May 31, 2021 - Aaron Antwine of Hurricane Hostel in Split on the realities of opening a business as a foreigner in Croatia. 

To be upfront, if I had known that the combination of Covid and the Croatian government would screw my wife and me over so hard, I would have moved to any other country. 

My wife and I opened our hostel at the start of March 2020. A few weeks after opening, we closed our doors due to quarantine. Officially, accommodations were not required to close, but with so little information about Covid and a terrible amount of fear, we thought it would be the socially-responsible decision to close. Maintaining two meters of space in a dorm setting is next to impossible, and there were no tourists to be had anyway. We remained closed through all of April and reopened on May 18th. 

We filed for aid through HZZ during those first few months of Covid, and we did receive salary support for three months. Once the season became more active, filing for aid was much more difficult, and we were denied. Business was not that bad for a few months, and we were optimistic for the future for a time, but that all changed once we reached September. 

Small caveat. I am a U.S. citizen, and to maintain my own residence permit, I must employ three full-time Croatians, which we started in February 2020. Once the season started to slow, we requested salary support again to keep them employed. We were denied initially. Then we filed an appeal pointing out that our staff will be terminated if we do not get any help, and we were denied again. Due to no aid, the threat of a second wave, and greatly diminished sales, we were forced to terminate the staff in September. 

At this point, I was working by myself. My wife and I were hoping we could make enough money each month to cover our operating costs. I do not even pay my own salary. I pay the taxes and contributions for myself.  Every kuna I would pay myself, I put right back into the company anyway. We were trying to survive, and I was doing everything I could. Basically, to survive the winter months, my wife and I tapped into a lot of our resources so we could stay afloat. 

A new ordinance closed almost every business on November 27th, 2020. It did not exactly state that hostels were included as the wording was ambiguous and vague. Hostel owners across Croatia were questioning our lawyers and accountants to verify if we were included. Eventually, we decided that we could stay open. With so much uncertainty, it was too risky to close and have no income whatsoever. Several requests were sent to government offices in Zagreb to get clarification, and no official answer or response was ever given. We thought we were ok. 

January 23, 2021, an inspector entered our hostel and, after looking around for 10 seconds, informed me that our hostel needed to kick out all the guests and close our doors immediately. Their interpretation of the ordinance is that all hostels in the country needed to close. No one in the hostel owners’ group in Split was aware of this. Not one hostel owner in the country knew this was a thing. We asked repeatedly. My attorney and I asked several other government offices, and not one office knew what was going on. The only office in the entirety of the Croatian government that said hostels were to close was the inspector’s office here in Split. My company and I were both fined, and we were forced to close immediately. We lost what small income we were making from January, and we had to remain closed all of February as well. 

Here is where it gets fun. We were the only hostel this happened to. According to Hostelworld and Booking.com, there were around 100 hostels open across Croatia during the winter months. At least 10 of them here in Split. Not one of them was asked to close or received any punishment for being open. We told the hostel owners about being closed, and some responded by closing their own properties until March 1st. None of us could afford fines, and it was safer to close. The other hostels in Zagreb and throughout the country were taking in guests with no problem. Hostels all over were still taking in digital nomads, while some sold “reservations” as a cover charge to go in and party. 

My attorney and I planned on taking the fines to court to contest them. We were going to present information from several other offices, discussing the lack of clarity in the November decision and that hostels elsewhere were still open. Instead, we were hit with a larger fine for wasting the time of the court. I have discussed legal action for discrimination or something to that effect, but legal battles cost money I don’t have. 

Hostel owners and I here in Split deduced that we were now eligible for receiving some sort of support. It was determined that since our hostel was open in January, our business was not eligible to receive any aid, which was an understandable reason. It sucked, but we understood. We then asked for support for February during the month that we were explicitly closed by the government, and we were denied again. I am still not even sure why at this point. 

