Law and regulation of industrial and logistics investment in Croatia

The Republic of Croatia recognizes the strategic importance of the manufacturing and processing industry for its future economic development and has therefore adopted a number of legislative acts and by-laws with the intention to provide incentives for investments in these sectors. The incentives are granted to support innovation, research and development, create new employment opportunities and improve production processes.

The incentives include various forms of non-repayable state funding for investments focusing on developing new equipment and technologies, increasing employment rates and training employees, developing new products and services, increasing market competitiveness, regional development, activating fixed assets owned by Croatia, and increasing productivity, amongst others.

2. General incentives, from which investors in the I&L sector in CEE-17 can benefit, if no specific ones are available

Croatian law envisages various ways of improving the entrepreneurial infrastructure and the commercial conditions of doing business in Croatia. These include the establishment of entrepreneurial and business zones, business hubs and incubators, which aim to promote economic growth by ensuring that investors have the necessary infrastructure, e.g. good traffic connections, business and office spaces and other resources, which thus enable investors to streamline their business operations and optimise their investments in Croatia.

3. Available tax exemptions or preferences for investors specifically in the I&L sector in CEE-17

Reduced corporate income tax (CIT) rates are available to Croatian taxpayers investing in business support activities projects, which include the development of high-technology logistics and distribution centres. The percentage of the CIT reduction varies from 50 to 100% depending on volume of investments and created new jobs. The same applies to investments in manufacturing and processing activities, development and innovation activities and high value-added services. Entrepreneurs eligible for tax incentives can also apply for non-refundable cash grants.

4. General tax exemptions or preferences for investors in CEE-17 that would apply to the I&L sector

The CIT base can additionally be decreased for eligible R&D costs, including:

  • 200% for basic research;
  • 150% for industrial research;
  • 125% for experimental development;
  • 150% for feasibility studies.