How to Register a Sole Proprietorship (Obrt) in Croatia

Starting an obrt in Croatia gives you a flexible, relatively low-cost way to begin working on your own. The laws are well-defined, especially under the Crafts Act (Obrtni zakon) and the Companies Act, so with the right preparation, you can go from idea to a fully registered sole proprietor fairly quickly. On the flip side, because you’re not a separate legal entity, you bear full personal liability, must comply with Croatian rules on taxation, social contributions, naming, and sometimes need specific qualifications depending on your craft.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Croatia?

In Croatia, a sole proprietorship is called an Obrt. Depending on the kind of activity and your qualifications, there are different types: slobodni obrt (free craft), vezani obrt (tied craft), and povlašteni obrt (privileged craft).

These all fall under the Crafts Act and allow one person (Croatian or foreign, under some conditions) to carry out a business without forming a company. Sometimes people refer to being self-employed or an independent contractor, but officially, Obrt is the term used for most small business crafts or service activities under Croatian law.

How does a sole proprietorship (obrt) work in Croatia?

Here’s a concise look at how a sole proprietorship works in Croatia—what you register, how you pay tax, what liability you hold, and more.

Obrt vs Limited Liability Company in Croatia

If you’re deciding whether to stay as an obrt or set up a company (such as a d.o.o.), here’s a helpful comparison so you can see the trade-offs clearly.

Step-by-Step Guide: How to register a sole proprietorship in Croatia

Here are the actions you’ll take, in order, to become a registered obrt.

Step 1: Check eligibility

First, make sure you meet legal requirements. You must be a natural person with legal capacity. Croatian citizens can easily do this; as a foreigner, you’ll need proof of identity, possibly a residence permit, and, depending on your craft, proof of professional qualifications if the obrt is a tied or privileged craft. Also, check if your planned activity is permitted under the Crafts Act.

Step 2: Choose the type of obrt and business activity

Decide whether you will operate a slobodni obrt (free craft, generally lower restrictions), vezani obrt (requires certain qualifications), or povlašteni obrt. Choose the NKD code (Croatia’s activity code) that matches what you plan to do. Think about whether you will trade under your own name or choose a trade/business name.

Step 3: Register through the crafts register (obrt registry)

Submit your registration with the relevant local authority (State Administration Office or through the e-Obrt system). You’ll need to fill in the forms for craft registration (Obrt Registry), specifying personal details, business name, address, and business activity. In many cases this can be done electronically.

Step 4: Obtain tax identification (OIB) and register with tax authorities

If you don’t already have one, get an OIB (Osobni identifikacijski broj), which is the personal tax ID. Then register with the Tax Administration (Porezna uprava) for income tax obligations. If your turnover is expected to exceed the legal threshold, you’ll register for VAT (PDV).

Step 5: Register for social and health insurance

Once you’re registered as an obrt and with tax authorities, you must also register with social security and health insurance institutions. In Croatia, that means the Croatian Pension Insurance Institute (HZMO) and the Health Insurance Fund (HZZO). These contributions are mandatory.

Step 6: Open a business bank account and prepare for accounting

You’ll want a bank account dedicated to the obrt (recommended for clear bookkeeping). Set up a system for tracking income, expenses, and invoices, possibly using simple accounting software or engaging an accountant. Be ready to issue invoices and receipts according to rules.

Step 7: Pay registration fees and comply with ongoing rules

You’ll pay the fees tied to the craft registration (which vary depending on the type of obrt and locality), possibly local taxes or dues if relevant. After registration, maintain required records, file annual tax returns, make social and health insurance contributions, and update any registration information if your business activity, address, or other critical detail changes. If you hired employees, handle payroll obligations.

Financial and tax obligations for obrt in Croatia

• Personal Income Tax: Income from obrti is taxed through personal income tax. Croatia uses progressive rates—commonly 20% and 30% for self-employment/income from independent work. Local surtaxes may also apply.

• VAT (PDV): Standard rate is 25%; reduced rates for certain goods/services. You must register if your turnover exceeds the legal threshold. Voluntary registration may be possible earlier.

• Social and Health Insurance: Obligatory contributions to pension and health insurance institutions. These are based on declared income, with minimum bases applying.

• Record-keeping: Maintain books of receipts, invoices, income, and expense records. May need bookkeeping according to rules, depending on size.

• Annual filings: File yearly tax returns. If VAT registered, submit VAT returns periodically. Also, file any other required declarations depending on local rules.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start an Obrt in Croatia?
There is no minimum capital requirement for starting an obrt.

Do Obrti need to register for VAT (PDV)?
Yes, if their turnover exceeds the legal threshold. They may also voluntarily register earlier, especially if they deal with VAT-registered clients or wish to reclaim input VAT.

How much are standard contributions for social security and health insurance?
These depend on your declared income and whether minimum base amounts apply. The rules vary depending on location and type of obrt. An accountant can help you estimate based on your expected revenue.

Can an Obrt hire employees?
Yes. If you hire staff, you are responsible for payroll taxes, social and health insurance contributions for employees, and meeting employment regulations.

How long does it take to register an Obrt?
If all documents are ready, registration via e-Obrt or through the Craft Registry can take just a few days. Some parts (like permits for tied/privileged crafts) may take longer.

Can foreign nationals register an Obrt?
Yes. Foreigners can form an obrt, though additional document requirements (proof of residence, translated documents, qualified permits or professional credentials) may apply. EU/EEA citizens usually have simpler paths.

Do Obrti need a separate business bank account?
Not strictly mandatory in all cases, but strongly recommended. Using a separate account helps with clarity of finances, tax audits, and separating personal and business money.

What happens if I stop operating the Obrt?
You should formally deregister the obrt in the craft registry, inform tax authorities you’ve ceased activity, settle any outstanding tax or social/health contributions, and keep your records for the legally required retention period.

Are there government incentives or reduced rates for new Obrti?
There are simplified registration procedures (like e-Obrt) and certain tax or craft-type advantages for small or free crafts. Some types of obrti (free crafts) are less regulated and have lower barriers to entry.

Can I use Deel as an Obrt to get paid by international clients?
Yes. Deel supports obrti and freelancers in Croatia. You can invoice international clients, receive payments in multiple currencies (depending on banking / FX rules), and use Deel’s tools to generate invoices that comply with Croatian legal and tax requirements.

Does Deel generate compliant invoices for Obrti?
Yes. Deel’s invoice tools can include all required details (OIB, activity description, VAT if registered, etc.) so your invoices meet legal standards in Croatia.

Can Deel help me with taxes as an Obrt?
Yes. Deel offers downloadable financial records, reports of your earnings and invoices, which make tax filing much easier. Though Deel doesn’t replace accountants or legal advisers, those tools significantly reduce the time and risk in keeping correct records.

Does Deel offer contracts for freelancers and Obrti?
Yes. Deel’s contract templates are adapted for Croatian law, helping protect both you and your clients.