Business Consulting

The procedure for establishing a company or a subsidiary in Croatia is precisely the same for foreign citizens, as well as for citizens residing in Croatia, with the fact that foreign citizens, in most cases, request the services of local experts to avoid linguistic misunderstandings and administration traps.

Procedure for opening a company in Croatia for foreign citizens:

• Collect legal documents for the establishment of a company from the Commercial Court and the State Institute of Statistics
• Check if the selected company name is free (https://sudreg.pravosudje.hr/)
• Specify the address where the new company will be registered
• Preparation of documentation by the Public notary
• Payment of the initial capital (minimum amount for a simple limited liability company is HRK 10,00 and for a limited liability company is HRK 20.000,00)
• Select a bank and open a business account
• Choose an accountant to run the business books of the company
• Request a company’s OIB
• Apply for VAT number, VAT ID number and EORI number for the company
• If a foreign citizen wants to be employed in their company, a work permit is required for foreign citizens (MUP).

Want to find out how much your business is worth? UHY experts prepared valuation of companies to interested parties because they are important for: 

• investors – due to the recapitalization of the company
• to a company seller – when selling a stake in a company or paying off one of its partners
• in the inheritance of enterprises – in the division of assets
• to the owner – because he is interested in the value of the business he has created.

Valuation of an enterprise represents the range of values ​​of a particular enterprise. The base of any valuation should be proper due diligence, credible documents, interviews, and test plans- all of which our expert UHY team can offer you.

There are three basic methods for business valuation:

• discounted cash flow method (“DCF method”), dynamic- because it is based on future cash flows
• the Multiples method, where similar companies are compared
• static Asset-Based Approach method, the present value of the asset is taken into account.

Valuing a company (defining a fair price), is the most complex service that requires specific knowledge and the use of particular methods. UHY experts are experienced in valuing your business, they understand your business, and will choose a combination of the best ways for calculating your company value.

Business diagnostics involves reviewing historical financial statements, company documentation, and discussions with employees to identify potential business difficulties and propose restructuring measures.

Diagnostics can also be an overview of the profitability of a particular product/service within the company, individual sales markets, profit centers, employees, and similar.

Why do only some ideas become suitable investments, and most end up as a complete failure?

Before embarking on an entrepreneurial venture, good advice is to make sure your idea can also become an excellent business opportunity.

What discerns an idea from an excellent business opportunity?

An excellent business opportunity should meet the following parameters:

• a market that is big enough 
• strong growth
• a large profit margin
• strong and positive cash flow
• continuous income, small assets, working capital
• great profit potential
• attractive rates of return for investors.

Financial restructuring is carried out in case of financial difficulties of the company, but also to increase the solvency of the company or avoid higher tax levies.

When difficulties arise, the most important thing is to act quickly to avoid the worst-case scenario – bankruptcy of the company.

What does that mean? Reduce costs and increase net profitability.

The process of financial restructuring can be summarized in these few steps:

1. business valuation, or analysis of all financial statements, to understand what are the fundamental causes of business liquidity
2. cost-cutting, in terms of employee layoffs
3. the elimination of less important external services, optimization of other costs, the settlement of customers and suppliers, but also the sale of unnecessary short-term inventories as well as non-operating assets.
4. The last step is  to restructure the balance sheet, ie, optimize costs and look for new sources to refinance the business.

The business plan is made for investments of less than 300 thousand Croatian kuna, and is mainly chosen by small and medium-sized enterprises,or by individuals.

The investment study is commissioned by entrepreneurs who enter into business ventures above 300,000 Croatian kuna, whether it is investing in existing businesses or in the process of withdrawing grants from Croatian and EU funds.

The Ministry of Economy, Labor and Entrepreneurship, HBOR and commercial domestic and foreign banks prescribe the content and methodology of the business plan and investment studies, and are required to obtain: 

• bank loans for investment and working capital investments
• grants from EU funds, most often tendered by the Ministry of Agriculture, the Ministry of the Economy, Entrepreneurship, and Ministry of Tourism
• donations from a series of incentive measures of individual ministries, primarily the Ministry of Tourism and the Ministry of Agriculture
• independent development of a business entity.

The basic units of the business plan include information about the company and the project, analysis of the planned location, projection of income and operating costs, and financial statements (Balance Sheet and RDG), while the investment study additionally includes the cost-effectiveness and sensitivity analysis of the project.

For Croatia to make the most of the available financial support from EU funds, complex bidding documents need to be prepared, ie, each major project needs to prove its justification through a compulsory feasibility study and a cost-benefit analysis – CBA. 

How is the cost-effectiveness of an EU-funded project defined?

The primary task of EU projects is to bring benefits to the community, so those are mainly projects such as building hospitals, roads, schools, landfills. This group also includes larger private enterprise projects that can bring long-term benefits to the broader community.

Creating a feasibility study with cost-benefit analysis is a complex task,  performed by external consultants with relevant expertise and references for project applicants.

The Total Development Program (PUR) is a primary strategic document of municipalities and cities, drafted for planning, implementing, and controlling the execution of development projects.

It is also a basic document in applying for EU funds and attracting foreign investors, as it addresses all strategic plans of the public, civil and private sectors, aligned with the strategic guidelines for the development of the county and the state.

Consultants, representatives of the local government, the private sector, and non-governmental organizations are involved in the preparation of the documents. Their common task is to analyze the current situation, define projects with a focus on priorities, set goals, and list all available sources of funding.

UHY experts have years of experience in developing a dozen Projects for the overall development of specific municipalities and cities in the Republic of Croatia.

By joining the European Union (EU), Croatian municipalities and cities have the option of withdrawing grants from the EU. The basis for applying for tenders are development strategies and similar strategic plans for the development of local government units (LGUs).

Strategic plans for the development of municipalities and cities are vital documents, showing the direction of development of a particular area, in terms of long-term and sustainable property management, but also addressing pressing issues such as birth rates, unemployment, infrastructure issues, etc.

The objectives and priorities set in the development strategy should be in line with the programmatic goals of the EU guidelines set for the 2014-2020 programming period.

UHY experts participated in the development of a dozen strategic documents for Croatian municipalities, which defined their future survival and growth by creating a single strategic document, and laid the groundwork for future investments.