During the first three months of 2021, I worked on renewing my residence permit. Obviously, I could not maintain the requirement of three full-time Croatians. As part of our re-application process, MUP was kind enough to give me some leniency and work the process another way to ensure I could get a permit and stay open. We caught at least one break, and I am thankful for their help. Sadly, we learned something that nearly broke me almost immediately.  

A new law was passed for foreign business owners in January. The employees I am required to have must be paid the median wage of all employees in the entire country. So instead of paying a net of 3.400,00 for a full-time minimum wage receptionist position, we were now required to pay over 6.700 kuna. In bruto, that is over 9.300,00 kuna per employee. 

I requested MUP asking for a better clarification on the salary law to see if it meant median wage for the receptionist job position. According to the website MojaPlaca, the top salary for any receptionist in the country is around 6.800 kuna. MUP stuck by the law, essentially making our three staff members one of the highest-paid reception staff in Croatia…. for a little 27 bed backpackers’ hostel.

The hostel reopened on March 1st. We made a few thousand kuna total for the entire month, so my wife and I had to dip into even more savings to help cover our costs again. As part of my residence permit process, we set up full-time contracts with three employees that would start working on April 1st. We were still optimistic that sales would increase, and we could get at least enough money to cover most of the bills. Also, we planned to ask for salary support from HZZ to help cover our costs. If we can get salary support, then that would help us cover our largest expense until we can get enough guests. Wrong again.

We filed our requests for aid during this latest March-April window. As our company is relatively new, instead of comparing our sales numbers to 2019, they allowed us to use our first full month of sales in 2020 to use as the basis of the 40% decrease in sales. Our first full month of being “open,” according to HZZ, was April 2020, the month we were closed. Hard to make 40% less than zero. We were denied aid again. I voiced my concerns with my accountants, and they were able to help me produce another complaint. We asked for a different method we could use to show our decrease in sales and our dire need for any type of support. Clearly stating that if we don’t receive some sort of aid, our employees will be terminated, and our company will have to close. I received the decision from HZZ a few days ago, and despite our plea, we were denied again.

The highest-paid receptionists in the country, continuously denied aid from HZZ, closed, and fined by the government. We cannot win. I concede that some events were unfortunately timed, but the rest is going to destroy us. My wife and I will only be able to hold this business open for a short time, and if we do not get any aid or a massive influx of tourists, we are doomed to close later this summer, if not sooner. 

For anyone who might question how our business performs, we have been immensely successful by every metric we can track. According to Booking.com, out of the hundreds of accommodations in Split, from hotels, apartments, guesthouses, and other hostels, we are ranked 19th in guest nights booked over the last 3 months. We are working as hard as we can for every guest we can get, and we are still getting destroyed by a Covid economy and a government that not only refuses us aid but punishes us as well.   

Fundraiser by Aaron Antwine : Help Aaron and Ashley keep their hostel open (gofundme.com)

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ZAGREB, 28 May 2021 - The European Investment Fund has approved a €35 million guarantee to the Croatian Bank for Reconstruction and Development (HBOR), allowing it to originate a portfolio of €50 million to mitigate the economic consequences of the COVID-19 pandemic, HBOR said on Friday.

HBOR will approve loans at interest rates reduced by 0.403 percentage points or only with bills of exchange and promissory notes as collateral.

The EIF guarantee stems from the Pan-European Guarantee Fund (EGF), a €25 billion guarantee facility set up by the European Investment Bank Group in 2020 to accelerate the post-COVID-19 recovery of the European economy.

The EGF guarantee will allow HBOR to offer loans to Croatian SMEs and small mid-caps under more favourable terms, including reduced interest rates or lower collateral requirements. The loans will available to SMEs and small mid-caps operating in some of the hardest hit sectors of the Croatian economy, including tourism and manufacturing.

For more about business in Croatia, follow TCN's dedicated business section.

ZAGREB, 27 May 2021 - Comping, a leading Croatian IT company, has taken over Megatrend Business Solutions, to expand its business concerning high technological solutions, Comping's management board director Alojzije Jukić told a news conference in Zagreb on Thursday.

Both sides said that they were happy with the transaction, however, they stopped short of revealing the value of the transaction.

