Services market liberalization aims to facilitate business operations in the Croatian market and the internal market of the European Economic Area. Such regulatory reform opens opportunities for increased economic activity and productivity.
Services include dozens or several hundred activities and professions where economic value is mostly generated. These include professional and business services that contribute to the added value of the industry.
Therefore, the Croatian Ministry of Economy, in cooperation with the competent authorities, horizontally encourages the further reduction of red tape and administrative barriers in sectoral regulations of various services and professions.
The Ministry communicates the economic benefits of doing business in the European internal market with students as potential entrepreneurs and business associations.
A key result indicator is more than 300 implemented measures in 50 business activities and professions. This has achieved the objective of the National Recovery and Resilience Plan 2021-2026 and the 2020 National Reform Programme.
According to the relevant OECD methodology Product Market Regulation (PMR), the overall regulation of the Croatian economy and services market has been roughly reduced from the highest level (PMR 2013) to the average OECD level (PMR 2018 and PMR 2023).
At the same time, the main professional services (accountants, architects, engineers, real estate agents, and lawyers) are regulated lower than the EU and OECD average and within ten EU member states in terms of level of deregulation. Zero licensing of accountants and reduced regulation of engineers, architects, and real estate agents contribute to this result.
On the other hand, the regulation of pharmacies is high (the highest within the EU and twice the OECD average). Also, the regulation of legal services (notaries and lawyers) is high, although they do not deviate from comparable continental countries that are part of the EU.
This reform aims to continue encouraging competition in the services market by applying the PMR methodology of reducing the regulation of professions. This would open up room to increase productivity (the National Reform Programme 2020).
This reform aims to simplify or lift additional regulatory requirements for the private professional services sector. (National Recovery and Resilience Plan 2021-2026 & Annex to the Council Implementing Decision).
More than 300 measures have been implemented in at least 50 sectors and professions, thus fulfilling the reform goal. Additional reform measures will ensure the continuation of easing and removing regulatory and administrative barriers to market access for professional and business services. Also, indicators and results based on the OECD’s Product Market Regulation (PMR) methodology are used. MINGO carries out horizontal coordination of proposing, formulating, and reporting on measures to liberalize the service market, and the competent authorities are responsible for ensuring the implementation of legislative adjustments. (National medium-term fiscal-structural plan of the Republic of Croatia for the period 2025-2028).
The institutional framework governing the right of establishment and the freedom to provide services is shared by all states of the European Economic Area (EU+EFTA) through the Treaty on the Functioning of the European Union (Articles 49-61). This framework for the free market for services is enabled by the Services Directive, i.e., the Services Act.
Services market liberalization is carried out at the EU level and in line with specific reform recommendations within the framework of the European Semester. In addition, within the Single Market Enforcement Taskforce (SMET), the European Commission and the Member States arrange initiatives to remove cross-border barriers to the freedom to provide services and to operate in the internal market, which is also important for Croatian exporters. More information is in Annex II.
EU Internal Market Centre supports easier access to the European market by bringing together a range of institutional tools used by all EU/EEA countries – all in one place. In this respect, two administrative support tools are used to facilitate business start-up and access to the services market:
The Point of Single Contact for Services provides information on starting a business in the Croatian services market (establishment, freedom to provide services, sectoral requirements, and so on). Access to the EUGO network is also available, which answers questions from Croatian exporters on how to operate in the European Union and particular Member States. Further simplification and digitalization of authorization procedures for individual service activities have been continued. The Point of Single Contact for Services (as well as the Product Contact Point) is a customer support service through the Single Digital Gateway. It needs to be developed by all Member States in cooperation with the European Commission through the Your Europe portal, which provides links to regulatory and administrative information for businesses and citizens.
The Internal Market Information System (IMI) is a common European online tool for cross-border notification concerning the justification of regulatory requirements for the services market to prevent unjustified restrictions for freedom to provide services in Croatian, i.e., the European market. In addition, IMI facilitates cross-border administrative checks of data in different areas, thus avoiding red tape, which reduces the time needed for an administration to respond.
The Croatian domestic market is open to competition from the EU market in most service activities. Freedom of establishment has been provided. Furthermore, the freedom to provide cross-border services on a temporary and occasional basis has been provided for various service activities for EU/EEA nationals, without the obligation to register a company, to be a member of a professional chamber, or to pass a professional exam. Also, in the context of Croatia’s accession to the OECD, the freedom to provide cross-border services continues to be introduced.
Starting a business has been simplified, accelerated, and digitalized. As regards access to the services market, digital procedures are available for a growing number of professions as well as qualification recognition (architects, civil engineers, mechanical engineers, electrical engineers, geodetic engineers, tax advisors, auditors, real estate agents, veterinarians, detectives, driving schools, tourism and catering industry, tourist guides, taxi drivers and road transport, intellectual property, education, real estate agents, retail, e-commerce, health professions and environmental protection). The digitalization process is ongoing in several service activities and cross-border interoperability according to the “once-only” principle. For various other services, scanned documents may be sent by e-mail without seals and stamps and without the additional obligation of sending the documents via post office. Information on requests for the services sector is available in one place, without the obligation to go to institutions in person.
