| Capital Transaction
(1) Under the terms of this Act, capital transactions
shall mean transactions concluded between residents
and non-residents, as well as unilateral transfers of
assets for the purpose of transferring capital, other
than current payments and transfers referred to in Article
8 of this Act.
(2) Capital transactions referred to in paragraph 1
of this Article shall comprise:
1. direct investments;
2. investments in real estate;
3. securities transactions in the capital markets;
4. securities transactions in the money markets;
5. transactions with stakes in investment funds;
6. credit transactions;
7. deposit transactions;
8. payments related to insurance agreements;
9. unilateral transfers of assets:
a) personal transfers of assets;
b) physical transfers of assets.
(3) Capital transactions shall also comprise transactions
involving the alienation of rights acquired through
investments, or securities referred to in paragraph
2 of this Article, as well as the repatriation of assets
or transfer of the balance of assets in liquidation
or of the bankruptcy estate.
Current Transactions and Current Payments
Article 8
(1) Current transactions are transactions concluded
between residents and non-residents for a purpose other
than a transfer of capital.
(2) Payments and transfers arising from current transactions
shall comprise:
1. all payments due in connection with foreign goods
and services trade and other current business, including
services and short-term banking and credit facilities;
2. payments due as interest on loans and as net income
from other investments;
3. payments of moderate amounts for amortization of
loans, for depreciation of direct investments and distribution
of profits based on ownership stakes;
4. transfers in connection with remittances from workers
abroad, pensions, disability allowances, and other social
benefits, taxes and dues, interstate cooperation, settlement
of insurance claims, lottery gains, compensations for
concessions, membership fees and fines (penalties) and
moderate remittances for family living expenses.
Direct Investments
Article 9
(1) Direct investments, under the terms of this Act,
shall comprise all investments by residents abroad and
all investments in the Republic of Croatia by non-residents,
made with a purpose of establishing permanent economic
relationships and gaining considerable control over
the managing of a legal person.
(2) The following situations shall be identified as
those whose purpose is to establish permanent economic
relationships and to gain considerable control over
the managing of a legal person:
1. the establishment of, or an increase in the initial
capital of, a company fully owned by the investor, the
establishment of a branch office or acquisition of an
already existing company into full ownership of an investor
or investment for the purpose of performing the activities
of an individual undertaking;
2. investment into a new or an existing company, provided
the investor acquires a minimum 10% stake in the initial
capital of a company, or a minimum 10% voting rights,
following fulfillment of conditions referred to in paragraph
1 of this Article;
3. loans with a minimum maturity of five years, granted
for the purpose of establishing permanent economic relationships,
provided such loans can be classified as subordinate
or hybrid claims.
(3) Following the establishment of a direct ownership
relationship between residents and non-residents in
terms of paragraphs 1 and 2 of this Article, direct
investment transactions shall also comprise:
1. reinvested profit or any direct investor’s
share in the profits of a company which is not distributed
in the form of dividends or other forms of profit distribution;
2. debt transactions between any direct investor and
a company into which direct investment has already been
made. This shall comprise debt securities, commercial
loans, financial loans and other debtor-creditor relations.
Investments by financial institutions involving debt
transactions related to current operations shall not
be considered direct investments; only those transactions,
which are motivated by permanent interest in ownership
status shall be considered direct investments.
(4) The following shall not be considered direct investments:
investments by investment funds, brokerage firms, pension
funds, insurance companies, banks and other persons
granted by the Croatian Securities Exchange Commission
a status of an institutional investor, in accordance
with a special law, and investments in financial assets
made for the purpose of issuing depository bills.
(5) The following shall exceptionally be considered
direct investments: investment by a bank into another
bank or other financial institution whose main activity
is the provision of financial services and investment
of an insurance company into another insurance company,
provided such investments fulfil the conditions referred
to in paragraph 2 of this Article.
Securities Transactions
Article 10
(1) Securities transactions, under the terms of this
Act, shall comprise securities transactions in the capital
and money markets and transactions with stakes in investment
funds, which are not investment transactions in terms
of Article 9 of this Act.
(2) Securities transactions referred to in paragraph
1 of this Article shall comprise:
1. issuance, listing, and the sale of domestic securities
abroad;
2. issuance, listing, and the sale of foreign securities
in the Republic of Croatia;
3. investments by residents into securities abroad;
4. investments by non-residents into securities in the
Republic of Croatia.
(3) The listing of securities referred to in paragraph
2 of this Article means the beginning of trading in
foreign securities in the Republic of Croatia or in
domestic securities abroad in stock exchanges or regulated
public markets.
Credit Transactions
Article 11
(1) Credit transactions, under the terms of this Act,
shall comprise commercial and financial loans. Under
the terms of this Act, credit transactions shall also
include sureties and guarantees.
(2) Commercial loans, under the terms of this Act, shall
imply deferred payments, or advance payments for goods
and services. Commercial loans shall also include bank
funding for deferred and advance payments and transactions
involving purchases of claims (factoring and forfaiting),
provided the underlying transaction from which the claims
arise can be characterized as a commercial loan..
(3) Financial loans, under the terms of this Act, shall
imply all loans except loans referred to in Article
9, paragraph 2, item 3 and paragraph 2 of this Article.
Financial loans shall not comprise sureties and guarantees.
(4) Credit transactions referred to in Article 9, paragraph
2, item 3 of this Act and all credit transactions referred
to in this Article, except deferred and advance payments
up to 12 months, based on a commercial transaction,
shall be concluded in a written form. Bank loan agreements
shall always be concluded in a written form.
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