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It’s unusual for a new tax-free EU residency permit to be introduced nowadays. Most EU countries have high taxes and they’re very bureaucratic.

Yes, you can apply for residency in a tax haven like Monaco if you can afford it or opt to live in Portugal under the Non Habitual Residence Scheme but a simple, tax free EU residency is less common.

Earlier this year, a new type of digital nomad visa was launched by Croatia. The grand total cost is around $100 and it can be issued in just 1-2 months with no foreign earned income tax payable while you’re resident there.

This residency program offers complete exemption from paying taxes on your foreign earnings while living there. It’s easy to qualify and apply for it.

The main criteria to qualify you for this digital nomad visa in Croatia are:

• You must be working for a foreign company. Your own offshore company will work fine. You just cannot be retired or unemployed.

•  You must have around $30,000 in a personal bank account; however it could even potentially lowered if you submit slightly more complicated paperwork .

• You must not be an EU citizen. If you are you can already live in Croatia without a resident permit.

When it comes to getting this EU digital nomad visa, you don’t have to hire an expensive lawyer. You can do this yourself, online in English or at your nearest embassy in person.

Before we get into the details, a caveat. This EU digital nomad visa may or not be a way to reduce your overall tax bill. That depends very much on the rules of where you are coming from and whether this is even possible for you in particular circumstances . Americans will still need to report their worldwide income as taxable under US law, though there might be some benefit with use of foreign earned income exemption.

Besides that, the program was only made law in February 2021, and the online application procedure was only launched in March 2021. There are some things that are still unclear about how it will work in practice.

Frankly, I find this tax exemption surprising to say the least. I think it could easily be restricted in the future, but then again – the idea is clearly to attract wealthy foreigners who will spend money in the country, so maybe it’s a sign of things to come as the competition for wealthy residents amongst countries increases.

Croatia’s new digital nomad visa allows digital nomads to stay in the country for up to 365 days. You can increase this to 15 months by using the 3 month visa waiver that most people get when visiting Croatia and then applying when you’re there. You then have to leave for 6 months before applying again.

If you aren’t sure what to do during the six month wait, hop over Croatia’s border into Serbia and apply for a temporary Serbian visa. It’s also a great place to spend some time. You can open some private bank accounts there too, as Serbia’s not part of the CRS reporting system.

The Croatian government is calling it a Residence Permit instead of a digital nomad Visa because they want this specific group of people living there and staying longer than usual tourists who just visit briefly for vacation or business purposes.

Apply for This EU digital nomad visa at Your Nearest Croatian Embassy or Online

You can apply for a Croatian digital nomad visa from outside of Croatia. If your passport usually needs a visa to enter the country, you will need this route. However, if you don’t need one than we consider it an attractive option that allows entry even without having ever set foot in the county before receiving approval by applying at either our embassy or consulate office and get biometric status rather than old-fashioned paperwork depending on where they are located within embassies/consulates being utilized.

The online form for a Croatian digital nomad visa is not as easy to use and helpful as it first appears. After filling out the application, you will be forwarded an e-mail that forwards your application onto local police stations in Croatia depending on the address given by applicants. This may give Digital Nomads some time but they still need to go in person at a local station where there might not be staff who speak English or are familiar with dealing with this new program.

If you don’t have an address in Croatia, the government website suggests that a hotel or Airbnb should work just fine – as long as there’s already a reservation made for your stay!

You will have to visit Croatia which seems obvious – however there might well be some people out there who would like to get residence permits without actually visiting the country. You need to go at least once . Anyhow Croatia is a wonderful place to visit with an extremely relaxed Mediterranean lifestyle .

If you are interested in the visa application process, I recommend reading about it on government websites. It is an easy and straightforward process that doesn’t require a lawyer to apply!

Get a Croatian Tax ID and Have all Your CRS Information Sent There!

The key points I want to focus on are the tax planning and EU banking opportunities because these have not been covered elsewhere online. Here’s what I see, reading between the lines of this new legislation:

1. In Croatia, it is extremely easy to get a tax number as non-resident even if you only have your passport in hand and not much else at all.

2. As holder of residence permit for Croatians, establishing local substance should be no problem such as opening bank account with utility bills under your name too!

You’ll be able to open accounts easily in other EU countries. Banks might need your Croatian residence permit and a utility bill before you can sign up for an account. The bank will also report automatic information into Croatia which would clearly make it the country of your residency under CRS reporting criteria.

Digital Nomads Are Exempt from Croatian Tax

EU Residency
Digital nomads can get a tax free EU residency in Europe

Digital nomads can now be tax exempt in Croatia. The law, as it refers to digital nomadism is found here and has been translated into English below for your convenience: “Article 9 – Exemption of income from business activities are the natural persons who carry out self-employed activity or a freelance profession on an independent basis which have no permanent place of work where they perform such activities.”

This means that your income as a Digital Nomad in Croatia is tax exempt. The Croatian authorities won’t expect you to file any taxes. It’s still unclear whether other types of income are taxed but it doesn’t seem likely that the Croatian tax authorities will be interested in the affairs of digital nomads, who are only visiting temporarily.

If you plan to stay in Croatia for more than 183 days,  it would be best if we can get a formal tax residency certificate from the Croatian authorities. This will help you claim tax treaty benefits when necessary.

When it comes to leaving your tax system in the country you are coming from, different countries have various criteria. For example, if I say that I am moving to Croatia and physically leave my place of residence for one year-long with a Croatian residency permit, then this will be sufficient evidence according to some sources such as the UK. The UK government defines residence for tax purposes as:

  • you spent fewer than 16 days in the UK (or 46 days if you have not been classed as UK resident for the 3 previous tax years)
  • you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working

The Croatian Digital Nomad visa demonstrates that you work in Croatia so I believe it fits the bill nicely. You could still spend up to 90 days per tax year in the UK, too – since this is from 6 April to 5 April of the following year (the UK’s “tax year”).

US citizens are fully taxable on their worldwide income no matter where they live. If Americans choose not to claim treaty benefits but are nonetheless working in Croatia for a whole year, can they claim the Foreign Earned Income Exclusion? That would be a question for an American tax attorney because it is complicated and depends on individual circumstances such as length of time spent abroad or whether you have lived outside the US previous years too.

Create an Offshore Company to be Your Employer

Let’s look at the company that wil be your employer for this EU Digital Nomad Visa:

It’s described as:

Digital nomad is a third-country national who is employed or performs work through communication technology for a company or his own company that is not registered in the Republic of Croatia and does not perform work or provide services to employers in the Republic of Croatia.

So, clearly it can be your own company or one that you work for anywhere else in the world.

The idea of owning an offshore company might be something that many people are interested in. These companies can hold other assets, such as cryptocurrencies for example. Offshore structures like trusts and Panama Foundations could also be recommended depending on your circumstances.

It’s clear that with this EU digital nomad visa that income from your company will not be taxed. Other income is less clear. The solution is to pay yourself a salary from the offshore company and let other income accumulate in the offshore company. The salary paid to you by the offshore company is tax free in Croatia. The other income held by the offshore company is tax free in any case..

There are many people sitting on large crypto gains and are considering moving to Malta or Portugal for a tax-free year. Could Croatia be an alternative? Yes! It is much easier than acquiring an EU residency in one of the other countries, which means you’ll save yourself some hassle, even if this is only temporary.

Croatia could be a great solution for an EU digital nomad visa. It gives you 15 months to spend there tax free and decide if you’d like to stay there longer term or explore other European options for tax-free living.

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