"The acquisition of the majority of Megatrend Business Solutions (about 90%) will help us to additionally strengthen our market position, particularly in the data center area, business analytics infrastructure. In that regard, we plan a data center in Buzin where we will invest about €2 million in the next two to three years," Jukić said.

He said that due diligence showed that Megatrend's business is similar to Comping, with intelligent people carefully developing its brand, and that cooperation had already been established with the Data Target company which has a data center, business analysis section, and infrastructure section with about 20 employees.

Responding to reporters Jukić presented some of Comping's business details, saying that in 2020 it generated a turnover of about HRK 200 million, that it employs 110 experts, and that it is focused on profitability, adding that each year it generates a profit.

With the planned investments, he expects revenue to increase based on its business operations and further development of its infrastructure and integrating services which account for about 25% of its business.

Comping has been doing business on the Croatian market for more than 30 years.

For more, follow our dedicated business section.

ZAGREB, 23 May, 2021 - The Slovenian Iskra company is taking over the Croatian Elka company, and the transaction will be carried out upon fulfillment of conditions, including approval of regulators for the protection of market competition in the two countries, the two companies said on Sunday.

According to a joint press release, Iskra director and majority owner Dušan Šešok and Elka -Cotra group owner Miljenko Hacek on Saturday signed an agreement on the acquisition of the 100% stake in Elka, the largest producer of electric cables in this part of Europe.

In the press release, Šešok said that Iskra was doing extremely well, despite the coronavirus pandemic.

"Last year, we ended with a record €130 million in consolidated revenues, and this year we expect further growth of over 20%," Šešok said, noting that this is the result of European customers turning to European manufacturers when it comes to components, as well as system solutions for energy, telecommunications, railways, and automation in industry.

"Iskra continuously invests in research and development of new products to implement new technologies and innovative solutions, which we will certainly apply, as the new owners, in the further development of the Elka company which we are taking over," Šešok said, adding that both companies are a symbol of reliability and quality.

For the Iskra Group, the acquisition of Elka is the second significant investment in Croatia since 2019, when it acquired the Repair Shipyard Šibenik, the press release reads.

Elka owner Miljenko Hacek said that in the past two years Elka had undergone thorough financial and operational restructuring and functional reorganisation and implemented new management, which were basic preconditions for achieving very good business results and attracting potential investors interested in strategic partnership.

The acquisition is a mutually beneficial cooperation between Croatia and Slovenia, and it is a precondition for the progress of both companies and the economic development of both countries, Hacek said.

Elka was founded in Zagreb in 1927, and it produces power lines and different types of cables, including telecommunication and fiber optic cables, halogen-free and flame retardant marine cables, cables for the petrochemical industry and others.

The Iskra Group this years marks its 75th anniversary, and it has become the largest Slovenian company dealing with process automation, electrical distribution system, water purifiers, power line communication, rail and road transport automation and software solutions in the field of energy and logistics. The Iskra Group is owned by the Šešok family, it employs more than 1,300 workers, and its share capital is slightly over €28 million, the press release said.

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ZAGREB, 24 March, 2021 - The main Zagreb Stock Exchange (ZSE) indices dropped by about 0.5% on Wednesday, with the Crobex decreasing by 0.48% to 1,853.53 points and the Crobex10 slipping by 0.54% to 1,161.91 points.

Regular turnover amounted to a mere HRK 3.8 million, about 2 million less than on Tuesday, and not one stock crossed the turnover mark of one million kuna.

The highest turnover, of HRK 770,100, was generated by the Atlantic food group. The price of its shares dropped by 0.68% to close at HRK 1,470 per share.

(€1 = HRK 7.570356)

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ZAGREB, 16 March, 2021 - The European Commission on Tuesday disbursed €9 billion to seven EU member states, including €510 million to Croatia, in the fifth instalment of financial support to preserve employment during the coronavirus pandemic under the SURE instrument.

