February 4, 2022 - Croatia is touted as being one of the best places to retire, with plenty to offer including an agreeable climate, rich culture, relatively low cost of living, and affordable healthcare. But how can retirees, especially 3^rd country nationals, gain the right to live long-term in Croatia?

In this article, I briefly walk you through the different types of long-term permits the Croatian government currently offers and provide deeper insights into those that are the most applicable to retirees.

All information presented here is from the Ministry of the Interior (MUP) which regulates the stay of foreigners in Croatia.

Can I get permanent status to stay long-term?

The short answer is, yes, but for anything longer than 1-year, it becomes increasingly complicated.

For now, just know that although there are 2 types of Permanent Residency Permits in Croatia that allow extended stays beyond 1-year, it is nearly impossible for a 3^rd country national to obtain either on arrival if you have no Croatian roots or family.

In order to stay for more than 90 days in Croatia, you must apply for a Temporary Residence Permit.

Time to get all that paperwork in order. Image: Anete Lusina/Pexels

Types of Temporary Residency Permits

According to the MUP, there are different ways for 3^rd country nationals to obtain a Temporary Residency Permit.

1. Work for a Croatian registered company
2. Study at a Croatian institute
3. Conduct scientific research
4. Humanitarian grounds
5. Be a digital nomad*
6. Start a business
7. Be a non-remunerated volunteer*
8. Other purposes (purchasing real estate)*
9. Other purposes (renting real estate)*

As of writing, these (*) options do not count towards gaining permanent residency or citizenship.

For those looking to retire, let’s briefly consider options 5-9 as the most appropriate.

The Digital Nomad Visa (point 5)

Introduced in January 2021, the Digital Nomad Visa provides a relatively straightforward way for 3^rd country nationals to stay in Croatia for an extended period.

If you’re retired but do some freelancing from time to time, this may just work for you.

Criteria for a Digital Nomad Visa include:

1. Proof that you are a digital nomad by providing documents such as company registration, freelance contracts, invoices, and payment from clients (documents should be translated into Croatian and notarized)
2. A criminal background check from your home country
3. Valid health insurance for 1-year (e.g. Cigna, Safetywings, Croatia Osiguranje)
4. Proof of sufficient monthly funds which are 2.5 times the average net salary of the previous year as published by the Croatian Bureau of Statistics (DZS). For each additional family member, the amount is increased by 10% of the average net salary
5. When this expires, you have to leave the country for 90 days before reapplying

As of October 2021, the average gross earning per employee as published by the DZS is HRK 9,597 (€1,275), while the average net earning per employee is HRK 7,140 (€948).

This means for one retiree; you need to show that you have a monthly income of HRK 17,860 (€2,367). For each additional member, it is HRK 714 (€95) more per month.

If your monthly income is irregular, you can also prove sufficient funds by showing you have a full 12 months of income in your bank account, HRK 214,320 (€28,424) for a solo retiree and HRK 222,786 (€29,545) if you are coming with a partner.

Starting a business (point 6)

Alternatively, for some retirees, starting a local business may be an ideal way to make some passive income while enjoying all that Croatia has to offer.

3^rd country retirees can gain Temporary Residency by starting a business in Croatia, but meeting the required thresholds and the additional bureaucratic requirements can be more than a full-time job in itself.

To qualify, you have to:

1. Own at least 51% of a Croatian company, or incorporate one of these business forms - obrt, j.d.o.o, or d.o.o.
2. Invest at least HRK 200,000 (€26,500) as starting capital which can be claimed for business expenses
3. You must employ yourself, as well as 3 Croatian nationals as full-time permanent staff
4. The gross salaries of all 3 of your staff have to be equal to the average gross salary of the previous year
5. Your own salary must be at least 1.5 times the average gross salary

For 3 members of staff and yourself, you’d be looking at a minimum monthly human capital cost of approximately HRK 43,186 (€5,738). Not to mention you also have to deal with taxes, health insurance and other miscellaneous paperwork.

Becoming a long-term volunteer (point 7)

Maybe starting a business is not for you, perhaps consider volunteering? According to Croatian law, long-term volunteers between the ages of 18-65 are allowed to stay for 1-year.

The requirements are as follows:

1. You have to register your stay and apply for a residence and work permit
2. The host organization (“udraga”) has to prove they will cover costs for your stay, including food, accommodation, and other necessary expenses
3. You can be given an allowance by the host organization, but you cannot be paid
4. You are not allowed to work for any other company in Croatia
5. The hosting organization must possess a third-party liability insurance policy

Under certain conditions, this permit can be renewed for a second year if approved by the host organization and relevant authorities.

Real estate in Dubrovnik. Image: Lucian Photography/Pexels

Other purposes: Investing in real estate (point 8)

Unlike other EU countries (e.g. Spain, Portugal, Greece), Croatia does not currently offer a similar investment scheme where investing a certain amount in real estate qualifies you to live indefinitely.

In the case of Croatia,

1. There is no set amount of investment required
2. You must live in the purchased residential property
3. The visa is only valid for 6 months which is extended to 9 months if you include the 3-month short-term tourist visa
4. Once your 9 months is up, you are not allowed to renew or extend the permit
5. You must wait 6 months and leave Croatia during this time before submitting a new application again

While there is no minimum investment requirement, the criteria of having to leave and resubmit an application make it difficult for retirees to settle permanently.

Other purposes: Renting real estate (point 9)

What if you’re considering the following retirement scenario: renting out your current residence that will help fund your retirement years in Croatia where you’d also rent instead of purchasing real estate?

You most certainly can but know that this route will also only entitle you to a 1-year Temporary Residency permit.

