Closing a Legal Entity in Croatia
By Biljana Svaljek, Infokorp
Some projects are only designed to last a few years. Usually, in Croatia, a legal entity is established in order for a project to run smoothly or to receive government incentives. Since the annual financial statements have to be submitted even when there were no transactions, entrepreneurs should close the company when it is no longer needed. There are two ways of closing a legal entity that do not include filing for bankruptcy: the regular liquidation process and the shortened cessation of business activity without liquidation.
The regular liquidation process begins by making a decision, which has to be signed at a notary’s offce. A liquidator has to be appointed and vendors have to be informed publicly, while the tax authority, business bank, and others have to be informed after the request is approved. The legal entity cannot be closed if any obligations are not paid. The entity must submit starting and final financial statements. Since the process takes more than a year, annual statistical financial statements have to be submitted during the liquidating period. Upon receiving the final resolution of liquidation all remaining assets, which are usually cash, are distributed to the shareholders.
The shortened cessation of business activity without liquidation process takes approximately two months. All shareholders of the legal entity have to decide to close it and the decision must be signed at a notary’s offce. The latter is to confirm that the legal entity does not have any liabilities toward employees and/or vendors. In addition, there is a two-year period in which stakeholders can claim a liability. Once the commercial court approves the request, there is still a 30-day period for appeal. Again, during the process all statutory financial statements have to be submitted.
Due to complex administrative procedures, entrepreneurs often decide on a counselling partner to cover all requests and relevant institutions.
Biljana SvaljekGGI member firm
Accounting, Tax, Advisory
T: +385 1 2221 200
INFOKORP provides accounting and payroll services, tax consulting, management consulting, and corporate services. The firm is dedicated to solving problems, regardless of their complexity to both national and international clients. The main office languages are Croatian, English, and German.
Biljana Svaljek has a long career in accounting and tax advisory. She is experienced in due diligence, forensic accounting, transfer pricing, and financial analysis. She also holds lectures and provides education to both domestic and foreign clients.
Published: Debt Collection, Restructuring & Insolvency Newsletter, No. 12, Spring 2020 l Photo: Mikhail Markovskiy - stock.adobe.com