This is the second instalment this year. Czechia has received €1 billion, Spain €2.87 billion, Italy €3.87 billion, Lithuania €302 million, Malta €123 million and Slovakia €330 million.

So far, 16 member states have received a total of €62.5 billion under the SURE instrument in loans which the Commission is taking out on financial markets at the best terms.

Croatia received the first instalment of €510 million on 17 November.

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ZAGREB, 16 March, 2021 - The Croatian Chamber of Trades and Crafts (HOK) on Tuesday said that the National Recovery and Resilience Plan should include trades and crafts.

HOK said that a survey of 1,722 HOK members indicates a huge interest in EU grants.

Most of them (85%) consider investing in tangible and non-tangible assets to be the most important, notably purchasing equipment and machinery, and upgrading and building new production capacities.

The estimated value of projects that would be submitted by the majority of trades ranges from HRK 150,000 to 750,000, HOK said, adding that trades are willing to invest their own funds too.

HOK in particular noted that more than 73% of trades do not plan to use financial instruments in the coming period.

HOK is investing significant effort in preparing programme documentation for the 2021-2027 EU financial period.

The aim is to raise awareness of the needs of trades and that adequate calls for applications for grants are ensured.

HOK said that the needs of trades should be recognised through the National Recovery and Resilience Plan due to the consequences of the COVID pandemic and the negative economic trends. Hence HOK has sent its recommendations to Prime Minister Andrej Plenković in an effort to find the best possible solution for trades.

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ZAGREB, 10 March, 2021 - Former Croatian Chamber of Commerce (HGK) head Nadan Vidošević told the court on Wednesday that he did not participate in fictitious business deals, dismissing as lies claims by Davor Komerički, who turned state's evidence, that Vidošević had asked him to launder money for him.

"The indictment is a cobweb and I know why Komerički gave a false testimony... so that he is freed from criminal charges and to have his company's accounts unblocked. There were no fictitious deals and Komerički is the only witness the prosecution has," Vidošević said at the Zagreb County Court while presenting his defence in a case dubbed Remorker.

Vidošević repeated several times during the presentation of his defence that he and his associates had not caused any damage to the HGK or the Kraš confectionery company, and that they had not siphoned money from them. "There is not one piece of material evidence against me, nor any message or text message that I might have exchanged," he said.

He also said that he had been barraged by some media outlets even before the trial started and that two-thirds of the indictment were based on his property whose value some of the media had exaggerated and which, he said, he had obtained legally.

Vidošević added that during a search of his home, documents referring to his artworks and the construction of his house in Gorski Kotar disappeared, of which he accused the police anti-corruption office PNUSKOK, saying it had made his defence more difficult. He also said that the expert estimate of the value of his property was "grotesque."

Defence presented four years since trial started

Vidošević's defence comes four years after the trial started in the Remorker case in which the former HGK head was accused of siphoning money from the HGK which he had led for years.

Vidošević's long-standing associate Zdenka Peternel was also accused in the case as was Josipa Mladinov, Jasna Mikić and Jadranka Ivčić, who have all pleaded not guilty.

Four other co-defendants pleaded guilty prior to the trial and were convicted after plea-bargaining with the prosecution. They are the key figures in the scandal - Igor Premilovac, who was the first to own up to issuing fictitious invoices via his Czech-based company Remorker and returning laundered money to Croatia for a commission; Davor Komerički, a marketing expert who accused Vidošević of being involved in a chain that was siphoning money from the HGK; real estate agent Vesna Rodić who advised Vidošević, and Jasna Mrakovčić Grubić, who admitted that she had siphoned money from the HGK with Vidošević by faking artwork purchases.

The USKOK anti-corruption office pressed charges against Vidošević and the eight other defendants in July 2015. USKOK proposed that assets equivalent to the HRK 33.4 million that was allegedly siphoned be confiscated from Vidošević.

However, a new expert analysis has shown that Vidošević acquired 26 properties and 444 works of art, worth HRK 22.3 million, legally and that property worth only HRK 9.2 million remains suspicious.