Equivalent types of professional liability insurance are recognized from other EU/EEA states. The access to regulated professions through automatic recognition of professional qualifications for EU/EEA citizens has been facilitated, and the same applies to Croatian professionals in the EU market. The government does not demand information from domestic service providers that it already has in the system. The use of the IMI system for verification of information on the cross-border service providers has been increased. The licensing of accountants has been revoked. The relicensing of construction companies has been removed, including energy certification, auditors, and psychotherapists, and the licensing of tourist guides, employment agencies, and accountants. The professional chamber is not mandatory for construction site managers anymore, and the introduction of mandatory chamber memberships for accountants, nutritionists, and traffic and transportation technology engineers was prevented.
Architects, engineers, and geodetic engineers, as well as many other professions, are no longer under obligation to register their permanent residence in Croatia. Architects and geodetic engineers are no longer obliged to prove that they are not under any criminal investigation or criminal proceeding.
Mandatory work experience for architects, engineers, and geodetic engineers has been reduced to two years, for auditors to four years, and for veterinarians to six months, while it is no longer required for tourist agency managers. Work experience for notaries has been reduced. The right to take a professional exam for tax advisors has been granted to applicants with completed graduate or master’s degrees and with three years of relevant work experience, and to applicants with specialist studies and five years of relevant work experience.
Automatic recognition of professional qualifications has been implemented for the professions from other EU/EEA states. A general system for the recognition of professional qualifications from third countries has been introduced as well. European Professional Card issued for the provision of services on a temporary and occasional basis gives an automatic right to practice the profession without fulfilling any additional requirements. A person who wants to provide regulated professional services may notify the competent authority thereof or Point of Single Contact for services. Croatian language proficiency test is not required anymore for professionals from EU/EEA states, except for healthcare professionals due to patient safety. There is a 30-day deadline for a competent authority to issue a decision on the recognition of foreign professional qualifications after the fulfillment of an additional measure. Fees for cross-border service provision and recognition of engineering qualifications have been reduced.
Removing minimum fixed tariffs has enabled free price formation and negotiation in various professions and sectors, such as accountants, real estate agents, architects, engineers, auditors, tax advisors, taxi drivers, driving schools, etc. Furthermore, it is possible to determine the price of legal services more flexibly, in such a way that in all legal matters, lawyers can agree with the client in writing to work on an hourly basis, whereby they are not obliged to adhere to the minimum hourly rate. The statutory right of the chamber to impose fees for tax consultancy services has been abolished.
Interior and landscape design are not exclusively under the competence of architects, so there are no limitations for others to perform this business activity. It has been provided for tax advisors to participate in tax administrative matters before administrative courts. There is a possibility of multidisciplinary cooperation between architects, engineers, real estate agents, accountants (and other services).
Architects and engineers, tax advisors, lawyers, pharmacists, and physiotherapists are no longer banned from advertising their services, and this is also the case in many other professions.
Territorial restrictions considering the number of licenses have been removed (e.g., for driving schools and taxi services). Taxi drivers may obtain licenses in any municipality. This enables the expansion of professional businesses and their new investments. Furthermore, founders of driving schools, private archives, private educational institutions, and private scientific institutes are no longer under obligation to have economic justification for their business using a study. Architects, engineers, auditors, and lawyers are free to open new offices like most other occupations and professions.
In most professions, there are no limitations in terms of the legal form. Therefore, entrepreneurs decide independently whether they want to start a business as natural or legal persons. This enables the removal of costs of obligatory status change, for example from a natural to a legal person. For example, lawyers and tax advisors may also establish a limited liability company.
No shareholding restrictions
The 51% shareholding requirement concerning ownership interests or membership in a tax consultancy company has been abolished. The same principle has already been provided for architects, engineers, and other professions. Also, any natural or legal person, and not just a tax advisor, has founding rights in a tax consultancy company (with at least one licensed tax advisor). Also, the shareholding requirement for auditors has been reduced from 75% to 51%.
As with other professions, civil engineers and online travel agencies are no longer obliged to hire a minimum number of employees; instead, they independently decide on this matter. Freedom to conclude full-time or part-time job contracts is provided for driving schools. Online travel agency office managers are no longer under obligation to have permanent residence. Also, there is no obligation to have a full-time employed office manager in every branch office of a travel agency. The ban on employment with another natural or legal person has been lifted for tax advisors pursuing a self-employed activity.
Croatian lawyers may practice in companies in other EU Member States. The right to practice law profession does not cease to exist for Croatian lawyers in other EU Member States when the profession is practiced outside a law firm. Branch offices of EU law firms may provide consulting services on Croatian law as well. Lawyers from other EU Member States may start a law firm in Croatia, and they can provide legal services jointly with Croatian lawyers or lawyers from other EU Member States, without the obligation to wait for recognition of qualifications to have an equal status with Croatian lawyers.
It is possible to start employment as a lawyer with another lawyer who independently practices the legal profession and within a joint law firm. Lawyers who, without a justified cause, do not practice their profession for more than 6 months will no longer be deleted from the register. Specific administrative requirements for European lawyers have been reduced. The high fee for chamber re-enrolment is no longer payable, while the fee for the first enrolment has been reduced by 40%.