New Investment Promotion Act in Croatia

On 25 September 2015 a new Investment promotion Act (henceforth “the Act“) has been introduced with the aim of harmonization with EU legislation for the new programming period 2014 - 2020 The authorities responsible for the enforcement of this Act are Ministry of entrepreneurship and crafts and Ministry of Economy, depending the size of the applicant.

The Act is governing the state aid granting with the aim of encourage investments, the manners and the time frame to fulfil the necessary investment activities, all with the aim of successfully and time defined realization of investment projects on the territory of Croatia. The beneficiary can be either (a) individual person, subject to corporate income tax, or (b) legal entity, micro, small, medium or large sized entrepreneur, registered in Croatia.

Following types of state aid are anticipated by the Act: (a) tax related aid, (b) aid for the eligible expenses of creating new jobs and the eligible expenses for training and education, (c) aid for development and innovation activities, activities of business support and activities and services of high value added, (d) aid for projects’ capital expenditure, (e) aid for labour - intensive investment projects, (f) aid for investments of minimum 13 million EUR and 10 new university degree job positions.

Terms and conditions as well as the intensity of the individual state aid prescribed by the Act vary according the size of the applicant and the size and the nature of the investment itself. In order to compete for the state aid it is necessary to submit an application, and the responsible authority should issue a certificate no later than 60 days from the application date. Financing structure for the projects competing for the state aid according to the provisions of this Act, should be free from any type of (state) aid at the minimum of the 25% of eligible expenses.