Business etiquette

Business tips

Normal Western business dress and etiquette should be observed.

Shake hands when arriving and leaving. It’s considered polite to shake hands with the women before the men.

Address business associates by their title (eg. Dr, Professor) and surname. First names should be used only if you know the person well or have been instructed to call them by their first name.

Dress code for the first business meeting is conservative: a dark-coloured suit and tie for men, and suit or dress for women.

Please also note: Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

Croatia is a member of the World Trade Organization, and its customs tariff is adapted to the Harmonised Customs Tariff. The Croatian customs regulations comply with those of the European Union. Customs duty is calculated on the basis of the invoiced value of imported goods plus all foreign expenses incurred (transport costs and insurance to the Croatian border, commission fees payed to agents and bank expenses).

Based on the free trade agreements signed in 2003, Croatia enjoys preferential treatment in trade with 32 countries. In 2003 the average customs tariff on industrial products amounts to 3.5 per cent, which is in accordance with the principle that the tariff rates for raw materials arid intermediary goods must be lower than the rates for finished or semi-manufactured goods.

Tariff rates for agricultural and food products are determined in a number of ways, as value-based (ad valorem), quantity-based and combined rates.

According to the Customs Act and the Istanbul Convention on the Temporary Admission of Goods, goods temporarily imported into Croatia may be completely or partially exempt from customs duties and taxes.

Croatia is a signatory to the following international conventions:

• ATA Carnet System
• TIR
• Transit
• On trademarks, copyright and intellectual property

Tariff

The tariff system is based on the combined customs nomenclature with Croatian sub codes. Australian products are subject to rates contained in the MFN column. Duties are ad valorem, assessed in harmony with GATT conventions.

The tariff rate tends to vary from 0-25 per cent, depending on the product. Over 96 per cent of all goods listed in the Customs Tariff Schedule may be exported to Croatia without restriction. The Croatian Customs Service – (Carina) has the customs tariff online in Croatian.

Some products may attract additional charges above the customs tariff. These products include oil derivatives, tobacco products, non-alcoholic drinks, mineral water, carbonated water, alcohol and alcoholic drinks and new imported cars with engine power exceeding 75 kw. Please check with Austrade, Carina or Croatian Chamber of Economy before shipping.

Customs authority contact details:

Croatian Customs Service – (Carina)(in Croatian only)
A. Humboldta 4a
Zagreb
Tel: 6102 333 or 6102 461
Fax: 6155 280
Email: carina@carina.hr

Non-tariff barriers

Import quotas are applied for only a small number of goods. If a quota is applied, it is valid for up to one year. Most products are free from quota restrictions, but it is worth checking before shipping any goods. Some goods may also require an import license.

Goods covered by licenses include health, environment, precious metals and art works.
Licenses are managed by the Ministry which covers the product sector. A number of consumer goods remain on the special list (eg. the Ministry of Defence for weaponry and ammunition, the Ministry of Culture for works of art, the Ministry of Health for medicines, etc.). These goods are subject to both licensing and global quotas.

Certain imports (food, cattle, consumer goods, medicines, etc.) must be accompanied by special certificates (sanitary certificate, veterinary and phytopathological certificate, certificate of quality). Certificates are issued by competent institutions, dependant on the type of goods. Goods which must undergo the proscribed procedure of obligatory certification or homologisation must be tested and certified by an authorised organisation and must be adequately labelled before being traded.

Croatia strictly enforces international regulations on drugs, psychotrope materials and precursors.

Product certification, labelling and packaging

Labelling

Special labelling regulations apply for the retail sale of food and some other products:

• Labels with Croatian directions for use must be attached to the individual packing.
• Specific references on technical (eg. electric) certificates issued by Croatian authorities must be attached to the individual packing.

Specific instructions on packing, marking and labelling must be outlined in the contract.

Additional labelling requirements are required for food products:

• List of ingredients
• Additives
• Production and expiry dates
• Other relevant information regarding preparation

Medicine, textiles and footwear also require additional labelling. Full details of these requirements can be obtained from the Ministry of Economy, Labour and Entrepreneurship.

Special certificates

Certain imports (food, cattle, consumer goods, medicines, etc.) must be accompanied by special certificates (sanitary certificate, veterinary and phytopathological certificate, certificate of quality). Certificates are issued by competent institutions, dependant on the type of goods.

Packaging

No general requirements. Any specific requirements will be stipulated in contracts.

Goods should be securely packed, having due regard to the nature of the goods, means of transport and likely climatic conditions during transit and delivery.

If hay or straw is used as a packing material a phytosanitary certificate, issued by the appropriate authority in the country of origin, must accompany the shipment papers (see also 'Special certificates' below).

Outer containers should bear the consignee's mark and port mark and be numbered (in accord with packing list) unless the contents can be otherwise readily identified.