Let’s look at the additional criteria:

1. You are not allowed to work for a Croatia registered company
2. You have to sign a rental contract with the landlord and prepay a full year of rent (AirBnB, Booking.com does not count)
3. The contract has to be notarized before submission to the relevant authorities
4. At the end of your 1-year permit, you have to leave Croatia (although through anecdotal evidence, I have heard of this being extended for another year)
5. You can only reapply again 6 months after the permit expires

While rent in Croatia is relatively lower than in cities in North America, Australia, or the UK, it also comes with its own complications.

Finding a landlord who is willing to lease you an apartment year-round can be difficult as the tourist season (June - September) brings in the bulk of their income. It is not uncommon for landlords to make a full year’s rent and more, just during tourist season alone.

What would retirement in Croatia look like then?

Until the rules change, it is problematic if you intend to live out a “classic” retirement scenario.

However, now that you know what to expect, if you’re willing to take on a more dynamic approach and make Croatia a secondary home as part of your broader retirement plan, it might just be some of the best year(s) of your life.

 (€1 = HRK 7.54)

For more, check out our lifestyle section.

ZAGREB, 24 Jan 2022 - The total assets managed by mandatory pension funds reached HRK 133 billion at the end of 2021, up by HRK 14 billion on the year, the UMFO association of pension funds  and pension insurance companies said on Monday, adding that pension funds have earned their insurees HRK 50.9 billion to date.

At the end of 2021, mandatory pension funds had 2,111,192 insurees, or 53,801 more than at the end of 2020.

Of them, 1,899,623 were in category B, which is for insurees in the middle of their career and has medium-risk investment; 150,266 were in category A, which is for younger insurees and has the highest investment risk; and 61,303 were in category C, for insurees who are about to retire and has the lowest investment risk.

Thanks to a recovery of the capital market, the average yield for category A insurees in 2021 was 13.52%, and 7.78% since its establishment, for category B it was 7.37%, and 5.51% since its establishment, and for category C it was 0.43%, and 4.48% since its establishment.

At the end of 2021, there were almost 67,000 more insurees in category A than the year before, the UMFO said, adding that this was due to the 2018 amendments to the law on mandatory pension funds as well as higher financial literacy.

The structure of mandatory pension funds' portfolio is diversifying, the UMFO said, with sovereign bonds accounting for 63.8% of the portfolios at the end of 2020 and for 57.7% at the end of last year.

Domestic shares accounted for 10.7% of the portfolios at the end of 2020 and for 12% at the end of 2021, while foreign companies' shares accounted for 9.2% of the portfolios, up by 17.7%.

At the end of last year, 397,253 citizens made voluntary pension contributions and the net assets totalled HRK 7.8 billion, up 15.8% on the end of 2020.

At the end of 2021, eight open voluntary pension funds were active in Croatia with 351,251 insurees as well as 20 closed funds with 46,002 insurees.

Among citizens with 11 to 20 years of service, 30.6% wish to save in the third pension pillar while 27.4% would like to invest in real estate.

As for citizens with less the ten years of service, 31% wish to invest in real estate and 23.3% in the third pillar, UMFO said, adding that only 5.1% of them would invest in securities and less than 10% would keep the money at home.

(€1 = HRK 7.5)

ZAGREB, 30 Aug 2021 - Zvornimir Troskot, a member of parliament from the opposition Bridge party, said on Monday that the economic situation in the country was not good despite the government's boasting about it being excellent, and he also criticised insufficient production and the country's heavy reliance on tourism.

"It is good that GDP has grown by 16.1% in the last quarter considering our open tourism strategy but we have also been lucky because Spain has been on lockdown due to the pandemic and Greece due to wildfires," Troskot said at a news conference.

He noted that experts did not comment on the impact of inflation and price growth on GDP growth.

"If there are no more external shocks like the pandemic and lockdown, we will return to Croatia's economic reality, namely a 91% share of debt in GDP. That is why we should talk about real structural reforms in the economic sector because during the lockdown, too, the hospital system spent enormous amounts of money despite the fact that hospital care was less available than normally," he said, calling also for a reform of the judiciary.

Economy based on tourism, instead of on production

Troskot believes that public sector investments are yet another problem and recalls that the government has said that EU funds intended for recovery from the coronavirus crisis will eventually end up with private enterprises.

That money will possibly reach entrepreneurs through public procurement and we know how those allocations are made and that they do not reach entrepreneurs, he said, noting that his party had proposed transferring EU funds directly to entrepreneurs who had 68 prepared projects instead of financing public infrastructure projects that should not be a priority at the moment.

The MP also said that the national economy was not based on production, as evidenced by projects like the Pelješac Bridge, which, he said, was good, however, the EU funds approved for it had ended up in the accounts of Chinese, Greek and Austrian companies working on it.

We have based our economy on tourism instead of on production which creates jobs and which is the best instrument to fight inflation, he said.

"When we look at the whole picture, we get the impression that Croatia is becoming exclusively a tourist destination and is turning into a retirement home for the EU," he said, noting that 310,000 Croatians, born between 1984 and 1999, had emigrated to Germany.

He warned that in Slovakia wages in the past 15 years had grown by one thousand euros, while in Croatia they had increased by 327 euros, or a mere 20 euros annually.

Referendum on euro introduction

Asked if Bridge would support the campaign of the Croatian Sovereignists calling for a referendum on the introduction of the euro, Troskot said that his party was in favour of introducing the euro, but that Croatia was still not ready for it because it lacked own production and was not ready for the strong competition in the EU.

"Yes to the euro because we assumed that obligation under the Lisbon Treaty, but not for the time being because we are still not ready for it," he said.

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