on the fifth floor of the Matrix Office Park.

Kresimir Jelakovic has decades of experience himself and together with his team he is able to offer a wide range of services. From support in restructuring and renegotiation of the existing projects to legal support in the areas of real estate law, contract law, corporate law, energy law, tax law, insolvency law to the areas of financing, such as senior loans, junior loans, syndicated loans and much more.