The following items must appear on the two vertical sides of each outer container:

• The sales contract number
• The consignee's instruction number
• The import licence number (if applicable)
• The gross and net weights

Methods of quoting and payment

Quotes should be in convertible currencies (Pound Sterling, US dollar, Australian dollar and the Euro) and whichever freight parity requested by the importer (Incoterms 2000 applies). The method of payment is usually stipulated in the contract. Croatian importers prefer long-term payment conditions.

Documentary requirements

Commercial invoice

No prescribed form. Usually three original copies are required. Additional copies are stipulated in the contract. Invoices sent electronically are currently accepted by customs, but this practice is not yet officially regulated.

Must be signed and certified by the shipper and show:

• The names and addresses of the shipper and consignee
• The country of origin and purchaser of goods
• The number of packages and a description of the outer packing
• The quantity and value of the goods
• A precise description of the goods as per the combined customs nomenclature
• Incoterms conditions apply

Bill of lading

No specific requirements. 

Packing list

Not obligatory but advisable.

Certificate of origin

May be required for customs tariff classification, where there may be doubt as to the origin or when stipulated in the contract. Certification by an approved authority is prescribed.

Insurance

Usually arranged by the importer through local insurance companies. However, it is necessary to outline the parties' obligations in the contract. 

Weights and measures

The metric system.

Public health requirements

Specific plant and animal health regulations apply (See also 'Special certificates').

Medicinal products, cosmetics, foodstuffs and agricultural machines and equipment may require testing and approval by the Croatian authorities before import is allowed.

Specific requirements will be stipulated in the contracts.

Setting up in Croatia

Finding the right partner

Austrade is prepared to advise you and search for adequate partner for your business activities. The partner search will depend on whether you are merely plan to export or trade in Croatia or whether you are intending to establish a permanent presence or purchase a business or company there. You will need to find out what permits or licences are required,

Setting yourself up to do business in the Croatia is a complex (but perfectly achievable) undertaking requiring plenty of planning and forward thinking. Obtaining the necessary permits and papers and setting up appropriate entities  takes time, and people considering doing business in the Croatia should allow adequate time to be ready by their desired deadlines. Always check the legal, tax and accountancy regime well in advance, but get regular updates as the law can change frequently.

In-market representation

Perception and awareness of Australia is very good. Besides finding the right partner Austrade can represent you in market. This is especially recommended in relations with public sector or government.

Taxation

The Croatian taxation system is comparable with the taxation systems of the EU member states and is based on direct and indirect taxes.
Corporate tax, profit tax – 15 or 20 per cent

• The difference between income and expenditure, as provided by the Profits Tax Act is 20 per cent.
• Remuneration for the use of intellectual property, rights market research services, tax consulting, auditing services, dividends, shares of profit and interests to foreign non-natural entities is 15 per cent.

Corporate tax, name tax is up to HRK2000 annually.
 
Income tax, steps at 15, 25, 35 and 45 per cent depending upon income.
 
Value-added tax, 22 per cent and zero per cent (the VAT rate is zero per cent for bread, milk, books with professional, scientific, artistic, cultural and educational content, students' books, medications specified in the Decision on Medications Listed by the Croatian Health Insurance Fund, surgically implanted products, scientific magazines, public film presentation services and services related to organised tourist stays paid by bank transfers from abroad.)
 
County taxes (gifts and inheritance tax, tax on road motor vehicles, tax on vessels and  levy on coin operated machines for amusement).

Excise tax is levied on the following consumer goods:

• Tobacco products
• Beer
• Non-alcoholic beverages
• Spirit
• Coffee
• Personal cars, other motor vehicles, vessels and aircrafts
• Luxury products
• Automobile liability insurance premiums and comprehensive automobile insurance premiums for vehicles

The excise tax will be levied in addition to the VAT.

Environmental tax is levied, particularly on packaging materials and oil products, irrespective of their use for substantial protection or operation.

Tax exemptions, relief and incentives: 

• Tax payers who perform their activities in the town of Vukovar are exempt from paying.
• Profit tax for the period between the years 2000 and 2005, and in 2006 the profit tax rate for them will be five per cent.
• Tax payers who perform their activities in areas of special state concern pay profits tax at lower rates (5-15 per cent).
• The profit tax rate for free zone users is 10 per cent.
• The tax rate on profits resulting from new investments has been reduced (now from zero to seven per cent), depending on the amount of investment and on the number of employees.
• Additional tax base reduction for the amount of salaries (incl. taxes and deductions) is granted for new employees and new disabled employees.

The Ministry of Finance has information in English on the Croatian tax regime.

Banking and finance

The banking sector in Croatia is very well developed. One of the reasons is that it is 95 per cent foreign owned, mainly by German, Italian and Austrian banks. Major players in market are Zagrebacka banka and Privredna banka Zagreb.
 
Special development funding under good terms is provided by EBRD European Bank  Reconstruction and Development and HBOR Croatian Bank of Reconstruction and Development.