Key Considerations for Foreign Investors When Acquiring Croatian Companies Introduction The Croatian market, as part of the EU single market, continues to attract foreign direct investment across a range of industries—particularly tourism, real estate, energy, ICT, and manufacturing. According to the World Bank and the American Chamber of Commerce (AmCham), foreign investment in Croatia is experiencing strong growth since 2024, with a notable shift in its structure — capital is increasingly moving away from the banking sector and into tourism and the IT industry. In the first quarter of 2024, foreign investors injected over one billion euros into the Croatian economy. If this trend continues, it is expected to surpass the 2021 record of approximately four billion euros. From 1993 to date, Croatia has received more than 46 billion euros in foreign capital, primarily in finance, manufacturing, and real estate — and over time, the country is increasingly perceived as an attractive investment destination.

Civil and Criminal Liability in the Context of Piercing the Corporate Veil Introduction Although company members and management board members are generally not liable for the obligations of the company, there are legal provisions in place to protect creditors from the abuse of this rule. Both company members and management board members may be held liable for the company’s obligations, albeit on distinct legal grounds. Liability applies equally, irrespective of whether the individuals are domestic or foreign persons, as their residency status has no bearing on the scope or nature of their potential liability. Creditors have at their disposal additional legal remedies beyond the liabilities provided for in the Companies Act and the Criminal Code. Notably, various forms of security instruments can be used to prevent or mitigate malicious conduct by debtor companies and their members or management. Furthermore, creditors may initiate legal proceedings to annul legal transactions made to their detriment, thereby effectively reversing certain forms of abuse by company members or management board members. In conclusion, creditor protection in the Republic of Croatia is broad and comprehensive, offering multiple legal instruments to safeguard against malicious and fraudulent conduct within companies. It is also evident that the limitation of liability for company members and management board members is not absolute.

On 7 March 2025, the Croatian Parliament adopted comprehensive amendments to the Aliens Act. This marks the third major reform of the legislative framework governing migration policy since 2020. The new amendments consist of 96 articles and bring far-reaching consequences for the legal status, employment, residence, and rights of third-country nationals in the Republic of Croatia.

In recent days, one of the key legal developments in Croatia has been the adoption of amendments to the Foreigners Act. The Croatian Parliament has amended the existing Foreigners Act (Official Gazette Nos. 133/20, 114/22, and 151/22), following a proposal submitted by the Government of the Republic of Croatia last year. The revised Act entered into force on 15 March 2025 (hereinafter: the Act). The amendments primarily aim to improve the management of residence and employment of third-country nationals in Croatia and to align national legislation with EU law—particularly Directive (EU) 2021/1883 of the European Parliament and of the Council, which governs the admission and residence conditions for highly qualified workers (the so-called EU Blue Card). The Act also introduces stricter criteria for employers hiring foreign workers, in response to the continuous rise in the number of third-country nationals working and residing in Croatia.

Croatia is a popular destination for foreign investors, particularly in the real estate sector, especially those located in the southern, coastal, and seaside areas of the country. This is because their tourist potential is far superior to that of properties used for tourism in other parts of Croatia. Naturally, when it comes to such investments, the speed of return is crucial, if not decisive.

The primary legal act governing the legal status of foreigners (persons who do not hold Croatian citizenship) is the Foreigners Act (hereinafter: FA) and the Regulation on the Residence and Work of Highly Qualified Third-Country Nationals in the Republic of Croatia, which is fully aligned with Council Directive 2009/50/EC of 25 May 2009 on the conditions of entry and residence of third-country nationals for the purposes of highly qualified employment (OJ L 155, 18 June 2009).

The European Blue Card is a residence and work permit that allows third-country nationals to live and work in the member states of the European Union (EU) and the European Economic Area (EEA) if they meet certain conditions. The main objective of the European Blue Card is to attract highly skilled workers from third countries to contribute to the economic development of the EU. The permit is issued under simplified conditions compared to the standard residence and work permit.

According to the Labor Law (Article 76 and 77), an employee has the right to paid annual leave for each calendar year, lasting at least four weeks. However, minors and employees working in jobs where, despite the application of health and safety measures, it is not possible to protect the worker from harmful influences, have the right to annual leave lasting at least five weeks. Similarly, individuals with disabilities have the right to paid annual leave lasting at least five weeks for each calendar year. Nonetheless, through a collective agreement, an agreement between the workers' council and the employer, work regulations, or an employment contract, the duration of annual leave longer than the minimum prescribed can be determined. In cases where a right from the employment relationship (in this case, annual leave) is differently regulated by these sources of law, the most favorable right is applicable to the employee. It should be noted that an employee who is newly employed or who has a break between two employment relationships longer than eight days gains the right to full annual leave only after six months of uninterrupted employment with that employer.