In mid-December 2020, USKOK withdrew its motion to expand the confiscation of Vidošević's assets after it was determined that the discrepancy between his income and expenditure was smaller than the value of the assets he was charged with having illegally gained.

ZAGREB, November 7, 2020 - In 2019, there were 24,592 enterprise births in Croatia, the data on enterprise deaths are still not known, while survival rates was at the levels registered in the previous years, show the temporary data provided by the national statistical office (DZS).

The business demography for Croatia show that the enterprises, that were set up in 2019, employed 41,212 people. The ratio of the newborn enterprises to employees show that they had 1.7 workers on average.

Broken down by business activity, the largest share of newborn enterprises, 4,119, were from the expert, scientific and technical activities. There were 3,171 newborn enterprises in the construction and 2,913 in commerce.

In 2018, there were 16,667 business births and 12,160 business deaths.

An enterprise death is defined as a business that was on the active registered enterprise
dataset in a reference year, but was no longer present in the dataset in the two following reference years.

The temporary data show that survivals of the companies in the years since their establishment were similar as in the previous periods. Thus, in 2018, one-year survival rate was 85%, and in 2017 this was around 89%, while in 2016, it stood at 85%.

The data on the survival in the following four years since the enterprise birth show that of the companies, born in 2015, 57% were active in 2019.

When it comes to the five-year survival rates, of the companies, set up in 2014, 56% of them were still active in 2019.

The DZS statistics show that in 2019, as many as 209,317 enterprises were active and they employed 1.23 million workers.

The highest share of hired workers, 272,521, were in the processing industry, and 244,029 were employed in construction businesses, while 121,049 were in hospitality services businesses.

This remarkable young Croat plays this ''role'' so well that he is also the winner of the Inspire 2030 Award for the Most Influential Young Entrepreneur Under 30.

As Poslovni Dnevnik writes on the 10th of February, 2020, Nikola Zec is just nineteen years old, a second-year student at the Faculty of Economics at the University of Rijeka, and he already owns three companies.

Although it sounds incredible, especially for Croatia, for this young Croat, life in which he plays the roles of both student and business man is a common daily routine. Moreover, Nikola Zec has two years of entrepreneurial experience behind him, since he started his first company back in high school, and it also brought him the status of one of the largest importers of snacks in the Balkans.

According to Glas Istre, he is also the winner of the Inspire 2030 award for the most influential young entrepreneur under the age of 30, which, Nikola says, is just one of several awards he has won so far.

''I'm a student of Business Economics at the Faculty of Economics in Rijeka, the director and founder of startups WorldFood Box and Gooders News and the entrepreneurial consulting agency Nikola Zec Business. The first company I started was WorldFood Box back in high school and we're currently the biggest importers of foreign food, namely sweets and snacks on the Balkan market.

In addition to the WorldFood Box, I'm currently working on launching the first positive news outlet in Croatia called Gooders News, with which I want to change the way the media communicates with the public. Gooders News began its preparations and work back in May last year, and we first introduced ourselves to the public in early October with the aim of spreading positive news and promoting positivity through humorous content. Through Gooders News, I want to inform the public about the importance of positive thinking and maintaining good mental health,'' said Nikola.

The move, this talented young Croat added, was decided by the devastating results of a World Health Organisation survey that listed depression the world's second biggest health problem. After conducting his own market research, he came to the conclusion that the constant pressure of negative news has a markedly negative impact on the mental health of readers, writes Glas Istre.

''Our goal is not to manipulate content for the sake of creating a false sense of positivity, but our goal is to change the everyday life and mindset of the Croatian public with quality entertaining, humorous and positive content.

In addition, we believe that negative news media is still extremely important in order to encourage a change in the definition of the media, but we believe that there must be positive content in the sea of ​​negative news that will create a certain balance.

Our wish is to move away from the classic media communication with the public and to bring to the Croatian market a business model that is already recognised in a similar, video form in the rest of the world. They want to grow their business without controversial articles and provide their readers with humorous and informative content in a completely different form than is already known,'' explained Nikola Zec.

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